23.09.2014 - Statistics from China has improved the mood of investors
Volatility of the euro has decreased significantly and the price continued to consolidate near the level of 1.2850. The index of consumer confidence in the euro area has shown the value of -11, which was in line with analysts' forecasts. At the same time, existing home sales fell in August to 5.05 million, against the forecast of 5.21 million. Positive dynamics of the housing market, which has been observed in the early summer becomes weaker. Mario Draghi said yesterday about the readiness of the ECB to use unusual methods to deal with low inflation and to support the region's economy. Today we should pay attention to data on the manufacturing and services in the Eurozone PMI (08:00 GMT) and the manufacturing PMI in the USA (13:45 GMT). We maintain a negative medium-term outlook for the euro and recommend holding short positions.
British pound after some stabilization and reduction of volatility continues gradual growth on the one hand based on the correction of the dollar and on the other, due to the fact that Scotland remained a part of the United Kingdom, which cleared the risks associated with the possible independence of the country. Today will be published data on public sector net borrowing in August and the number of permits issued for mortgage lending in the country (08:30 GMT). Despite the slowdown in the British economy, it continues to grow strongly, moreover drop caused by waiting for a referendum in Scotland has not yet been compensated. We look forward to continuing growth of quotations of the British pound and maintain a medium-term positive outlook.
The Japanese Yen continues to consolidate near lowest levels since 2008. The volatility remains low due to the holiday in Japan. The demand for safety assets was raised in connection with the air strikes by American aircraft on positions of the Islamic state in Syria. Tomorrow in Japan will be published data on the manufacturing PMI in September. Given the loose monetary policy in Japan and its tightening in the United States, we expect continued devaluation of the yen. Our medium-term outlook remains negative.
The price of the Australian dollar after the seven-month low began to grow on the positive statistics from China where was published the manufacturing PMI. Thus, the rate in September showed an increase by 0.3 to 50.5. Analysts had predicted a decline to 50.0. We recall that the value of above 50.0 indicates growth. Statistics from China supported metals prices, which also contributes to the growth of the Australian currency. Despite this, we expect further downward dynamics on the Australian dollar, though declining potential for further fall.
The New Zealand Dollar continues its consolidation above 0.81 despite a convincing victory of party set on the implementation of economic reforms in the country and the positive data on the industry in China. Investors are in no hurry to build up positions ahead of the publication of data on the trade balance in the country (22:45 GMT), after the publication of which we traditionally see an increase in volatility. Depending on the data on the trade balance, we can see a strong growth and the acceleration of the fall. Current outlook remains negative and we keep the medium-term negative view on the New Zealand Dollar.