27.05.2014 - The Bank of England may raise interest rates until the spring of 2015
The price of euro yesterday corrected upwards against stable indicators in Germany and statement of the head of the ECB Mario Draghi. Thus, the consumer confidence index in Germany remained at 8.5, which coincided with forecasts of analysts and almost had no effect on the course of trading. The statement of Mario Draghi on the need to deal with low inflation and choosing the right moment for it, did not surprised the market, and many investors have decided that the future monetary policy easing is already included in the prices. Today the course of trading will be affected by data from the U.S. on durable goods orders (12:30 GMT), the house price index (13:00 GMT), the services PMI (13:45 GMT) and the index consumer confidence in May (14:00 GMT). We keep medium and long term negative outlook for the euro.
The price of the British pound rose after the statement by the deputy head of the Bank of England, Charles Bean, regarding the possibility of a rate hike till spring of 2015. He noted that until the moment when the rate will rise to 3% will pass from 3 to 5 years and the increase will be conducted very carefully. Today in the UK will be published data on the number of mortgage lending approvals in April. We keep medium and long term positive outlook for the pound and we expect continued upward movement in the coming days.
The growth of the USD/JPY stopped near the strong level of 102.00. The reasons for stopping the movement have become technical factors, as well as business holiday in the United States. Among macrostatistics we should highlight the rise in prices for corporate services to 3.4%, which is 0.1% more than forecast. Traders are waiting for the release of a large block of statistics on Friday on inflation, unemployment and industrial production in Japan. We expect continued growth of quotations of the pair due to loose monetary policy of the Bank of Japan aimed at the growth of inflation to 2.0% and the weakening of the national currency to support exporters.
The price of the Australian dollar rose sharply on the background of data from China, which is the main trading partner of the country. Thus, the cost of borrowing in China has fallen with the strongest pace since 2007. Decrease in the cost of borrowing resulted in placing domestic bonds worth 1.005 trillion. yuan - 161 billion USD. This figure is more than the entire first quarter. Tomorrow we should pay attention to data on new home sales in April and the index of leading economic indicators in March (00:30 GMT). We maintain a medium-term negative outlook for the Australian dollar, but forecast a strengthening of the Australian currency today.
The price of the New Zealand dollar rose following the Australian currency on the background of data from China, where the decline in the cost of borrowing leads to lower default risk and raises the appetite for risk. Tomorrow we should pay attention to the index business confidence in New Zealand (01:00 GMT). The price of pair continues to be under the pressure from the Reserve Bank of New Zealand, which is ready to cope with a high exchange rate at lower export prices. We maintain a medium-term negative outlook for the pair.