26.09.2014 - Dollar continues to strengthen
The price of euro continues to decline and within a downtrend has reached a level of 1.27. Falling prices of European currency was due to the continuation of the strengthening dollar despite the weak data on durable goods orders which fell by 18.2% in August, which is 0.5% worse than the forecast. This decline is caused by an unusually high rate in July. In addition, the service PMI fell to 58.5 in September against the forecast of 59.4, but remains at a high level. Today the course of trading can be affected by the data on the index of consumer confidence in Germany (06:00 GMT), the United States GDP for the second quarter (12:30 GMT) and the index of consumer confidence in the United States (13:55 GMT). Today we can see a correction due to the fixation of positions, but keep medium-term negative outlook for the euro.
The price of the British pound has stabilized and continues to consolidate around the level of 1.63. The head of the Bank of England said yesterday that the time of the rate hike is approaching and will depend on macroeconomic indicators. Yesterday was published data on the balance of retail sales in the UK in September, which fell to 31, against the previous index 37. Today is not expected to be released an important macro and volatility is likely to remain at a low level. We maintain our positive outlook for the medium-term, despite the lower growth potential than before.
The Japanese yen strengthened yesterday on the background of weak statistics from the United States, but today resumed its decline after the release of data on the core index of consumer prices in Japan, which in August was 3.1%, which is 0.1% worse than the forecast and 0.2% less the previous figure. Inflation rate continues to decline, contributing to the launch of further measures to fight deflationary risks from the Bank of Japan. Today, dynamics of trading will depend on the data from the United States. We maintain a medium-term negative outlook for the yen.
The Australian dollar continues to fall following the prices for iron ore, which is the main export commodity of the country. In addition, investors negatively evaluate the slowdown of growth in the Chinese economy, which consumes a significant part of Australian exports. It should be noted that the index of leading economic indicators in China in August fell to 0.7%, compared to 1.2% in July. We recommend holding short positions on the Australian dollar and maintain a medium-term negative outlook.
The New Zealand dollar, after a brief stop of reduction falls again after it reached 0.8900. Investors sell the currency of New Zealand due to weak data on the trade balance of the country, the fall in export prices and the statements made by the Reserve Bank of New Zealand concerning the overvaluation of the currency. Risks associated with a slowing of Chinese industry also put pressure on quotes. We recommend holding short positions and maintain a medium-term negative outlook.