The dollar is a good chance of growth

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Another trading week in the currency market promises to be interesting primarily due to the expected statistics. The previous five days also contained many important events, but the quotes of major currency pairs not in a hurry to show significant movement. One of the main events of last week, of course, was the meeting of U.S. President Donald trump and the President of the European Commission Jean-Claude Juncker. The result of the meeting we believe the positive – side were able to find a compromise, promising the investment community to find a solution to the conflict with the trade fees.
The interest rate decision from the European Bank brought no surprises – the rate stayed unchanged, but dovish rhetoric of the ECB sent the Euro/dollar to around 1.16. However, the Euro closed on Friday in the area of 1.165, still not wanting to move down. Will we see this week the dollar rally? The reasons are more than enough. Europe publishes statistics on inflation and GDP for the second quarter.
According to the forecasts, GDP in annual terms will amount to 2.2% (worse than the previous value), the consumer price index will be released at 2% (unchanged). In other words, little positive can not wait. Thus, a soft monetary policy of the ECB continues, obviously still long enough.
It is quite another thing – the ocean. And if the fed meeting this week, the rate is unlikely to change, then in September, we expect increases of 0.25%. The difference in rates in favour of the dollar will lead to its growth. Meanwhile Friday’s statistics on the US labor market will add to the volatility.
From a technical point of view, there are specific to summer months trading ranges. 1.15 -1.18 pair Euro/dollar, 0.98 -1.00 – pair dollar/franc. Only break the boundaries of this range will indicate a trajectory of further movement.
Judging by the fundamentals, the chances to grow up more so the dollar than its European counterparts.
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Oleg Dmitriev,
Financial analyst,
Larson&Holz