For the first half of the day, the dollar was not only doing well but keeps on trying to strengthen. Although the growth rate of industrial production in the UK accelerated from 1.0% to 1.3%, the pound at least had a reason for growth. But all the same, the dollar confidently gained points in anticipation of the publication of data on producer prices, which became the reason for its rapid weakening. The fact is that the growth rates of producer prices slowed down from 2.8% to 2.6%, and remain unchanged, as expected. Moreover, inventories at wholesale warehouses increased by 1.0%, hence, they have been growing for ten consecutive months. The combination of a slower growth in producer prices and a constant increase in stocks obviously does not inspire optimism about rising inflation and, consequently, the policy of the Federal Reserve System.
Donald Trump added fuel to the fire when he wasn't busy with attacks on his planet's neighbors, he immediately attacked the Federal Commission on Open Market Operations. So yesterday, in his next tweet, he lashed out at the Fed's actions to tighten monetary policy. In his opinion, a further increase in the refinancing rate only harms the American economy, which he himself is trying to make great again day and night. Of course, the owner of "Trumpunkt" account does not have leverage on the members of the board of the Fed, but investors do not get any safer.
Today, we are waiting for a very busy day, and the first thing you should pay attention to is the performance of Mark Carney. From the head of the Bank of England, they are once again waiting for at least some specifics about the further actions of the regulator, naturally on the issue of the refinancing rate. Moreover, the completion of the divorce process is not far off, and some even say that an agreement will be signed on Monday between the UK and the European Union. Thus, it is extremely interesting to all how the policy of the Bank of England will be built after the break with continental Europe.
Old Europe itself will not let you get bored either, as there are data on inflation in France and Spain, but in both cases, it should remain unchanged, which casts doubt on the statement that inflation will grow steadily. And, of course, the minutes of the meeting of the Board of the European Central Bank are published. given that there is less and less faith in the market that the ECB will minimize the effect of the quantitative easing program, everyone is waiting for specifics on this issue in the text of the meeting minutes. Knowing the habit of Mario Draghi and his department, a lot of things to say and say nothing concrete, the content of the protocol will be like that. Also, given the reluctance of inflation to grow, investors will make an unequivocal conclusion that this time the ECB will find a reason not to fulfill its promises.
However, the main event of the day will be the publication of data on inflation in the United States, which may slow down from 2.7% to 2.4%. This really raises the question of the possibility of revising plans for the rate of increase in the refinancing rate. And even if the Bank of England and the European Central Bank disappoint market participants, slower inflation in the United States will not allow the dollar to take advantage of this opportunity.
The euro/dollar currency pair rushed up towards the range level of 1.1510 / 1.1550, after testing the periodic level of 1.1440. It is likely to temporarily assume fluctuations within the range level due to the regrouping of trading forces.
The pound/dollar currency pair showed an active upward interest, reaching the periodic level of 1.3200 and leaving a pulse move behind. We can consider a rollback of 1.3170 if the bullish sentiment persists and there will be stagnation.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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