EUR/USD: inflation in the eurozone has fallen to a three-year low
During the Asian session, the EUR/USD pair shows a steady strengthening, rising to the 1.1165 mark and trying to gain a foothold above it.
This week, investors' attention was focused on inflation data in the eurozone. In August, the consumer price index rose by 2.2% year-on-year, which was the lowest since July 2021. On a monthly basis, inflation growth slowed from 0.2% to 0.1%. Core inflation increased by 2.8% year-on-year and 0.3% month-on-month, indicating continued pressure on prices. These figures confirm that inflation remains above the ECB's 2% target, despite some positive dynamics. The lowest inflation rates were observed in Lithuania (0.8%), Latvia (0.9%) and Ireland (1.1%), and the highest in Romania (5.3%) and Belgium (4.3%). The main factor in the increase in inflation was services, which rose by 1.88 percentage points, as well as food, energy and tobacco products, which added 0.46 percentage points. The ECB previously predicted that inflation could increase again in the second half of 2024, as the impact of fluctuations in energy prices gradually decreases. The bank expects inflation to reach 2.5% by 2024, and 2.2% and 1.9% in 2025 and 2026, respectively. The next ECB meeting is scheduled for October 17, and market participants assume that another reduction in interest rates may follow before the end of the year to maintain economic activity.
- Support levels: 1.1130, 1.1000.
- Resistance levels: 1.1200, 1.1330.
GBP/USD: the Bank of England rate is fixed at 5.00%
During the Asian session, the GBP/USD pair shows an upward movement, trading around the 1.3295 mark, which is facilitated by the market reaction to the results of the Bank of England meeting.
The day before, eight of the nine members of the Monetary Policy Committee voted to keep the key interest rate at 5.00%. Recall that in August, the regulator lowered the rate from a 16-year high. The head of the Bank of England, Andrew Bailey, noted that inflationary pressure is easing, and the country's economic dynamics remains within expectations, which gave rise to forecasts of a possible rate cut in November. Bailey stressed the importance of a "gradual" approach to monetary policy easing to avoid a negative impact on the economy. The latest statistics in August turned out to be ambiguous. The consumer price index rose to 0.3% from 0.2%, maintaining annual dynamics at 2.2%. Core inflation increased to 3.6%, exceeding forecasts of 3.5%. However, the retail price index slowed from 3.6% to 3.4% year-on-year, although the monthly figure increased from 0.1% to 0.6%. Economists also note a decrease in activity in the country: GDP has not shown growth for the second month in a row, while an increase of 0.2% was expected. In addition, industrial production decreased by 1.2% year-on-year, which is lower than the previous indicator of -1.4% and significantly worse than forecasts of -0.2%. On a monthly basis, the indicator fell by 0.8% after a similar increase in June.
- Support levels: 1.3240, 1.3040.
- Resistance levels: 1.3350, 1.3570.
USD/CHF: SECO forecasts a slowdown in the Swiss economy
After a significant decline in August, the USD/CHF pair remains in the correction phase, trading at 0.8466. The Swiss franc remains stable, but its further growth is limited against the background of weak economic data.
Yesterday, the Swiss State Secretariat for Economic Affairs (SECO) published an updated forecast for the development of the national economy. It is estimated that in 2024 the growth rate will remain below average and will amount to 1.2%. In 2025, a gradual increase to 1.6% is projected, which is slightly lower than the previous estimate of 1.7%. The main driver of growth will be increased consumer demand, and inflation will decrease to 1.2%, which is a more optimistic forecast compared to previous calculations of 1.4%. In 2025, the price growth rate is expected to be 0.7%, which is also better than the previous forecast of 1.1%. Experts expect the labor market to strengthen, but the unemployment rate is likely to remain at 2.4% until the end of this year.
- Resistance levels: 0.8510, 0.8630.
- Support levels: 0.8430, 0.8330.
AUD/USD: the Australian labor market has strengthened AUD's position
The AUD/USD pair is showing an upward correction, trading at 0.6816. The Australian dollar is showing moderate growth, supported by positive labor market statistics.
According to data for August, the number of unemployed decreased by 10 thousand, and employment increased by 47 thousand, which allowed keeping the unemployment rate at 4.2%. The share of the economically active population reached a record high of 67.1%, and the employment-to-population ratio rose to 64.3%, which is almost equal to the historical maximum of 64.4% recorded in November 2023. Such indicators indicate a high demand for jobs, despite the limited number of vacancies, which hinders the more active development of the employment sector. Meanwhile, the index of leading indicators from the University of Melbourne remains at 0.0% for the second month in a row, indicating uncertainty in the economy. The Reserve Bank of Australia's monetary policy meeting is scheduled for September 24, when the US Federal Reserve's interest rate decisions will already be known. At the same time, analysts suggest that Australian officials may refrain from changing the current rate at this meeting.
- Resistance levels: 0.6850, 0.6950.
- Support levels: 0.6790, 0.6690.