Yesterday, the American statistics came out better than expected which was a pleasant surprise, however, it did not help the dollar. In particular, the third GDP estimate for the second quarter showed that economic growth rates accelerated from 2.6% to 2.9%. The previous estimate showed an increase to 2.8%, and from yesterday's data it was expected that they would show acceleration only up to 2.7%. But in the end, the US economy shows even greater growth. Even data on unfinished real estate transactions came out better than forecasts, although they are still difficult to call good. The point is that the rate of decline in the number of unfinished transactions for the housing sales fell from -2.5% to -2.3%. Forecasted growth to -6.0%. However, this still indicates a continuing deterioration in the real estate market, so after the expansion of economic growth in the second quarter, it is still expected that it will slowdown in the third quarter . But the important thing is that the market reacted to the statements of the European Union representative in agreement with the UK. Monsieur Barnier said that continental Europe is ready to offer the United Kingdom such conditions of cooperation that no one else has. This was the reason for a significant increase in the pound and the single European currency. It should be noted that the forecasts for US statistics indicates weakening of the dollar, which eventually happened, but for other reasons.
After yesterday's events, the dollar turned out to be oversold and a rebound arises. Moreover, there were no further details about the proposal that Europe is ready to work with UK yet. But the statistics can adjust the state of affairs in the market. For example, credit data is available in the UK and consumer lending should be worth 1.5 billion pounds compared with 1.6 billion pounds in the previous month. Also, the number of approved applications for mortgages should be reduced from 65,619 to 65,000. And do not forget that the pound is heavily overbought and even such data can be quite enough to weaken it. Meanwhile, personal incomes and expenses in the US are expected to grow by 0.3% and 0.4%, respectively. An outpacing increase in spending indicates an increase in consumer activity, which somewhat reduces fears caused by the continued decline in home sales and growth in inventories. As a matter of fact, the number of applications for unemployment benefits may increase by 2 thousand because of the 4 thousand increase in the number of initial applications for unemployment benefits. But the number of repeated applications for unemployment benefits, which indicate the duration of unemployment, should be reduced by 2 thousand.
However, there is still a political factor and it is still difficult to say what comments will be made about yesterday's statements.
The euro/dollar currency pair testing the periodic level of 1.1650 and managed to return to the range of 1.1720 / 1.1750. There is a potential rebound from the 1.1720 level, otherwise, there will be a stagnation within the limits of 1.1685 / 1.1720.
* The presented market analysis is informative and does not constitute a guide to the transaction.
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