Central banks that deals with major currencies continue to demonstrate the lack of desire to improve their monetary policy towards tightening.

During the meeting of the Central Bank of New Zealand today, the bank decided to leave the key interest rate at the same level of 1.75%, thereby proving satisfaction with their current level. Previously, the Reserve Bank of Australia (RBA) did the same thing, as well as the Bank of England. The only one who broke out of the general cohort is the Central Bank of Canada and decided to increase its main interest rate to the level of 0.75%. The behavior of the Central Banks, except the Canadian one, indicates continuous fears that the economy may suffer damage due to an unjustified increase in the rates of national currencies, despite the economic recovery. For it has the potential to restrain the competitive ability of the national business in world markets and may cause harm to economic growth.

Analyzing the general picture, it can be assumed that the central banks with currencies that are in the main line, are unlikely to take any radical measures in the near future to replace the monetary rates. First of all, this is due to the fragile state of the global economy, after a long and severe crisis during 2008-09. In this situation, each country will restrain the exchange rate of the national currency, which increases the limits of the competitive ability of national business in the world markets.

In this regard, we believe that the possible actions of the ECB aimed at liquidating the asset repurchase program (German government bonds initially) can be adjusted and will not terminate completely. An important element that influences rate has changed its direction of growth in terms of inflation and stalled at 1.3%, opposing such increase. This is a significant hurdle against the ECB to start a drastic change the course of monetary policy. This is the reason we kept a steady position and remain committed on the continuing decline of the euro, primarily against the dollar after the meeting of the European Central Bank in September.

If the ECB tries to somehow mitigate its potential plans to liquidate the quantitative easing program or slightly adjust it in some way, we can only expect an increase in the weakening of the euro in the world markets.

Today, an important event will be the release from the United States which is the industrial inflation data. It is expected that the production price index will increase in monthly terms by 0.1%, and in the annual terms, it will jump immediately to 2.2% from 2.0%. On this wave, the US dollar can get support.

Forecast of the day:

The EURUSD pair is trading above the level of 1.1720. We continue to expect the pair to fall towards the targets of 1.1660, then to 1.1625. The advantage for this can serve as industrial inflation data from the US.

The GBPUSD is consolidating above 1.2965. We expect that the decline will resume after the breakthrough of this mark. In this case, we should expect a downturn to 1.2840.