25.03.2015 - Rising inflation supported the dollar

The price of euro failed to extend gains yesterday in connection with the strengthening of the US dollar after the release of statistics on the US consumer price index, which rose by 0.2% in February, which was the first increase since September last year. This fact increases the probability of an earlier raising Fed’s interest rates. At the same time, sales of new homes rose to 539 thousand, against the expected drop to 466 thousand. We recall that the value is higher than 500 thousand was last time registered in 2008. Today, the course of trading will be affected by the news on index of business confidence in Germany (09:00 GMT) and durable goods orders (12:30 GMT). Our medium-term outlook for the euro remains negative and we recommend holding short positions in relation to the effects of quantitative easing in the Eurozone.

The price of the British pound was unable to continue its upward movement and began to decline on a background of positive statistics on inflation and new home sales in the United States. At the same time, the index of consumer prices in the UK remained unchanged in February, which also negatively affected the mood of investors. Today, the course of trading will be affected by the data on permits issued for mortgage lending in the country (09:30 GMT) and US statistics. Traders will not rush to open new positions before the statement of financial policy Committee of the Bank of England, which will be published tomorrow. Our medium-term outlook remains negative and we see no reason to change the negative trend.

The price of the Japanese yen was unable to continue to grow due to the strengthening of the US dollar after was released data on rising inflation in the United States by 0.2%, and a sharp increase in the number of new home sales. The fall of the Japanese manufacturing PMI to 50.4 in March against 51.6 in February also had a negative effect on the Japanese currency. Today the dynamics of trading will depend on the data from the US. Monetary policy of the Bank of Japan remains soft, and in the US this year will raise interest rates, which is the basis for the further fall of the Japanese yen against the US dollar. We maintain our medium-term negative outlook on the yen.

The price of the Australian dollar has stabilized below the important resistance level at 0.7900 in connection with the strengthening of the US dollar and weak statistics on manufacturing PMI in China, the value of which was less than the psychologically important mark of 50.0, which indicates a contraction in activity in the sector. Price of the Australian currency is under the pressure of low export prices, reduced investment in the mining sector and the weak indicators of the labor market of the country. We maintain our medium-term negative outlook for the Australian currency and recommend holding short positions.

The New Zealand dollar has stabilized above 0.7600 and stopped the growth. Yesterday was published data on the trade balance of the country. Thus, the figure was 50 million in February, compared to 33 million in the previous month. Analysts had expected the figure increase to 375 million. Further dynamics of prices will depend on the data from the US and the movement of the US currency. To determine the medium-term direction of price movement, we need additional signals.

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