EUR/USD, GBP/USD
The past Friday closed with a slight increase in the euro and the pound due to the weaker than expected July inflation in the US. The consensus forecast for consumer prices implied an increase of 0.2% in both the basic CPI and the general CPI. However, for both indices, the growth was 0.1%. On an annual basis, the CPI rose from 1.6% to 1.7% with expectations at 1.8% . Meanwhile, the basic CPI remained at the expected 1.7% y / y. Also, the representatives of the Federal Reserve Bank R. Kaplan and N. Kashkari acted relatively gently about the prospects for monetary policy. They focused on the fresh report on consumer prices. The probability of a December rate increase in December fell to 35.4%. Investors are moving the next increase to March next year (52.7%). In spite of this, the markets will have enough as the Fed begins to wind down its balance sheet starting in September. By its action, this measure is similar to raising the rate. This is because it will put pressure on the yield of bonds and create a currency deficit. Truly, there is one trick here. If the Fed lowers the rate on excess reserves of banks, which now stands at 1.25%, the banks will withdraw these funds from the cache to the Fed and invest in commodity markets (and if everything is quiet, then the stock market). And then the commodity markets will drag the dollar down, as it was in 2007. On Wednesday, the minutes from the last meeting of the Fed will be published. The mood of the committee shows that it can already be written that it will start reducing the balance in September.
This week, important macroeconomic data will come out. According to forecasts, the advantage may be on the side of the dollar. Tomorrow, there will be data on retail sales in the US for July with a 0.4% forecast and for base sales (excluding cars) a 0.3% forecast.
For the euro, we are waiting for a decline to 1.1640.
On the British pound, the upward correction may continue as the British CPI indicators for July are published with positive forecast. According to the basic CPI, the growth is from 2.4% y / y to 2.5% y / y. According to the general CPI, the growth is 2.7% y / y versus 2.6% y / y in June. We are waiting for growth in the range of 1.3095-1.3115.
AUD / USD
Last weekend, the mutual intimidation of North Korea and the United States was noticeably reduced. Market participants found this fact to be a return to initial positions. We agree with this assessment of the situation as the US is more concerned about the Chinese technological espionage. This will be the press conference of D. Trump today. It is possible that the US will impose sanctions on China or, more likely, increase import duties. Also, the US is interested in the pressure on the DPRK by China. With these sentiments, the stock indices of the ATR are growing today. The Australian dollar is adding 12 points, although not without a general weakening of the US dollar.
However in China, apart from political blackmail, not everything is good, including their economic indicators. Data released today on industrial production for the July estimate showed a drop from 7.6% y / y to 6.4% y / y. The expectation was a slower decline to 7.2% y / y. Investments in fixed assets decreased from 8.6% y / y to 8.3% y / y. Retail sales in July decreased from 11.0% y / y to 10.4% y / y. Real estate sales decreased from 16.1% for the first half of last year to 14.0% for the same period of this year. All of this indicates a clear slowdown in China's economy and there were forecasts that GDP this year will not reach the expected 6.5% which has already been lowered from an earlier forecast of 6.7%. The cost of metal fittings fell on Friday by 2.7% with iron ore falling by 1.3%, to 72.81 dollars.
Tomorrow, the protocol from the RBA meeting last August 1 will be published. It is expected to be have a moderately aggressive attitude towards the "high rate" of the Australian dollar. We are waiting for quotation in the range of 0.7710 / 30.
