The dollar continues to grow actively, and many factors contributed to this yesterday. Both macroeconomic statistics and political events clearly favored the dollar. Let's start with European statistics which encouraged the market participants at first as preliminary data on business activity indexes in France showed a decline in the production index from 52.5 to 51.2, but the service sector index grew from 54.8 to 55.6. Consequently, it led to an increase in the composite index from 54.0 to 54.3.
We expected a decline in all indices, so the data were clearly better than forecasts. However,0 almost immediately came the similar data for Germany, which showed a deep decline in all indices. Thus, the business activity index in the manufacturing sector decreased from 53.7 to 52.3, and in the service sector from 55.9 to 53.6. As a result, the composite index of business activity fell from 55.0 to 52.7. They waited for a decline, but not so much. After such sad data from the largest eurozone economy, it was not worth waiting for something positive on a European scale. This is what happened. The business activity index in the service sector decreased from 54.7 to 53.3, and production from 53.2 to 52.1, which gave a decrease in the composite index of business activity from 54.1 to 52.7. The results were significantly worse than forecasts.
In addition to this sad picture, the growth rate of consumer lending did not grow but remained unchanged. In turn, the United States waited for the growth of the indices, and preliminary data showed just that wherein only growth was greater than predicted. The business activity index in the service sector increased from 53.5 to 54.7, and the production index from 55.6 to 55.9. As a result, the composite index of business activity increased from 53.9 to 54.8.
But all this is not enough for such a rapid and prolonged strengthening of the dollar. He was assisted by European disputes over the size of the Italian budget deficit, since Brussels insists that Italy change the budget plan in order to reduce the deficit from 2.4% to 2.0% of GDP. The Italian government cannot take this step. So investors rightly fear that Italy's credit rating could go down below the investment grade. The dispute between Rome and Brussels only highlights the problem of public debt in Europe.
The main event for today and of the whole week is the meeting of the board of the European Central Bank on monetary policy. It is obvious that today no decisions will be taken on changing the parameters of monetary policy today. However, in the light of recent events, especially with regard to the government debt of the eurozone countries, no one believes that Mario Draghi will decide to keep his promise and curtail the quantitative easing program, which is scheduled for the end of the year. The current situation in the European economy is so difficult and uncertain that the ECB has no choice but to continue printing money again. Yet, do not think that the dollar will also grow uncontrollably. After all, investors have already laid in the course of the extension of the quantitative easing program of the ECB, and in the United States itself, durable goods orders are expected to decline by 0.9%. The total number of applications for unemployment benefits should increase by 17 thousand. In particular, the number of initial applications may increase by 4 thousand and repeat once again by another 13 thousand.
The EUR/USD pair continues to show active descending interest, reaching a value of 1.1378. Now there is a justified rollback, but, most likely, the downward movement will resume in the late afternoon.
The GBP/USD pair continues to slide down, reaching a periodic level of 1.2870. After which, a pullback was observed on overheating. A temporary fluctuation of 1.2870 / 1.2930 can be assumed, where in case of price fixing lower than 1.2870, it will open the way to the main level of 1.2770.
