23.10.2015 - Statement by Mario Draghi has led to a drop in the euro
Currency trading and the euro. The price of euro showed a rapid decline after the press conference of the ECB President Mario Draghi in which he showed a soft rhetoric on plans for monetary policy. The fall in inflation against the background of weak external demand, low energy prices and a stronger euro had a negative impact on the economy of the euro area. During yesterday's meeting of the ECB were discussed different options to stimulate the economy among which was the reduction of interest rates on deposits, which currently is at -0.2%. In connection with the statement of the ECB, the confidence in the new incentive measures has grown, together with the expectation of the Fed raising interest rates may lead to a drop in the euro to its lowest level this year, about 1.05. We maintain a medium-term negative outlook and expect volatility to reduce and partial fixation of positions.
Currency trading and the British pound. The price of the British pound rose during yesterday's session after the publication of a strong report on retail sales in the country, where the rate in September reached 1.9% vs. expected 0.3%. After that, the price has changed the direction on the negative influence from the speech of the head of the ECB after which the market expects launching additional measures to stimulate inflation in the euro zone after the ECB meeting on December 3rd. Today, investors will continue to assess the likely decline of the euro on the price of the British pound and the volatility of the market will decline. Our medium-term outlook for the euro remains negative.
Currency trading and the Japanese yen. The price of the Japanese yen has weakened amid growing investor interest in risk and reduced demand for defensive assets like the yen. In addition, the strengthening of the dollar also had a strong negative impact on the course of trading. The main reason for the fall of the yen has been the growth of investor confidence in the new stimulus steps by the ECB to support inflation. A similar situation may occur next week, when the Bank of Japan also may declare its intention to strengthen the process of stimulating inflation. Support for the yen today was the news on the growth of Japan's manufacturing PMI in October to 52.5 vs. anticipated 50.6. Our medium-term outlook for the yen remains negative and we are waiting for the continuation of the negative dynamics in the near future.
Currency trading and the Australian dollar. The price of the Australian dollar is corrected upwards, despite the strengthening of the US dollar. It should be noted that iron ore prices continue to decline, which will put pressure on quotations of the national currency of Australia in the near future. According to our estimates, quotes will continue to consolidate in the near future and then fall in prices with high probability will continue. Our medium-term outlook remains negative.
Currency trading and the New Zealand dollar. The price of the New Zealand dollar continued to rise after the recent correction. Easing concerns about the negative impact of the slowdown of the Chinese economy in the New Zealand dollar supported by the national currency of New Zealand. It is worth noting that the growth potential of the New Zealand dollar is limited and we are waiting for new signal to open short positions. Our medium-term outlook remains negative.