All throughout the day yesterday, the dollar continued to lose its positions which was largely because of the consumer lending in Europe, whose growth rate accelerated from 2.9% to 3.0%. The data completely coincided with the forecasts, so investors have reason to hope for the growth of consumer activity in the Old World. But in the evening, the dollar managed to win back some of its losses. The growth of the dollar coincided with the placement of five-year bonds, the yield decreased from 2.815% to 2.765%. The growth in demand for medium-term US Treasury bonds may be due to Jerome Powell's slurred position on the rate hike in the refinancing rate next year. Two more increases in the refinancing rate before the end of this year have long been laid in both the dollar price and the US bond yield. However, if the Fed slows the rate of increase in the refinancing rate next year, then it makes no sense to wait for the bond yield growth and investors could make a decision about purchases right now, which led to an increase in demand for debt securities. It is worth noting that preliminary data on commodity stocks in warehouses of wholesale trade showed their growth by 0.7%, which means that stocks have been growing for four months in a row. The constant growth of stocks suggests that the US economy shows signs of a slowdown, and it is because that the Fed can substantially revise its plans to tighten monetary policy.
Today, it is worth paying attention to the latest estimate of US GDP growth for the second quarter. Two previous estimates showed that the US economy accelerated in the second quarter, and the third assessment is expected to show the same. However, the data may be somewhat worse, since the US economy did not grow as fast as expected, and this could have a negative impact on the dollar. Also, data on the number of unfinished transactions for the housing sales can be extremely weak. As of this writing, it is reduced by 2.5% in annual terms. Today's data can show that its number is decreasing by 6.0% in annual terms, as well. This is against the backdrop of the continuing decline in home sales both in the primary market and on the secondary market. Therefore, it is not worth waiting for the growth in housing sales, at least in the short term.
Thus, the single European currency will be able to consolidate at 1.1725.
The pound will also react to US statistics, and it is worth waiting for the pound to rise to 1.2900 based on its forecasts.
* The presented market analysis is informative and does not constitute a guide to the transaction.
The material has been provided by InstaForex Company - www.instaforex.com