The price of euro significantly increased yesterday amid growing consumer confidence index in Germany in July by 0.3 to 8.9. The growth rate was associated with the softening of monetary policy by the ECB. At the same time, analysts noted the risks of negative impact of events in Syria, Iraq and Ukraine. The main driver of growth in the euro against the U.S. dollar became the final data on U.S. GDP in the 1st quarter of the year, which showed a decrease of 2.9% compared with an expected drop by 1.8%. Such result is explained by the economic slowdown on the background an anomalously bad weather this winter. Despite that, in Q2 and Q3 is expected the acceleration of the pace of U.S. economic growth. Orders for durable goods in May decreased by 1.0%, which was due to a decrease in orders for military goods, after a sharp rise in April, amid fears of a direct military confrontation against Russia. Today, the dynamics of prices could have an impact on the labor market and personal income and consumer spending in the U.S. (12:30 GMT). We maintain a medium-term negative outlook for the euro.
British Pound continues to be under the pressure of the statements of the Bank of England, which has weakened expectations of traders on earlier interest rate increase. Balance of retail sales in the UK surprisingly fell to 4, with an expected growth to 25 amid expectations of increased demand during the World Cup. Today will be released the report of the Bank of England on financial stability and the price will probably continue to decline gradually. Reduction potential of prices is not high and in the medium term the growth of quotations of the British pound will resume.
The Japanese yen strengthened on the background of falling of the U.S. dollar after the release of U.S. GDP data. At the same time, investors took a wait, due to the fact that tonight (23:50 GMT) will be issued a large block of macro statistics. Thus, special attention should be paid to data on consumer prices, retail sales, household expenditure and unemployment. We expect that in the medium term, the U.S. dollar will strengthen, and the Japanese yen will continue to decline.
Weakening of the U.S. dollar, along with the correction of the Australian currency has led to a strong increase of the Australian dollar. Considering the lack of important macroeconomic data in the country, traders are monitoring the situation in China and the U.S., as well as world market prices for iron ore and copper. We expect that the growth of price will not last long and maintain a medium-term negative outlook for the Australian currency.
The New Zealand dollar, despite earlier attempts to decrease, has resumed the growth in connection with the fall of the U.S. dollar after the release of surprisingly weak data on GDP growth. Continued growth of quotations in the near future is possible in case of positive indicators on the trade balance of the country, which will be published today at 22:45 GMT. In general, the New Zealand economy shows sustained positive results, but the growth of the national currency is limited by the policy of the Reserve Bank of New Zealand, who notes that the strengthening of the New Zealand dollar hurts the economy.