Forecast for the week July 21, 2014 - July 25, 2014

July 21, 2014

Financial market players will remember last week for its drastic aggravation of the world's geopolitical situation, which led to a sell off of global stock indices and currencies of developing economies.

This week pay attention to the statistics for housing sales in the US in the primary and secondary markets for the month of June. The problems in the US housing market that caused the global financial crisis have still not allowed the US Federal Reserve to begin a cycle of raising interest rates. Moreover, the US consumer price index's jump above the 2.1% mark (y/y) in June may cause substantial growth of the world's reserve currency on the forex market. Regarding the USD/JPY pair, after it tests the 101.00 mark, we expect it to rise to the level of 101.70.

The British pound may exhibit considerable volatility on June 23 when the Bank of England's minutes are published. If at the July 10th meeting of the Central Bank just one of the 9 members of the Bank of England's Monetary Policy Committee expressed his or her opposition to the current soft monetary policy in the country, then we may expect to see the pound climb right up to the level of 1.717.

On Thursday, July 24 information will be published on the Eurozone's business activity indices in manufacturing and services. We do not rule out a decrease in these figures given the continuing military actions in Ukraine. The IMF has already announced the negative impact that events in Ukraine have on the European region. Given a breakthrough of the support level of 1.3475, the EUR/USD pair may drop to the 1.3400 mark by the end of the week.

Additionally, the Reserve Bank of New Zealand will announce on Thursday its decision regarding the nation's key interest rate. If the rate rises by 25 bps to 3.50% annually, the NZDUSD pair may test the 0.8800 mark.

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