The data coincided with the forecasts of economists for the US economy, the approval of the bill on short-term financing of the government and the speeches of representatives of the Fed, all this supported the US dollar yesterday afternoon, which continued to strengthen its position against the euro and the pound.
Yesterday, it was reported that the US Senate approved a bill on short-term financing of the government, which cancels the suspension of its activities after September 30. The document is expected to be signed today by US President Donald Trump. Thanks to the new bill, the government will be able to continue its work without problems until November 21.
As for fundamental statistics, yesterday's report on the US GDP growth rate in the 2nd quarter of this year fully coincided with the forecast and remained unchanged, which led to only a small surge in volatility in the market. According to the US Department of Commerce, US GDP growth in the 2nd quarter was 2.0%, which coincided with the previous assessment of the ministry and the expectations of economists. Let me remind you that the growth rate of the US economy in the 1st quarter of this year amounted to 3.1%, and for the whole of 2018 was at the level of 2.9%. Several economists expect that in the 3rd quarter, the GDP growth rate will be, if not the same, then clearly not less than in the 2nd quarter. US GDP is expected to grow by 2.2% in Q3.
Data on the growth in the number of Americans applying for unemployment benefits for the first time did not put pressure on the market since, despite a slight increase in applications, the indicator remained at historically low levels.
According to a report by the US Department of Labor, the number of initial jobless claims for the week of September 15-21 increased by 3,000 to 213,000. Economists had expected applications to be 212,000. The number of secondary applications for the week of September 8-14 fell by 15,000 to 1,650,000.
Good data on the real estate market indicate a stable state of the economy. Yesterday, a report was released, which shows that the number of contracts for the sale of homes in the US in August 2019 increased. According to the National Association of Realtors, the pending home sales in August rose by 1.6% to 107.3 points, while economists had expected the index will grow by 1%.
The Fed camp continues to divide into two parts. Some are confident that there is no need for another interest rate cut, while others point to a propensity for softer monetary policy to support economic growth in the current downturn of the world economy.
President of the Federal Reserve Bank of Minneapolis Neel Kashkari said yesterday that the current prospects for the US economy are ambiguous and the Fed should have lowered rates more significantly for a long time, as there is no evidence of overheating of the US economy. According to Kashkari, all issues of financial stability should be resolved with the help of appropriate regulatory instruments
As for the technical picture of the EURUSD pair, the pressure on the euro remains. About the reasons, I spoke in more detail in yesterday's review. Concerns that the eurozone will soon face a recession are not unfounded. Only Germany's economy is close to a technical recession, and weak manufacturing activity in several eurozone countries, which is likely to continue to shrink further, will drag down other sectors. At the same time, the US economy retains its strength, as yesterday once again we were convinced by the report on GDP growth for the 2nd quarter of this year. A break of the support of 1.0900 will only strengthen the bearish offensive, which will bring the trading instrument to new annual lows in the areas of 1.0870 and 1.0840. The upward correction in the pair will be limited by the upper level of the downward price channel, which is viewed just below the resistance of 1.0960.
