Investors are waiting for US GDP data. We assume that growth movement will be possible to continue in the range of the EUR/USD and AUD/USD pairs.
Today, the market will focus on the publication of US GDP data for the first quarter. It is assumed that it will decline in growth to 3.1% from 3.2% in quarterly terms. This is a slight decrease, in which the market is still perceived as acceptable if the forecast is confirmed.
However, if the values turn out to be lower, this should have a noticeable effect on the market.
On the one hand, investors may conclude that the process of slowing the growth of the American economy may force the Fed to lower interest rates this year. This may be the reason for local growth in stock markets and the weakening of the US dollar. On the other hand, this may serve as the basis for the markets to fear that the escalation of the trade and political conflict between Washington and Beijing will strike America at an increase in import prices, which will spur inflation and the Fed will not take any action to raise rates again. In this case, the dollar will continue to receive significant support not only as a safe haven currency but also because of the rising expectations of a rate hike.
In addition to GDP data this week, the base personal consumption index (RFE) values in the United States will also be important on Friday. On an annualized basis, it is expected to maintain a growth rate of 1.6%, but its April value will rise sharply by 0.2% immediately from the March zero mark. It is also expected that the income of Americans rose last month by 0.3% against a 0.1% increase in March, although expenses dropped to 0.2% from 0.9%.
Assessing the possible reaction of the market, we believe that today's output of GDP in America as part of the forecast can support the demand for shares of American companies. The dynamics of the dollar is likely to be restrained but tomorrow it may receive more noticeable support on the positive data of the base index for personal consumption (RFE).
Forecast of the day:
The EUR/USD pair is under pressure with strengthening the US dollar position as a result on the one hand and expectations of a possible expansion of incentives from the ECB following its meeting in June on the other hand. Today, the pair can grow as well as fall on the wave of outgoing data from the United States. If they turn out to be strong, the pair may fall to 1.1100. However, if it is weaker than the forecast, then it will grow to 1.1215 after crossing the 1.1155 mark.
The AUD/USD pair is below the strong resistance level of 0.6935, which if overcome will lead to local growth of the pair to 0.6965.
