The price of euro yesterday continued to decline on a background of strong data on the U.S. labor market. Thus, the number of non-farm payrolls grew by 288 thousand, against the expected 214 thousand and the unemployment rate fell by 0.2% to 6.1%, which, according to experts, is still high compared with the 4 - 5% before the crisis. Retail sales in the euro area remained unchanged in May, despite the forecast of growth by 0.3%, and the ECB kept rates unchanged at 0.15%. Today in the United States celebrate the Independence Day and investors will be focused on the statistics on industrial production in Germany in May (06:00 GMT) and the index of business activity in the retail sector of the Eurozone (08:10 GMT). We expect low volatility today and save midterm negative outlook for the euro.
The British pound fell sharply yesterday after the release of unemployment data in the U.S., but won back losses and reached the previous levels. The cause for optimism remained the record economic performance of GDP. Industrial growth in the last quarter was the fastest in the last 20 years, and unemployment continued to decline, which gives reasons to expect further growth of the national currency with the objectives of 1.72 and 1.73. We maintain our previous growth forecast of the British pound in the medium term.
Decline of the yen has accelerated yesterday against the strengthening of the U.S. dollar after it became known about the reduction of unemployment in the U.S. by 0.2% to 6.1%. Despite this, today the price of USD/JPY started to correct down due to technical factors. Another factor that reduces the demand for the yen as a defensive asset is the fact that investors got used to geopolitical tensions around Iraq and Ukraine. We look forward to continuing strengthening of the U.S. dollar in the long term, and the Japanese yen due to loose monetary policy will continue to devalue.
The price decline of the Australian dollar slowed after reaching the first target at 0.9330. The reason for the correction was a technical rebound and profit-taking by bears, after a strong reduction in the price of the Australian currency in recent days due to negative trade balance, the statement of the RBA head about the possibility of a strong currency reduction and strengthening of the U.S. dollar after strong labor market data. We expect that after a minor correction the fall of the price can resume to 0.9220 and maintain a medium-term negative outlook.
The price volatility of the New Zealand dollar has increased significantly after the publication of statistics on the labor market in the U.S., but, despite the strengthening of the dollar, the price returned to the previous levels. On the next week the price dynamics will depend on the data from China and Australia, and in the next few days the price will probably continue to move in a narrow side range.