Despite all the forecasts and expectations, the dollar continued to strengthen. In the first half of the day, the single European currency remained relatively stable, although the statistics came out somewhat worse than expected. Second, the GDP estimate for the first quarter confirmed the slowdown in economic growth from 2.8% to 2.5%, but this has long been taken into account by the market, so it could not affect the mood of investors. The growth rate of industrial production accelerated from 2.6% to 3.0%, while 3.7% was expected. Moreover, the previous value was revised to the lower figures, from 2.9%. So the market participants had doubts about buying the euro. But the US data has already finally affected the mood of market participants. Of course, the growth rate of retail sales slowed from 4.9% to 4.7%. However, the previous figures were revised from 4.5%, and a slowdown to 4.1% is expected. In other words, despite the decline in retail sales, given the revision of the data, growth is more likely. Equally important is the fact that commercial inventories remained unchanged, although they feared their further growth.
Today, the final data on inflation in Europe are coming out, and most likely they will coincide with the preliminary estimate, which showed its slowdown from 1.3% to 1.2%. In general, the market has already taken into account the possibility of extending the ECB's quantitative easing program precisely because of the reduction in inflation. So this data will not have a special effect. At a minimum, the single European currency will not have much cause for growth. Meanwhile, the data in the US is expected to show a reduction both the number of issued construction permits, and the construction projects started at 2.3% and 1.1% respectively. But the negative impact will be offset by data on industrial production, the growth rate of which should accelerate from 4.3% to 4.5%.
Most likely, the euro/dollar pair will hover around 1.1850.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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