24.03.2015 - Weak data from China disappointed investors
The price of euro yesterday showed growth and has overcome the significant level of 1.09. The reason for the optimism of investors was the speech of Mario Draghi in which he noted the positive outlook for economic growth, which is supported by low oil prices and growing demand for European goods. According to Mr. Draghi inflation will resume in the second half of the year, together with rising oil prices. Consumer confidence in the euro area improved to -4 in March against previous figure -6. Today, the course of trading will be affected by data on manufacturing and service PMI in the Eurozone (09:00 GMT), the Consumer Price Index in the US (12:30 GMT) and new home sales in the US (14:00 GMT). Our medium-term outlook remains negative and we look forward to the resumption of the fall of the euro because of the program of quantitative easing.
The rise in prices of the British pound yesterday held back by weak data on the balance of production orders in the UK in March, which fell to 0. At the same time, investors are in no hurry with actions before the publication of statistics on inflation (09:30 GMT). The course of trading will also be affected by the statistics from the United States. Weak growth in the euro area and a fall in the euro has led to a deterioration in macroeconomic data and fall of the British pound. We expect a continuation of the downward movement of the British pound and maintain a medium-term negative view.
The price of the Japanese yen continues to rise gradually amid the weakening US dollar after the Fed lowered its forecast for growth in interest rates and the likelihood of their increase in June declined. Yesterday, deputy head of the Federal Reserve, Stanley Fischer noted that the rate hike will not take place at a steady pace. It is worth noting the negative impact on the manufacturing PMI data in Japan, which fell in March to 50.4, against 51.6 in February. This indicator is a key for Japan and in this regard, we expect a further drop in prices of the yen. Our medium-term view remains negative.
The price of the Australian dollar has continued to grow and reached a strong level of 0.79. Negative for investors was the data from China, which is a major importer of Australian products. Thus, China manufacturing PMI, calculated by HSBC, fell to 49.2 in March against 50.7 in February. This figure indicates a contraction in activity in the sector. Despite this, quotes of the Australian dollar held at high levels due to the weakening of the US dollar. We still maintain a medium-term negative outlook and recommend holding short positions.
The price of the New Zealand dollar continues a gradual increase amid the weakening of the US dollar and positive expectations of investors. Today will be published important statistics on the trade balance of New Zealand (21:45 GMT), which shows a steady improvement over the past periods and probably will keep this trend this week. We expect the upward price movement in the near future and look forward to increased volatility tonight.