25.05.2016 - Strong trade data supported the New Zealand dollar

Currency trading and the euro. The price of euro showed a drop yesterday in connection with the strengthening of the US dollar after the publication of unexpectedly strong statistics on new home sales, which rose in April to 619 thousand against the forecast of 521 thousand and the previous value 531 thousand. It is worth recalling that the building sector is crucial for the US economy and its growth increases the likelihood of the Fed raising interest rates in the coming months. In addition, the pressure on the euro was weak data on the index of business sentiment in the euro area by the ZEW, which fell to 16.8 in May from 21.5 in April. Today, the dynamics of trade may influence the data on consumer confidence index in Germany (06:00 GMT) and preliminary report on the service PMI in the US (13:45 GMT). Our medium-term outlook remains negative.

Currency trading and the British pound. The price of the British pound rose yesterday in connection with the publication of the new survey results on the future referendum on the country's membership in the EU, which will take place on 23 June. In addition, the head of the Bank of England said that the next step of the central bank in case of saving the UK in the EU will be increase in interest rates. Tomorrow will be released the second preliminary report on the growth of UK GDP in Q1. According to our estimates, the volatility will remain elevated, but we expect the growth of the British pound after the referendum and recommend the use the price decline for the accumulation of long positions.

Currency trading and the Japanese yen. The price of the yen stopped growing and the trend has changed due to the fixations position and against the strengthening of the US dollar after the release of unexpectedly strong statistics on new home sales in the US, which grew by 16.6%. Increased activity of investors is forecasted on Friday after the publication of the report on inflation in Japan and on the growth of the preliminary US GDP data. Strengthening of the yen is possible in case of a fall on the stock markets, as the Japanese currency has traditionally been considered a defensive asset. Our medium-term outlook remains negative for the yen.

Currency trading and the Australian dollar. The price of the Australian dollar shows a slight increase within the correction. Support for the Australian currency was the increase in oil prices. The negative dynamics of commodity prices may continue in the near future, which will be negatively displayed on the currency price. In the next few days in Australia is not expected the release of important statistics and quotations movement will depend on the commodities’ market situation and dynamics of the US dollar. Our medium-term outlook remains negative.

Currency trading and the New Zealand dollar. The price of the New Zealand dollar rose after was published positive data on the trade balance of the country, which have a strong influence on the course of trading. Thus, the surplus in April totaled 292 million against the forecast of 40 million, and the previous value of 189 million. Reduced exports of dairy products was offset by the growth of small goods and fruit sales. Despite the current improvement in the trade balance, the situation remains fragile and the expected strengthening of the US dollar will put pressure on the local currency quotes. Our medium-term outlook remains negative.

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