29.01.2015 - The Federal Reserve declared the strong growth of the labor market
The price of euro resumed its decline after the Fed statement on monetary policy. Among the key points is worth noting the Fed keeping interest rates at current levels until June of this year, strong growth of the labor market, consumer spending and slowing inflation due to the drop of energy prices. In addition, investors continue to fear the steps of the new government in Greece, which may prevent the country's debt restructuring, which will be negatively displayed on stability in the Eurozone. Today, the course of trading will be affected by data on employment in Germany (8:55 GMT) and the number of initial unemployment claims in the US (13:30 GMT). At the same time, investors will not rush to open new positions before the publication of important data in the United States and the euro area tomorrow. We maintain our medium-term negative outlook and recommend holding short positions.
The price of the British pound corrected down against the background of the US Federal Reserve relatively strong performance of the labor market and consumption growth in the United States. In addition, the decline of the British pound was also caused by the statement of the Chief Economist of the Bank of England with respect to the gradual increase in interest rates in the country. Given the current slowdown in UK GDP, we expect a later increase in interest rates that will not contribute to the growth of the British currency. Today, it is worth paying attention to the balance of retail sales in the UK (11:00 GMT). Our medium-term outlook remains negative.
The price of the Japanese yen strengthened slightly against the background of falling US stock markets. The increased demand for defensive assets continues to be supported by investors' concerns about future growth on the stock markets, which could not continue despite the expectation of starting the program of quantitative easing in the Eurozone. The negative also was the low rate of growth in retail sales in Japan by only 0.2% against the expected 1.1%. Traders are waiting for tomorrow's publication of statistics from Japan and the US, which will lead to increased volatility. We maintain our medium-term negative outlook on the Japanese yen, but we recommend to wait for a signal to open positions.
The price of the Australian dollar fell following a statement of the Reserve Bank of New Zealand, which left interest rates at the same level, but noted the possibility of reducing them if necessary. The index of leading economic indicators in Australia in November rose by 0.1%, against a decline of 0.2% in the previous month. The main reason for the weakening of the Australian dollar is slowing growth in China, which in turn puts pressure on commodity markets. We maintain our medium-term negative outlook and recommend holding short positions.
The price of the New Zealand dollar fell sharply following a statement of the Reserve Bank of New Zealand in which was noted the possibility of lower interest rates if necessary. In addition, the trade deficit in New Zealand totaled 159 million in December against the expected 48 million. Despite the statement about the negative impact of a strong New Zealand dollar on the economy, GDP is growing by 3% per year and receives support from the construction sector and consumption growth. We expect a further fall of the New Zealand currency and maintain the medium-term negative outlook.