EUR/USD, GBP/USD
Yesterday, the European Central Bank kept its monetary policy unchanged. During the press conference, ECB head Mario Draghi spoke absolutely and precisely within the market expectations and the initial flow of information from Reuters and Bloomberg. The GDP forecast for the current year was raised from 1.9% to 2.2%, but the inflation forecast has been lowered from 1.3% to 1.2%. Investors expected Draghi to speak out in a negative tone about the euro exchange rate, but he chose to be neutral. Perhaps, this only made the euro grow because there was no negative assessment, while investors did not sell. Nevertheless, Draghi said that rates will remain low for a long time after the completion of QE.
There was also an optimistic event during yesterday's session, as the final estimate of the euro zone's GDP for the 2nd quarter was raised from 2.2% YoY to 2.3% YoY. But Germany's industrial production for July showed zero increase against the forecast of 0.5%. Meanwhile, France's trade balance for the same month amounted to -6.0 billion euros against expectations of -4.5 billion.
The significant oversight in the German industrial production (0.0% vs. a 0.5% expectation) yesterday may continue today. At 7:45 PM London time, France's industrial production output in August is projected at 0.6% against -1.1% in the previous month, which is most likely the worst value. The UK Industrial Production for the month July is forecasted at 0.2% and also expected to be the worst index. The trade balance of Germany for July is predicted by 20.3 billion euros against 21.2 billion in June. The trade balance of the UK had a slight improvement, with a forecast of -11.9 billion pounds against -12.7 billion earlier.
According to the US, a positive series of data may continue, considering the wholesale stocks for July which are expected to grow by 0.4%, the consumer lending for the same month is projected to increase from $ 12.4 billion to $ 15.1 billion.
So, we are expecting the euro will decline to 1.1990, and the British pound to lower down by 1.3050.
USD/JPY
On Thursday, the Japanese yen came under double pressure from the dollar along with its own Japanese economic indicators. The leading economic indicators index for July gained -0.7% (105 vs 105.9), the previous value was revised from 1.7% to 1.0%. The coincident indicator dropped by 1.2%. The yen lost 76 points.The GDP for the second quarter and bank lending came in worse than expected this morning. The final estimate of GDP decreased from 4.0% YoY, against the forecast of 2.9% YoY to 2.5% YoY. Lending declined from 3.3% YoY to 3.2% YoY. The trade balance of China also declined in August, as forecast showed a decrease from $46.73 billion to $41.99 billion, with an expected increase to $48.60 billion. Exports in China fell from 7.2% YoY to 5.5% YoY, against the forecast at 6.0%.
The growth on Japan's balance of payments is considered a positive factor, from 1.52 trillion yen to 2.03 trillion yen, versus the forecast of 1.65 trillion yen. Despite the drop in figures of Asian stock indices (Nikkei 225 -0.46%, S & P / ASX 200 -0.48%, Kospi SEU -0.14%), Chinese and Indian indices are growing (Shanghai Composite 0.24%, Nifty 50 0.30 %), that relieved many investors. In the US, there are no fears regarding the stock market fall, as we await for its growth today on positive data. The political situation is under control, the consequences of hurricanes as of this moment, at least, have time to be absorbed by the markets. There is a possibility of decline eventually, in case of a drop in economic indices.
There is a struggle in the range of 108.05 / 25, either a dip below or a sharp exit up is not expected. The minimum task is to strengthen in the range of 108.25 / 70.