EUR/USD, GBP/USD
On Monday, before the announcement of the Fed's decision on rates, the markets calmed down a bit. Dealers announced the closure of some positions on the euro and the pound. Although the pound grew by 32 points on expectations of a "good deal" with the EU, there are still no hints that this outcome is still there. On the contrary, there are fears that the final agreement will not be concluded on the scheduled date up until March 2019. In the euro area, business activity (PMI) in the manufacturing sector declined from 57.4 to 56.8 for the month of July with a decline of 57.2 / 3. In the services sector, PMI remained at the previous level of 55.4 but it was expected to grow to 55.5. Composite PMI from Markit decreased from 56.3 to 55.8. That means that for the reduction of euro, there were objective reasons.
In the US, Manufacturing PMI grew from 52.0 to 53.2. Services PMI remained at its June value of 54.2 points. Only home sales in the secondary market were brought down with a decrease of 1.8% in June against the forecast of -1.0% (5.52 million versus 5.62 million for May). The US stock market lost 0.11% (S&P 500), but the Nasdaq technology index increased by 0.36% indicating the minimal impact of the stock market on the forex market.
Today, there are no reasons for pronounced movements. Germany's Ifo business confidence data will be released and the business sentiment index from the current month is expected to decrease from 115.1 to 114.9. In the UK, the balance of production orders from the CBI for July is forecasted to fall from 16 to 12. In the US, the Conference Board Consumer Confidence Index is forecasted to be at 116.5 points against 118.9 points in June. Prices for homes in the US are expected to continue growing. The forecast for May is + 0.5%. The price index for S&P/Case-Shiller houses in the 20 largest cities is expected to be at 5.8% against 5.7% in April. Business activity in the manufacturing sector of Richmond is forecasted to be unchanged at 7pp.
We are waiting for the price development for the euro in the range of 1.1570-1.1650 while the British pound is in the range of 1.2970-1.3040.
AUD/USD
The Australian dollar continues to be in demand amid uncertainty over European currencies. Fundamentally, it helps that raw material prices are growing to two-year highs: iron added 1.1% ($67.86 per tonne), oil (Brent) increased by 1.0% ($48.65 per barrel), copper rose by 0.4%, and coal almost did not change in its current price ($164 per ton of coking coal). Tomorrow, Australia's consumer price index for the second quarter is expected to grow by 0.4%. The six-day consolidation of the "Aussie" in the range of 0.7890-0.7970 shows the intention of the market to continue its growth. However, the question is, will the investors succeed and will they want to leave this range before the Fed decision on the rate? Today's optimism in the Australian market is associated with a sharp increase in shares of the real estate sector (Mirvac 2.39%) and the mining sector (Fortescue 2.81%, Saracen Mineral 2.45%). The S&P/ASX200 added 0.91%. The indices of Japan, China, Indonesia, and North Korea are falling. This creates doubts about the continued optimism of Australian investors. We believe that they will not violate the trend of the last six sessions and will wait for the decision of the Fed on the rate. The growth of the Australian dollar to 0.8075 and the decrease to 0.7820 seems equally probable to us.