After long fluctuation in narrow ranges against most currencies during previous day, dollar succeeded to recapture the initiative in the middle of American session. The reason was Wall Street Journal publication of interview with the Atlanta Fed’s head Lockhart, in which he claimed that the Fed was preparing for increase in rates. Australian dollar was the one that resisted, though by the closure of the day it lost part of achieved in the morning, there the situation is clear – Aussie grew on fixation of short positions after the RBA decision to leave rates unchanged.
Today there are many variable economic statistics. In the Eurozone it is final values of PMI business activity in service sphere and retail sales. If PMI can be expected to bring some positive (production PMI was revised upward), then retail sales are likely to fall. The common currency can painfully perceive a new negative. Reports on foreign trade, ISM in service sphere, employment in private sector by ADP will be published in the U.S.A. It is difficult to predict something here, so we just have to look at forecasts and compare with actual results. Dollar needs fundamental support, verbal speeches about increase in rates aren’t enough. If today it will get such support, then there will be no problem with continuation of growth. Today it also makes sense to pay attention to publication of activity index in service sphere on the data of British CIPS. Now British pounds still resists and lags behind the market. Negative data can encourage pound and direct it with the market.
EURUSD pair closed below 1.0900 and aims at July minimums in the range 1.0810. Short-term indicators are slightly oversold and it requires a respite with consolidation in narrow range, but middle-term indicators point downward confidently. Daily closure above 1.0950 will become a threat to this movement. Now our recommendations stay unchanged – to keep euro’s short positions.
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