28.07.2014 - Beginning of the week promises to be quiet
The price of euro in the last trading session of the week continued to decline due to weak data from Germany, where the index of business confidence fell to 108.00, vs. expected 109.60 and M3 money supply in the euro area grew by 1.5% in June against the forecast of growth by 1.1%. An additional factor for the euro price reduction was the strengthening of the U.S. dollar after the release of data on orders for durable goods in the U.S., which grew by 0.7%, which is 0.3% better than expected. Today we expect the low activity of traders due to lack of important macro. In addition, investors will not build up positions before the publication of data on the labor market and the U.S. GDP, and before the announcement of the U.S. Fed's statement, which will take place on Wednesday. In the center of attention also remains the situation in Gaza and Ukraine. We expect the price to consolidate around current levels till Wednesday, after which the drop in prices is likely to continue. Medium-term outlook remains negative with the objectives of 1.32 and 1.28.
The price of the British pound on Friday stabilized around strong support level of 1.6970 against the U.S. dollar and the publication of data on UK GDP for the second quarter, which coincided with the previous indicator and totaled 0.8%. For the year, GDP grew by 3.1%, the biggest increase since 2007. Today, we expect low volatility, and tomorrow the course of trading will depend on statistics on lending market in the UK. We maintain our positive outlook for the medium-term, and expect a rebound in prices soon.
The Japanese yen started the trading week with consolidation above 101.70, due to the lack of important data, and the fact that inflation in the country except for the effect of the sales tax increase was 1.6%, according to data published on Friday against 1.7 % in May. Investors do not hurry to open positions before the release of data on unemployment, household spending and retail sales that will be published tonight. We expect a further reduction in the price of the Japanese yen against the U.S. dollar on Wednesday, after the statement of the Fed and publication of GDP data of the world’s largest economy. Medium term outlook remains positive with targets at 102.70 and 104.00.
The price of the Australian dollar continues to decline steadily, despite the growth of quotations of iron ore and higher prices for gold associated with the tense situation in the Gaza Strip and Ukraine. Today the course of trading may be influenced by the housing market in the country. We recall that due to the decline in investment in the mining sector, the housing market is a key for the development of the national economy. We expect a price drop of the Australian dollar to 0.9330 in the coming days and recommend holding short positions. Medium-term outlook also remains negative.
The price of the New Zealand dollar continues to fall after the announcement of the Reserve Bank of New Zealand on the significant potential for the fall of the national currency. Decline in export prices and a reduction in the trade surplus of the country also negatively affect the mood of investors regarding the New Zealand currency. We predict that in the near future the price may continue to decline, but in the medium term decline will be limited.