FX.co ★ Consolidation at the beginning of the week

EUR/USD, GBP/USD

Friday's, US GDP estimates for the second quarter was at 2.6%. This result is 0.1% higher than the consensus forecast of economists and exactly as estimated by the Atlanta Fed. What investors did not expect was a review to lower the indicator for the first quarter. Economic growth was revised from 1.4% to 1.2%. The US consumer confidence index for June in the final assessment was raised from 93.1 to 93.4. Meanwhile, the consumer sentiment for July was also raised from 93.1 to 93.4. The level of wages for the second quarter increased by 0.5% against 0.8% in the first quarter. Such data was not enough to deploy counter-dollar currencies and that temptation to close current highs, which we said on Friday, remained in the market. The euro, the pound, and other currencies closed Friday with growth. Only the yen fell. Stock indices closed mixed.

In France,consumer spending for June decreased by 0.8% while expectations were -0.3%. However, Spain's GDP for the second quarter showed an increase of 0.9% against the first quarter's 0.8%. The consumer composite index and the business confidence of the eurozone increased from 111.1 to 111.2. The IMF said that the effective euro exchange rate is understated by 25%. However, the rate of the pound is overestimated by 15%. On the other hand, it is understated rate of the euro (if it really is so) helps to develop European business and exerts increasing pressure on inflation.

Today, there are data on labor in the euro area. A decrease from 9.3% to 9.2% is expected. Consumer prices are predicted to be unchanged: the basic CPI is 1.1% y/y with the overall at 1.3% y/y. Retail sales in Germany for June can show a slight increase of 0.1% after the previous increase of 0.5%.

In the UK, the number of issued mortgage lending permits is forecast in June to be unchanged at 65,000. The net volume of new loans to individuals is expected to be at 4.9 billion pounds from 5.3 billion pounds previously.

In the US, business activity in the manufacturing sector of the Chicago region for July is projected to decrease from 65.7 to 60.8. Unfinished sales on the secondary real estate market in June are expected to increase by 0.9% after the previous reduction of 0.8%.

The balance of the expected economic data thus shows that investors, if they want, can easily block the highs of Thursday. Visually, we see the formation of consolidation in the range of 1.1650-1.1780. From Thursday, strong economic indicators for the USA are expected: the volume of factory orders in June was at 2.7%-2.8% and the unemployment rate decreased from 4.4%-4.3%. Therefore, as a main scenario, we take the trade in the specified range making the price goes down. The British pound has a similar forecast. The tipping range is at 1.3050-1.3160 while the turn is at 1.2930.

AUD/USD

On Friday, the Australian dollar rose by 20 points following the European currencies. Today, the positive is supported mainly by rising commodity prices, primarily iron ore and data on the growing demand for Chinese steel (although, even on Friday, iron ore has already fallen by 2.1%). The business activity index in the manufacturing sector of China (Manufacturing PMI) showed a decrease from 51.7 to 51.4 in the month of June. Non-Manufacturing PMI decreased from 54.9 to 54.5. In Australia, new home sales fell in June by 6.9% with sales of apartments declining by 10.7% and sales of individual houses losing 5.7%. Meanwhile, mortgage lending in June added 0.5% against May's figures of 0.6%. Lending to the private sector increased by 0.6% against the forecast of 0.4%.

The main event for the Australian dollar will, of course, is tomorrow when the RBA will announce the decision on monetary policy. Along with optimistic shifts in China there are also negative trends. It seems to us that the RBA will not change its moderate views on the economy. Such a moderate trend is supported by the quarterly reports of Australian companies. Profit growth is shown by service companies while the banking sector is suppressed. Meanwhile, the commodity sector feels more confident than others.

We are waiting for consolidation in the range of 0.7970-0.8135. In case of explicit positive notes of the accompanying statement, the RBA is likely to grow to 0.8135.