Last Friday was contradictory. Main movements were under influence of statistics from the Eurozone and the U.S.A. If in the first half of the day, after published weak indices of PMI business activity the common currency decreased sharply, followed by most other currencies, then at American session dollar had to retreat. The reason was collapse of houses sales in the primary market, herewith the data for previous month were considerably revised downward. Once again, American statistics showed own instability. As a result, for most main currency pairs, the day finished practically unchanged.
There is a difficult week ahead, events, which are able to become strong movement drivers are scheduled for almost each day. First of all, it is regular session of FOMC on monetary policy. In her recent speeches, Janet Yellen expressed a number of provisions, which players interpreted as one more step towards monetary policy tightening. In the meantime, though economic statistics improved slightly, still, they are instable. There will be no press conference on outcomes of the meeting, so players will have to be content with short communiqué. Next meeting will be in September, and all market’s expectations that the Fed will make the first step are focused on it. Accordingly, players will look for hints of readiness to make this step in the communiqué. The lack of such hints will be a great disappointment for dollar. The more so since next day the first evaluation of GDP for the 2nd quarter will be published, and these data will be already known for FOMC members. Forecasts on it are considerably better than for the 1st quarter. The Fed is in a difficult situation. On the one hand, it can’t disappoint the market all the time, on the other hand, US economy still moves forward on winding road with slow rate.
This week the Eurozone won’t leave us bored either. Inflation, unemployment and retail sales in Germany are sufficient grounds for activity. Naturally, more attention will be paid to inflation. Forecasts on it are contradictory – despite some improvement of monthly forecasts, there is a decline in annual one. Such condition will remind investors that program of quantitative easing still remains in the Eurozone and monetary policy of the U.S.A. and the Eurozone is in antiphase. Speaking of local data, we’d like to highlight the report on GDP in the U.K. for the 2nd quarter, where there are good expectations for growth. It is a positive for pound, it is just to await the data. British retail sales for previous week were disappointed, so surprises are possible this time too.
Activation of the market can be expected today after publication of two important events. In the afternoon IFO report on moods in German business environment will be published. ZEW report and PMI indices of business activity, which were published earlier, suppose that IFO indicators will continue this tendency. If the data are weaker than predicted, then one more attempt of testing 1.0910 – 1.0930 downward is possible, as it was tried on Friday. Still, the success of this attempt will depend on the data on durable goods orders in the U.S.A. For last two months the basis component of the indicator has demonstrated growth tendency after several months of fall, though it is inconsistent and shows frequent revision of previous figures. So, once again, all depend on the fact.
At Asian trades EURUSD pair returned again above 1.1000 and tries to fix there. Herewith short-term indicators returned to overbought area. The plan of pair’s sale from 1.1030 – 1.1050 is again relevant, from our point of view. Stop is at 1.1150. In case of a pair decrease of more than 30 points from the entry point, rearrange stop at the entry point.
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