27.05.2015 - Volatility today will fall
Currency trading and the euro. The price of euro continues to fall and reached the lowest level in more than a month. The reason for the decline is the improvement of data and Friday's statement by Fed chief Janet Yellen's intention to raise interest rates this year. Sales of new homes in the US rose in April to 517 thousand, against the forecast of 501 thousand. The consumer confidence index rose to 95.4, which is 0.2 better than expected. The increase in the probability of the Fed raising interest rates supports the US dollar. Also investors fear a default of Greece, which may take place in June in case of the failure of negotiations on restructuring the debts of the country. Today, it is worth paying attention to the report of the ECB on financial stability (10:00 GMT) and the consumer confidence index in Germany (06:00 GMT). Our medium-term outlook remains negative and we recommend holding short positions on the euro.
Currency trading and the British pound. The price of the British pound has stabilized after strong fall last week and is likely to continue the downward movement in the near future against the background of strengthening of US dollar. Positive for the British pound yesterday was the publication of unexpectedly strong growth of the balance of retail sales to 51 in May against the forecast of 18. Today, in the country will not be published important statistics and investors' activity will be constrained by the expectation of tomorrow's publication of statistics on the growth of US GDP. We expect a drop in prices in the medium term.
Currency trading and the Japanese yen. The price of the Japanese yen continues to decline against the strengthening of the US dollar and saving soft monetary policy in Japan to promote the growth of inflation and consumption in the country. After the publication of minutes of the previous meeting of the Bank of Japan it became known of the differences with respect to the inflation target of 2.0%. We, recall that at the moment inflation is about 0%. In case of increasing tension around Greek default, the growth of defense assets like the yen may rise. Despite this, we expect a continuation of the downward movement of the Japanese yen in the medium term.
Currency trading and the Australian dollar. The price of the Australian dollar continues to fall against the background of the US currency. The fall in commodity prices is an important factor for the Australian dollar which depends on the price of iron ore, copper, gold and other commodities. Today was released statistics on the index of leading economic indicators in Australia, which in March rose by 0.1%, against a drop of 0.3% in February. Our medium-term outlook for the Australian dollar remains negative due to the loose monetary policy of the Reserve Bank of Australia, which recently lowered interest rates by 0.25%, and may continue to reduce them if necessary.
Currency trading and the New Zealand dollar. The price of the New Zealand dollar continues to fall against the background of the US dollar strengthening, as well as the possibility of interest rate cuts by the Reserve Bank of New Zealand to support the lending market and consumption in the country. The decline in exports of dairy products continues to put pressure on the national currency quotes. We expect a drop in prices in the near future and see no reason to change the negative trend.