Optimism has spread again across the markets, which was recently largely supported by news from China, where local authorities have managed to maintain economic growth at acceptable levels with the help of emergency measures.
The reason for today's positive wave was the GDP data for the first quarter of this year, which was presented in the PRC and showed the preservation of growth dynamics of 6.4% on an annualized basis. Although, it was assumed that the indicator would show a reduction in the growth rate to 6.3%. In quarterly terms, the rate of increase in GDP declined slightly to 1.4% from 1.5%. Yet, the markets did not pay attention to this since positive sentiment is still playing up to several important factors in our opinion.
On the one hand, these are hopes for the early conclusion of a new trade agreement between the US and China and on the other hand, there are hopes that the interest rate increase cycle in the States is over, just as the Fed will reduce the balance in the fall. In addition, investors are highly likely to assume that the American regulator may have to start a reverse process to support economic growth in the country and lower interest rates, especially the US President Donald Trump constantly talks about it, which puts pressure on the Fed.
According to published data, the volume of industrial production rose sharply by 8.5% in March in annual terms compared to 5.3% a year earlier and the forecast of an increase of 5.6%. Also on an annualized basis, retail sales added up to 8.7% from 8.2% while the increase was forecast to 8.3%. At the same time, the unemployment rate dropped to 5.2% from 5.3%.
In the wake of today's economic statistics, all major currencies related to the overall Forex, with the exception of the New Zealand dollar and the Japanese yen received considerable support. "New Zealander" was under pressure on the wave of data on consumer inflation in New Zealand, which showed its decline to 1.5% from 1.9% in the first quarter on an annualized basis. In the quarterly, the value kept the previous growth rate of 0.1%, although it was expected to increase by 0.3%.
In our opinion, Chinese economic statistics and general expectations of markets that still believe in the possibility of maintaining global economic growth and the soft monetary policy of global central banks can locally support the demand for risky assets, which will adversely affect the rate of the US currency in the short term.
Forecast of the day:
The EUR/USD pair will most likely remain in the lateral range of 1.1280-1.1325. At the moment, we consider selling the pair as the priority from the upper limit of the range at 1.1325 or after breaking through the level of 1.1280 with a target level of 1.1280 and 1.1250, respectively.
The USD/CAD pair may continue to decline to the lower boundary of the triangle amid the resumption of rising oil prices. From a technical point of view, it will drop to 1.3300 if it stays below 1.3345.
