FX.co ★ The dollar will gain new strength on GDP data

EUR / USD, GBP / USD

On Tuesday, a significant event occurred on the market as the euro broke the level of 1.20 (1.2069). The market immediately filled with a lot of news regarding the revaluation of the euro. It shows that the ECB would likely extend the QE program in one form or another. Even Angela Merkel expressed her concerns during the annual summer press conference yesterday, stating that an expensive euro could worsen the trade balance. At the end of May, when the euro was worth 1.10, Merkel, who is under the pressure of D.Trump, said an opposing view.

According to futures markets rate, the probability of an increase in the ECB rate in September 2018 is down to 30%. It is possible that the growth of the euro from 1.1655 on August 17-19 was not part of the strategic plans of the investors due to inertial growth in purchases of small players. On Tuesday, the official growth in the first half of the day could manifest on the positive Germany GfK Consumer Climate that rose from 10.8 to 10.9 against the forecast without any changes, while the growth of consumer spending in France came in by 0.7% in July within the level of expectations. In the US, August consumer confidence index by the Conference Board grew to 122.9 against 120.9 forecast. The S&P CoreLogic Case-Shiller Home Price Indices in the 20 largest US cities in June maintained a growth rate of 5.7% YoY against expectations of 5.6% YoY.

The British pound gained 50 points as of this writing, but closed the day by 13 points due to the statement of Juncker, head of the European Commission, about the possibility of conducting trade negotiations only after having an agreement on the political aspects of Brexit. This week, the issues of migrants and financial regulation are being discussed.

Today, we are expecting for stronger pressure on counter-dollar currencies. The main event of the day is the release of the second estimate in the US GDP for the second quarter, with a forecast of 2.7% vs 2.6% in the initial estimate. The changes in the ADP Private Sector Job Numbers also has positive projections of 185,000 against 178,000 in July.

According to the euro area, there is no any important data from the UK, as the net volume of new loans granted to individuals in July is expected to decrease from 5.6 billion pounds to 5.3 billion. The number of issued permits for mortgage lending in the UK indicate growth from 65,000 to 66,000.

Euro would likely reach for 1.1875 and further to 1.1780, the pound is at 1.2850 and further in the range of 1.2735 / 55.

AUD / USD

On Tuesday, the Australian dollar have the same scenario with the euro and the pound, as it trades unevenly and decline by 11 points. This morning, the construction sector data came out better than expected and on the thin market, the "Australian" currently gained 44 points. Completed construction work in the second quarter increased by 9.3% against the forecast of 1.0%, construction permits in July decreased by 1.7% against the expectation of a deeper decline of -5.0%. But the published indicators failed to negate negative pressure on the national currency in general. The price of iron ore has fallen to 1.0%, coal down to -0.7%, oil fell to -0.3%. Yields on government bonds are growing, the 5-year-olds increased from 2.20% to 2.24%, and there is some support arising in the Australian currency.

Today, the Australian dollar may experience pressure from US GDP data and report on private sector jobs. It is anticipated that the private sector lending in Australia will slow down tomorrow, with 0.5% forecast vs. 0.6% earlier. Historically, after high leaps of 0.6 to 0.8% at this index, it collapsed of more than 0.1 percentage points, that is, waiting for the worst indicator. After the price has gone below the level of 0.7960, a decrease to 0.7870 is possible.