24.02.2015 - The New Zealand dollar fell against the backdrop of worsening inflation expectations
The price of euro showed a slight decrease on the background of statistics on reduction of the index of business confidence in Germany in February to 106.8, compared with an expected increase to 107.4. At the same time, sales on the secondary market in the US fell to 4.82 million in January, that is 0.21 million worse than analysts' forecasts. Today, in the center of attention will be the data on GDP growth in Germany in the 4th quarter (07:00 GMT), the consumer price index of the Eurozone and the publication of the economic forecast of the European Commission (10:00 GMT). The course of trading will also be affected by the data on consumer confidence in the US (15:00 GMT) and ECB President Mario Draghi (14:00 GMT) and the head of the Federal Reserve Janet Yellen (15:00 GMT). We maintain our medium-term negative outlook for the euro in relation to the expected tightening of monetary policy in the US and the launch of quantitative easing in the Eurozone.
The price of the British pound showed steady growth amid falling dollar after weak housing data in the US, which showed uneven growth. At the same time, investors ignored the data on the balance of retail sales in the UK, which fell to 1 against the expected growth to 42. Today in the UK will be held a meeting on inflation, but investors will not rush to build up positions before the publication of statistics on GDP growth in the UK on Thursday. Today, volatility will increase in connection with the publication of a large block of statistics from the Eurozone and the US. We recommend holding long positions in the near future.
The price of the Japanese yen strengthened slightly against the weakening US dollar, but then resumed its fall. Traders expect Janet Yellenâs speech in which the head of the Fed may announce the timing of interest rate increases. We recall that the tightening of monetary policy in the US and soft policy of the Bank of Japan has led to the fall of quotations of the Japanese yen against the US dollar. Demand for the yen may rise due to a deterioration in the situation of the Greek crisis and the fighting in the east of Ukraine. Increased volatility is also expected on Friday after the release of a large block of statistics. We maintain our medium-term negative outlook on the Japanese yen.
The price of the Australian dollar continued to decline following the New Zealand dollar. The reason for the fall was the report of the Reserve Bank of New Zealand, according to which inflation expectations fell to its lowest level since 1999. This situation contributes to mitigate the monetary policy of the central banks of Australia and New Zealand. We recall that the two economies are closely linked. Tomorrow the course of trading will be affected by the statistics on manufacturing PMI in China. We maintain our medium-term negative outlook and recommend holding short positions on Australian currency.
The price of the New Zealand dollar showed a decrease after the publication of the report, according to which inflation expectations have declined in the 1st quarter to 1.11% per annum against the previous forecast of 1.59%. This situation points to the possibility of lower interest rates and easing of monetary policy of the Reserve Bank of New Zealand in the future. We maintain expect further drop in prices in the medium term.