29.10.2015 - The Fed rate hike is still possible in December
Currency trading and the euro. The price of euro fell yesterday after the Fed's statement on monetary policy in which was noted the negative impact of the global economy on the growth of inflation and GDP in the US, but it was pointed out that the regulator will monitor the international situation. The issue of raising interest rates the Fed will be discussed at the meeting of the Federal Open Market Committee on 15-16 December. Investors interpreted the statement as a more hawkish. Today, the focus of investors will be the publication of data on US GDP growth in the third quarter (12:30 GMT). At the beginning of the trading session we should pay attention to the data on the labor market in Germany (8:55 GMT). Our medium-term outlook for the euro remains negative.
Currency trading and the British pound. The price of the British pound fell following the euro against the dollar strengthening in the US after the publication of the Fed's statement on monetary policy in which was not pointed on the impact of negative factors from abroad, and increasing inflation on the economy. Weak UK’s data on GDP growth by 0.5% in the third quarter negatively affected the likelihood of higher interest rates of the Bank of England in the first quarter of 2016, together with the strengthening of the US dollar and the fall of the euro puts pressure on quotations of the British pound. Today, we should pay attention to lending in the country (09:30 GMT) and the balance of retail sales (11:00 GMT). Our medium-term outlook remains negative.
Currency trading and the Japanese yen. The price of the Japanese yen yesterday showed a decline against the strengthening of the US dollar, but today a significant part of the losses was offset after the publication of important statistics on industrial production in the country, the volume of which increased in September by 1.0%, against an expected decline of 0.5% and a reduction of 1.2% in the previous period. Tomorrow will be published statistics on unemployment and household spending, but the focus of investors will be on the statement of the Bank of Japan, which may announce on additional measures to stimulate the weak inflation in the country. Our medium-term outlook for the yen remains negative and volatility will remain high.
Currency trading and the Australian dollar. The price of the Australian dollar fell against the strengthening US dollar and weak statistics on new home sales in Australia in September, the volume of which fell by 4.0%, against growth of 2.3% in the previous month. Tomorrow, on the dynamics of trading will be affected by the news on producer price index in Australia, but the main impact will be on the news from the US, which will keep volatility high. Our medium-term outlook for the Australian dollar is a negative and we recommend holding short positions, but do not exclude the correction in the near future.
Currency trading and the New Zealand dollar. The price New Zealand dollar fell against the strengthening of the US dollar. Holding interest rates of the Reserve Bank of New Zealand at the level of 2.75% supported the national currency of the country, but the regulator also said on the probability of interest rate cuts in the future if necessary. It is worth noting that the recovery in prices for dairy products in recent weeks has a positive impact on investor sentiment, but inflation at 0.4% against the target range of 1-3% is low. We expect the price decline of the New Zealand dollar, and recommend holding short positions.