26.03.2015 - The price of euro stabilized below 1.10
The price of euro continues to consolidate below the important level 1.10, despite the increase in the index of business confidence in Germany in March to 107.9, against 106.8 in February. At the same time, statistics from the US, disappointed investors. Thus, the volume of durable goods orders in February fell by 1.4% against the expected growth of 0.3%. The greatest negative impact on the data has been a decline in orders for military goods and aircraft. Today the course of trading will be influenced by news on the labor market (12:30 GMT) and service PMI in the US (14:30 GMT). Investors will be constrained from new steps before tomorrow's publication of data on US GDP growth in the 4th quarter. We maintain our medium-term negative outlook for the euro.
The price of the British pound showed a decline, despite the increase in the number of permits for mortgage loans to 37.3 thousand, which is 0.4 thousand better than the forecast. Today, in the focus of investors will be statistics on retail sales in UK and the statement of the Financial Policy Committee of the Bank of England (09:30 GMT). We estimate the potential drop in prices is limited, but we see no reason for the growth. The weakening of the euro associated with the launch of quantitative easing in the euro area is one of the reasons for the continuation of the fall of the British currency. We expect continued downward movement of prices in the near future.
The Japanese yen continued to strengthen due to the end of the fiscal year and anticipation of the publication of positive reports of the country's largest corporations. Weak yen supported the Japanese exporters in the past year. It is worth noting that tomorrow will be published a large block of statistics on household expenditures, CPI and retail sales in Japan. The course of trading will also be affected by the data from USA. We maintain our medium-term negative outlook on the yen, but in the near future we can see continued positive momentum.
The Australian dollar continues to decline after the publication of weak data on manufacturing activity in China, which showed a reduction. The Chinese economy is a major buyer of Australian goods and this situation leads to an increase in the trade deficit and reduce investment in the mining sector. At the moment, there is no reason for the growth of the Australian currency and we recommend holding short positions and maintain a medium-term negative outlook.
The price of the New Zealand dollar was unable to continue to grow and started to correct following the Australian dollar. Data on the country's trade balance fell short of analysts' expectations, and in the absence of signals for continued growth, traders began to take profits. In the near future the current negative trend may continue, but to determine the medium-term price direction, we need new signals.