29.07.2015 - Investors are waiting for the Fed statement
Currency trading and the euro. The price of euro continues to grow gradually in the downward trend. One reason for the increase is the desire of investors to take positions ahead of today's Federal Reserve statement on monetary policy. Yesterday was published statistics on service PMI, which rose to 55.2 in July versus 54.8 in June. Also yesterday, investors were disappointed by the data on consumer confidence index from the Conference Board, which fell to 90.9, compared with an expected increase to 100.1. Today, the central event of the day will be the Fed's statement on monetary policy (18:00 GMT), which will lead to a strong increase in volatility. In case of a hint of higher interest rates in September, the euro will show a strong decline. Our medium-term outlook remains negative and we expect increased volatility today.
Currency trading and the British pound. The price of the British pound yesterday, showed a strong increase in volatility in connection with the release of statistics on the growth of GDP in the second quarter. According to preliminary data, the UK economy grew by 0.7% over the period, against 0.4% in the first quarter. Today, the dynamics will depend on the data on the number of permits issued for mortgage lending (08:30 GMT) and the balance of retail sales (10:00 GMT). Growth of volatility is projected after the Fed statement. We maintain a medium-term negative outlook on the British pound.
Currency trading and the Japanese yen. The price of the Japanese yen continues to strengthen against the weakening US dollar. Today, support for the Japanese currency has become the retail sales data that grew up in June rose to 0.9%, which is 0.1% better than analysts' expectations. The strong volatility is expected in the evening after the publication of the Fed statement. In addition, at night will be published data on industrial production in the country, which traditionally have a strong impact on the dynamics of the Japanese currency. We maintain a medium-term negative outlook on the yen, and traders expect increased activity tonight.
Currency trading and the Australian dollar. The price of the New Zealand dollar continued to rise against the backdrop of the weakening US dollar, but the local and medium-term trend remains negative. Today, the dynamics will depend on the Fed statement. Tomorrow there will be the speech of the Reserve Bank of Australia. Risks associated with the fall of the Chinese stock market and a slowdown in industry of the country will continue to put pressure on quotes. We maintain a medium-term negative view and recommend investors to hold short positions.
Currency trading and the New Zealand dollar. The price of the New Zealand dollar shows growth amid fixing positions after the strong decline during the previous weeks. The head of the Reserve Bank noted on the need for further depreciation of the New Zealand dollar. In addition, Mr. Wheeler said that likely will be required further reduction in interest rates to stimulate economic growth and inflation in the country. In this connection, and due to low prices for export goods, we recommend holding short positions on the New Zealand dollar and maintain the medium-term negative outlook.