28.01.2016 - The rhetoric of the Fed became softer
Currency trading and the euro. The price of euro failed to extend gains against the US dollar despite the publication of the Fed's statement on monetary policy, which was more dovish than the previous rhetoric of the American regulator. As a result, the likelihood of raising interest rates in March, according to information of the Chicago Mercantile Exchange dropped from 34% to 29%. Such scenario was expected, and investors decided to fix positions. Support for the US dollar was also the strong data on new home sales in the US market. Thus, the figure rose to 544 thousand vs. expected 501 thousand. This indicator rose by 9.9% compared to the same period last year. Today, the dynamics of trading will affect data on the number of initial applications for unemployment benefits, and orders for durable goods in the US (13:30 GMT). We maintain a medium-term negative outlook for the euro.
Currency trading and the British pound. The price of the British pound was unable to continue its growth and fell against the background of positive statistics on new construction in the United States, which supported the dollar. At the same time, investors are reluctant to open new positions before the publication of reports on GDP growth in the UK today (09:30 GMT) and the United States tomorrow. Also, on the mood of traders can significantly affect the balance of news on retail sales (11:00 GMT). Our medium-term outlook remains negative, but the downside potential in the near future has dropped.
Currency trading and the Japanese yen. The price of the Japanese yen has stabilized and could not continue to decline due to a dovish rhetoric regarding the Fed raising interest rates, which was negatively displayed on the expectations of the Fed raising interest rates in March and resulted in the weakening of the dollar. Today was published statistics on retail sales in Japan, which in December fell by 1.1% compared with the same period last year. Analysts forecasted an increase of 0.1%. Traders are waiting for tomorrow's statement of the Bank of Japan on monetary policy in which may announce additional measures to stimulate inflation in the country. Specific attention should be paid to tomorrow's publication of a report on US GDP growth in Q4. Our medium-term outlook for the yen remains negative and we are waiting for the strong price movements in the coming days.
Currency trading and the Australian dollar. The price of the Australian dollar was not able to continue to grow, despite the weakening of the US dollar after the publication of the Fed's statement on monetary policy, which has led to a decrease in the probability of monetary policy tightening in the US in the nearest future. Tomorrow will be published producer price index in Australia, but the main influence on the course of trading will have statistics on the growth of the US economy in the 4th quarter. Our medium-term outlook for the Australian dollar remains negative and we expect the fall in the near future.
Currency trading and the New Zealand dollar. The price of the New Zealand dollar showed a sharp decline after the statement of the Reserve Bank of New Zealand. Thus, the central bank decided to keep interest rates at 2.50% despite the minimum level of inflation in 16 years. In the absence of signs of acceleration of consumer inflation in the country, the regulator will lower interest rates at the next meeting, which will negatively affect the price of the currency. In addition, it is worth noting the deterioration of the situation on the dairy market, which is crucial for the country's economy. Our medium-term outlook for the New Zealand dollar remains negative and we expect a further decline in prices in the near future.