This week, the world markets begins with a positive which was initiated by the closure of US stock indexes in positive territory amid weak data on consumer inflation in the US.

It was assumed that in July the consumer price index (CPI) would grow, but this did not happen. Only the annual value of the consumer price index added up to 1.7% against the previous value of 1.6%, but it was lower than the forecast for growth by 1.8%. Monthly values demonstrated the continued rate of inflation in July at the June level. Consumer inflation in July added 0.1%, and the base consumer price index also grew by only 0.1%.

Naturally, against the backdrop of such data, the expectations of the third increase this year in interest rates have fallen again. According to the dynamics of futures on the Federal Fund rates, in December, an increase of 0.25% is expected with a 40.4% probability. Expectations of maintaining the status quo (the level of the key interest rate in the range from 1.00% -1.25%) is much higher - 55.7%.

But today, on Monday, there is a small strengthening of the dollar on the market. We attribute this dynamics to the fact that the major currencies traded against the dollar seem to have already chosen all their opportunities for growth on domestic factors and are technically overbought, which forces investors to be cautious. Therefore, assessing the prospects for the currency market, we note that we expect the consolidation period to continue until the end of this month.

Today, important economic data are not expected to be released, so the focus of the market will remain the topic of the conflict between North Korea and the States. Any negative news pointing to the escalation of the conflict will hamper the demand for risky assets but the dollar from this also will not win.

Forecast of the day:

The EUR/USD pair is trading above the level of 1.1800, overcoming which could cause the pair to adjust to 1.1720 and then possibly to 1.1625. In general, the pair is likely to move in the side range against a backdrop of mutually exclusive factors, the weakness of the dollar and doubts among investors that the ECB can make a radical decision and go to the complete elimination of incentive measures.

The USD/CAD pair may rise against the background of a decline in crude oil prices to 1.2750, if it keeps above 1.2665. The commodity currencies will remain under pressure due to geopolitical risks and the inability of crude oil prices to break out of a narrow range.