EUR/USD: euro stabilizes at its local peaks
The EUR/USD pair shows ambiguous trading trends, being near the 1.0870 mark. On the previous day, the euro actively increased in value, updating the maximum values since June 7, but could not hold on to new heights, losing some of the acquired positions by the end of the day. By Friday morning, market activity had significantly decreased.
Meanwhile, the latest data from Germany showed that the consumer price index in June remained at the level of 0.1% monthly increase and 2.2% annual growth, confirming the possibility of further interest rate adjustments by the European Central Bank (ECB). In this context, the results of a Reuters survey of leading economists indicate that the ECB may cut rates twice this year — in September and December. However, if inflation, especially in the services sector, stabilizes above the target level, the central bank may limit itself to one adjustment of its policy.
- Resistance levels: 1.0900, 1.0930, 1.0964, 1.1000.
- Support levels: 1.0863, 1.0844, 1.0820, 1.0800.
GBP/USD: pound is growing on the back of good UK GDP data
During the Asian session, the GBP/USD pair stabilizes around the level of 1.2915, while not staying at the recently updated annual highs. This happened after the publication of inflation data, which reinforced expectations of a near-term reduction in the cost of borrowing by the US Federal Reserve. The consumer price index in June slowed to 3.0% per annum from 3.3%, falling short of the projected 3.1%, and the monthly dynamics decreased by 0.1% after stabilization in the previous month. Core inflation also declined, which, together with the latest labor market report indicating a downward revision in the number of jobs created in May, disappointed investors. In addition, the speech by the Chairman of the US Federal Reserve, Jerome Powell, emphasized the need to assess the economic situation as a whole, which increases the chances of an interest rate cut in September. As a result, the markets expect two rate adjustments in 2024 of 25 basis points each.
On the other hand, recent statistics from the UK showed GDP growth of 0.4% in May after stagnating in April, exceeding expectations of 0.2%. The annual increase in industrial production was 0.4%, despite the previous fall of 0.7%, with a projected increase of 0.6%. The monthly figure was also in line with forecasts, accelerating by 0.2% after a 0.9% decline. Economic growth in the UK supports the risks of accelerating inflation and reduces the likelihood of an early reduction in the cost of borrowing by the Bank of England, especially given hints from members of its board about a possible continuation of current rates, including recent comments by Bank representative Catherine Mann and chief economist Hugh Pill about continued inflationary pressures, especially in the service sector, and significant wage growth, which makes a correction monetary policy is unlikely in the near future.
- Resistance levels: 1.2948, 1.3000, 1.3050, 1.3100.
- Support levels: 1.2900, 1.2860, 1.2817, 1.2776.
USD/CHF: annual inflation in the United States decreased to 3.0%
The USD/CHF pair is at 0.8958, demonstrating a corrective decline against the background of the weakness of the US dollar and the stability of the Swiss franc caused by the lack of new macroeconomic data.
Investors are analyzing the latest conversations between Chinese Commerce Minister Wang Wentao and the Swiss head of the Federal Department of Economic Affairs, Education and Research Guy Parmelin. During the meeting, it was decided to deepen the free trade agreement, which became a key point in the context of trade restrictions caused by the Russian-Ukrainian conflict. These restrictions have made it more difficult to export Swiss goods, and a new agreement to improve the terms of trade could significantly support the Swiss economy, given that China ranks third among its trading partners. According to the State Secretariat for Economic Affairs (SECO), last year's exports to China amounted to 40.6 billion francs, while imports amounted to 18.4 billion francs. The expansion of the trade agreement is expected to increase these volumes by at least 30%.
- Resistance levels: 0.9000, 0.9100.
- Support levels: 0.8930, 0.8840.
USD/CAD: lower range heralds new lows
The USD/CAD pair shows a slight decrease against the Canadian dollar, being at the level of 1.3620 in anticipation of new factors that could affect the exchange rate.
Today, at 16:00 GMT+2, the consumer confidence index from the University of Michigan in the United States is expected to be published, projected at 68.5 points for July, which is slightly higher than the previous value of 68.2 points. Earlier at 14:30, investors will pay attention to data on production inflation for June, the expected growth of which will be from 2.2% to 2.3% per annum and from -0.2% to 0.1% monthly, while the basic producer price index excluding food and energy should rise from 2.3% to 2.5%. Yesterday's report on the consumer price index showed a slowdown from 3.3% to 3.0% per annum, which was below expectations of 3.1%, and the monthly change was 0.1% after stability in the previous month, contrary to forecasts of an increase of 0.1%. The base rate also decreased from 0.2% to 0.1% monthly and from 3.4% to 3.3% per annum. Given the declining dynamics of the labor market, the US Federal Reserve may reconsider its policy towards easing at the September meeting. In particular, recent data showed a decrease in initial applications for unemployment benefits from 239.0 thousand to 222.0 thousand, and repeated applications — from 1,856 million to 1,852 million, which is also lower than the expected 1,860 million.
- Resistance levels: 1.3650, 1.3675, 1.3700, 1.3733.
- Support levels: 1.3614, 1.3588, 1.3550, 1.3524.