The US dollar continues to gradually weaken against the Australian and New Zealand dollars, which receive support in the wake of two main factors.

On the one hand, the currencies of the Asia-Pacific region are supported in general by a positive assessment by local central banks (the RBA and the RBNZ) of the state of the economies of Australia and New Zealand. They have not yet given any signals about a possible prospective decrease in interest rates. In this case, the expected reduction in the key interest rate of 0.25% plays into their hands from the Fed at the July meeting.

On the other hand, economic statistics from China, published on Monday, somewhat reassured investors, who feared a noticeable slowdown in the growth of the local economy against the backdrop of Washington's trade war with Beijing. The preliminary values of China's GDP for the 2nd quarter in annual terms showed a slight decrease to 6.2% from 6.4%, but at the same time, the quarterly value of the indicator increased by 1.6% from 1.4%. Only an increase to 1.4% was predicted. In addition, it noticeably added the volume of industrial production on an annualized basis, which jumped 6.3% from 5.0% a year earlier, while an increase was only expected to 5.2%.

Given this state of affairs, it can be assumed that if the economies of Australia and New Zealand, which are closely linked to the Chinese, do not begin to weaken, this will greatly support local currency rates.

At the same time, the single European currency will be under pressure on the wave of the actual collapse of the eurozone economy into recession as indicated by economic statistics. It seems that in this situation even a decline in Fed interest rates and possibly, a consequent surge in demand for risky assets associated with this will not be able to provide significant support to the single currency rate. The reason for this is the position of the ECB, which will likely strive to significantly weaken the euro with additional measures to stimulate the region's economy. We believe that the activity of the ECB in this direction will only grow in the wake of a decrease in the Fed's rates.

Today, the focus of the markets will be the speech of the Fed and the publication of retail sales data in the United States. In addition, the dynamics of the index of economic sentiment in Germany and the eurozone will attract attention.

Forecast of the day:

The AUD/USD pair is below the level of 0.7040. It may adjust to 0.7015 before continuing to rise to 0.7100.

The NZD/USD pair is trading above the level of 0.6715 against the background of rising inflationary pressure in New Zealand and the strengthening of quarterly economic growth in China. Fixing the price above this level will lead to its growth to 0.6800.