On Friday, the euro made an attempt to reach a new high (and update highs from August 29), which it managed to do, but failed to successfully develop - the macroeconomic data did not contribute to this. Germany's trade balance for July fell from 21.2 billion euros to 19.5 billion euros, France's budget deficit rose from -62.3 billion euros to -83.8 billion. French industrial production in August added 0.5% after the previous decline of - 1.1%. In the UK, similar to Germany, industrial production showed weakening: production in the construction sector in July was -0.9%, total industrial production was at 0.2% (against 0.5% in June), production in the manufacturing sector 0.5% after 0% in the earlier month. The trade balance of Great Britain's negative balance deepened the from -11.5 billion pounds to -11.6 billion pounds.
The main event on the Friday of the day was the operational adoption by the US Congress of the removal of the state debt limit for 3 months, to a more detailed consideration of the issue of raising the national debt, both current and principled approaches to this issue - it is assumed that the current limit will be abolished and the threshold will automatically increase upon further consideration of the budget by the Congress. The Obama administration moved in a similar direction, but it did not work out. In the span of three months, the Treasury can attract any amount. Officially, the money was required by the budget for the clearance of the consequences of hurricanes "Harvey" and "Irma", but, as stated earlier, the current increase in the debt limit should go smoothly, as Donald Trump surrendered his positions to the establishment and in the future we will not see a dispute or bargaining around this threshold of borrowing. And the calmer the situation, the less obstacles the dollar will have in its strengthening. The driving forces of the dollar will be increased demand due to the large volume of government bonds offering and the actual increase in yields since the beginning of the Fed's balance sheet reduction.
On Monday, no important news is expected. In the morning it became known that the People's Bank of China for the 11th time in a row raised the yuan's rate by 0.05%, which indicated its unwillingness to engage in a trade war with the United States. Industrial production in Italy for July is expected to decline by 0.5%. Tomorrow, the inflation indicators for the UK in August will be released. The outlook for the data is positive, and this optimism is indirectly based on the CPI of China on Saturday, which showed growth above expectations: on an annualized basis, the CPI rose from 1.4% to 1.8%, 6%, for August the index added 0.4%. The producer price index increased from 5.5% y/y to 6.3% y/y.
Thus, we are waiting for the final consolidation for the euro and the pound: for the euro it is expected in the range of 1.1990-1.2110, for the pound it is anticipated in the range of 1.3160-1.3240.
AUD/USD
On Friday, the Australian dollar chart formed a spike, which is due to the closing of positions by investors in anticipation of nuclear tests in the DPRK. The test did not happen, and this was the main news of this morning. But nevertheless, the "Aussie" did not react to the growth of inflationary indices in China. Perhaps due to the fact that the impulse growth from 1.4% y/y to 1.8% y/y in the CPI, and the increase from 5.5% y/y to 6.3% y/y in producer prices index, can be a temporary phenomenon.
Commodity markets, being more dependent on real demand, after recent growth, decline 1-5 days, depending on the kind of raw materials. Iron ore lost about one and a half percent ($ 73.67) for Friday. Coal - Australia's second-largest export commodity to China - is cheaper by 2.5%, oil is down 3.0%. The discrepancy in the yields of government bonds of the US and Australia is somewhat in favor of the former, and accordingly the US dollar looks stronger.
Significant events that can set a new momentum in this pair are not expected in the near future. The consolidation in the range of 0.8025/75 with a further decline to 0.7965 is expected.