25.04.2016 - Markets are waiting for the Fed statement on Wednesday
Currency trading and the euro. The price of euro rose slightly today within the correction, after steady fall in the last trading session of the previous week. Today, investor sentiment will influence the news on the index business sentiment in Germany by the Ifo (08:00 GMT) and new home sales in the US (14:00 GMT). The central event of this week will be the Fed's statement on monetary policy on Wednesday. With a high probability monetary policy settings will remain unchanged, but the market will wait for hints on future Fed moves on interest rates. We expect continued tightening of the Fed on monetary policy due to the expected rise in inflation in the United States in the second half of the year. In this regard, our medium-term outlook remains negative.
Currency trading and the British pound. The price of the British pound continued its growth, but its potential is limited due to investors' concerns about the country's possible exit from the EU after the referendum on 23 June. Today, it is worth paying attention to statistics on the balance of production orders in the UK (10:00 GMT). Wednesday promises to be a volatile day in connection with the publication of the preliminary report on the growth of UK GDP for the first quarter and the Fed’s statement on monetary policy. We maintain our medium-term negative outlook on the British pound and forecast decline in prices before the referendum on the country's membership in the EU.
Currency trading and the Japanese yen. The price of the yen corrected after a strong decline at the end of last week. The main reason for the weakening of the Japanese currency has become speculation about a possible reduction in credit interest rates of the central bank to negative. At the moment, the credit rate is 0.0%. Such a decision may be announced on Thursday after a meeting of the Bank of Japan. On the same day will be released reports on inflation, retail sales and household expenditures. Our medium-term outlook for the Japanese yen remains negative due to the expected increasing divergence in monetary policy of the Bank of Japan and the Federal Reserve.
Currency trading and the Australian dollar. The price of the Australian dollar continued to decline after the correction in commodity markets from which the country's economy is heavily dependent. Today the country has a day off, and investors' activity is minimal. Growth of volatility is possible on Wednesday after the publication of statistics on the consumer price index, which will have a strong influence on the decision of the RBA on monetary policy. According to our forecasts, the fall of the Australian dollar will continue in the coming months.
Currency trading and the New Zealand dollar. The price of the New Zealand dollar falls before the publication of the statement of the Reserve Bank of New Zealand on monetary policy on Wednesday night. Low inflation allows the country's central bank to continue easing monetary policy, but on the other hand, the macro-economic indicators in New Zealand are improving. We forecast growth of volatility in the near future and expect a continuation of negative trends in the medium term.