After the speech of the head of the Fed, J. Powell, the dollar grew on Tuesday at the Senate Banking Committee, but on Wednesday against the background of increased, as it seems to us, still limited optimism and the propensity to buy risk has decreased. We perceive this decline as local and consider it necessary to make dollar purchases on its declines against major currencies. An important support factor for him is the desire of the Fed to continue to follow the path of normalizing monetary policy, which further and further spreads the interest-rate ratio in the United States and other countries, primarily economically developed.
We expect that today, after a short pause with a pullback after the growth on Wednesday, the dollar may resume pressure on world markets. The reason for this is still the same speech by Powell, who made it clear that the process of raising rates, although smoothly, but will continue. Yesterday's weakening of the US currency rate is estimated as temporary and under the influence of some demand for risky assets, which also grew on the wave of optimistic speech by the head of the American regulator on Wednesday.
Today, the market will focus on the publication of data on retail sales in the UK, as well as the output of the index of production activity from the Federal Reserve Bank of Philadelphia. According to forecasts, the base retail sales index in annual terms in June should decrease in growth to 3.5% against 4.4%. The monthly value of the indicator should fall to minus 0.3% versus the rise by 1.3%. The volume of retail sales is also expected to decline to 0.1% vs. 1.3%. We assume that if the data prove to be no better than the forecast, the sterling will resume its decline.
At the same time, from the US economic statistics, the index of production activity is expected to grow to 21.6 points against 19.9 points. If the values of the indicator do not disappoint - this can lead to another local strengthening of the dollar in the foreign exchange markets.
Forecast of the day:
The currency pair EUR / USD is trading again above the level of 1.1625. We expect that a price fall below this mark may lead to its fall first to 1.1590, and then, possibly, to 1.1550.
The GBP / USD currency pair is testing the level of 1.3050 in anticipation of publication of data on retail sales. If they turn out to be negative, the price may drop to 1.2975.