31.08.2015 - Volatility on the stock market will have a limited impact on the Fed's decision
Currency trading and the euro. The price of euro is consolidated near the level of 1.12 after a steady decline of quotations that followed unreasonably strong growth earlier. Support for the US dollar was the statement by the Federal Reserve on economic symposium in Jackson Hole, according to which the impact of problems in the China on the Fed’s policy was negligible and in case of saving interest rates in September at the same level, they can be raised at the next meeting of the Fed this year. The main factor that will affect the decision of the US regulator will be inflationary expectations in the country. Today, the dynamics of the euro will be affected by the news on retail sales in Germany (06:00 GMT), the consumer price index in the euro area (09:00 GMT) and the Chicago PMI (13:45 GMT). We maintain a medium-term negative outlook for the euro and we recommend waiting for the signal for the opening short positions.
Currency trading and the British pound. The price of the British pound corrected upwards after the recent strong price reduction. Today, investors' activity will be reduced due to the holiday in the UK. Tomorrow traders will return to the market and their focus will be on statistics on manufacturing PMI, and the lending market in the country. We expect growth of quotations in the near future, but according to our estimates, it will be limited and there is a high probability of further downward price movements in the medium term.
Currency trading and the Japanese yen. The price of the Japanese yen strengthened earlier this week after strong fall before the weekend, which was caused by the desire of investors to fix positions. It is worth noting that the yen is rising, despite the weak data on industrial production, which fell in July by 0.6% against the expected growth of 0.1%. Tomorrow will be published important statistics on the manufacturing PMI in China and Japan. In case of renewed deterioration of the situation in China, we expect increased demand for defensive assets like the yen. Our medium-term outlook for the Japanese currency remains negative due to the loose monetary policy of the Bank of Japan.
Currency trading and the Australian dollar. The price of the Australian dollar continues to be under the pressure of low prices for iron ore and other commodities, as well as risks associated with the slowdown of the Chinese economy. Today was published statistics on new home sales in Australia, which fell by 0.4% in July, against growth of 0.5% in the previous month. Tomorrow, on the dynamics of trading will affect data on manufacturing PMI Australia and China, as well as Australia's balance of payments, that are likely to be weak and will lead to a drop in the Australian currency. Particular attention this week will be focused on statistics on the growth of the country's GDP for the second quarter. We expect the price decline of the Australian currency, but note a decline in potential of downward movement.
Currency trading and the New Zealand dollar. The price of the New Zealand dollar continued to consolidate around the levels of local minimums. The pressure on the New Zealand currency continues to have a strengthening of the US dollar against the backdrop of confidence of the majority of Fed officials on the need to raise interest rates in the United States, as well as expectations of further easing of monetary policy of the Reserve Bank of New Zealand to support the growth of the economy in terms of low prices on dairy products and the pressure of the trade deficit of the country. A drop in prices is likely to continue in the near future, and we maintain a medium-term negative outlook.