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25.01.2016 19:20

American focus: the euro has appreciated against the US dollar

Japanese yen consolidated near the opening level against the US dollar. A slight pressure on the pair has dominate the market risk aversion. Also, investors are waiting for the meeting of the Bank of Japan, which will take place January 29. CFTC data Friday showed that bullish bets on the yen reached a four-year high, as markets removed from the prices easing the Bank of Japan this week. In addition, the reduced expectations that the Fed will raise rates this year 4 times, and it also puts pressure on the US dollar. According to the survey Reuters, economists are now expected in 2016 only 3 increase.

Meanwhile, today the governor of the Bank of Japan Kuroda said that the Central Bank could further expand the program of quantitative easing, "if necessary." The determination of the central bank is partly due to oil prices. "The Bank of Japan has scope for further expansion of quantitative easing - Kuroda said. - If required, we can expand and strengthen further" quantitative easing ". He added that to implement the above can be in many areas. According to him, the heads of the Bank Japan's "no limits" in the choice of means of easing. According to the current forecast of the Bank of Japan, inflation in Japan will reach the target level of 2% approximately in the second half of the 2016 financial year or at the end of 2016 early 2017. The goal can be achieved in the case of acceleration growth in oil prices.

Euro shows a moderate increase against the US dollar, taking advantage of reduced risk appetite. Recall that in the event of falling stock markets and the euro rises in price of oil prices, as a funding currency. Gradually, investors' attention switched to the FOMC meeting on Wednesday, which may have an impact on the dollar. And markets and economists do not expect any changes, which is confirmed by comments from the Fed in recent weeks. Most likely, the Central Bank repeats the thesis of gradual normalization of policy. However, there is a possibility that doubts about the developments on the financial markets and the world will again be mentioned in the text of the statement, in connection with what can be paid more attention to the downside risks to inflation.

In addition, this week will be published data on inflation in the euro area in January. According to a survey of analysts, the annual inflation rate rose by 0.4% after rising 0.2% in December. Rising inflation will force the ECB to breathe a sigh of relief.

The pound fell slightly against the dollar, returning to the minimum session. Experts note that the main influence on the pair has a total market sentiment and expectations of the speech of the Bank of England Carney on Tuesday, especially after his recent "dovish" comments.

Little influenced by the report from the Confederation of British Industry (CBI), which showed that British manufacturers reported a decline in orders at the beginning of the year against a background of weaker export demand. The balance of the portfolio of orders fell to -15 percent in January from -7 per cent in the previous month. Economists had forecast a -10 percent. The survey also showed that the balance of all new orders in the three months through January improved to -4 percent from -8 percent. Expected balance of orders in the next quarter amounted to 8, and the balance of the volume of production 14. The balance of employment prospects improved from -8 to +8.

Also today, the representative of the management of the Bank of England Kristin Forbes noted that the rate of wage growth in the UK is not so large as to justify raising interest rates. According to her, the growth rate of wages in the UK are still too slow to bring back annual inflation to the target level of 2%. Forbes added that low oil prices have a downward impact on inflation in the UK that provides management with the Bank of England more time. This will allow the management to ensure that the salaries and internal costs in the country are growing.

Market Focus

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  • German private sector output growth slowed for the second month running in July
  • ECB's Mersch says as conditions normalise, it is unlikely that uncoventional policies will remain necessary
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