If you look only at one chart, you get the feeling that nothing happened at all on the market yesterday. But the fact is that this is a completely false assumption. Yesterday was incredibly rich in all kinds of macroeconomic data, but looking at them, market participants seemed to have fallen into a stupor. Apparently, everyone was simply discouraged by inflation data in the United States, which showed an acceleration in consumer price growth from 1.7% to 1.8%. The fact is that even the most optimistic forecasts showed that inflation should remain unchanged. For the most part, many generally expected it to fall to 1.6%. And here is such a surprise. Moreover, the gift was so unexpected that no one understood what to do with it. Although at the end of the day, the dollar still strengthened, however, so insignificantly that it is practically and imperceptible.
Moreover, it is possible that the growth of the dollar, in addition to unexpectedly good inflation data in the United States, restrained industrial production in Europe, which also showed a slightly better result than expected. The decline in the industry of the Old World slowed down from -2.8% to -1.7%, while the improvement was only forecast to -2.3%. In addition to pan-European data, the final data on inflation in Germany were also published, confirming a preliminary estimate, which showed its deceleration from 1.2% to 1.1%.
Industrial Production (Europe):
At the same time, the UK was unable to join the general holiday, as inflation fell from 1.7% to 1.5%. Although, they predicted a decline but only to 1.6%. However, the uncertainty bound to all market participants yesterday, and then affect the pound without letting it fall.
Inflation (UK):
Of course, market participants are somewhat discouraged by yesterday's data, but you can't stay in this state forever. Yes, and this is impossible. Thus, today, the market will begin to gradually come to its senses, and the first thing we will help traders to pull themselves together is the second estimate of the GDP of the euro area for the third quarter. However, they should coincide with the first estimate, which showed a slowdown in economic growth from 1.2% to 1.1%. So no serious reaction will follow. However, this will somewhat cheer up the market participants and return them to sinful earth. Moreover, it is likely that the data will turn out to be slightly better than forecasts, since German GDP data has already been released, showing an acceleration of economic growth from 0.3% to 0.5%. Well, since the largest economy of the euro area is accelerating, then it will pull the whole European economy along with it. On the other hand, extremely worrying signals come from the second economy of the euro area, as the unemployment rate in France has risen from 8.5% to 8.6%, and they are also expecting inflation to decline from 0.9% to 0.7%. In Spain, they expect inflation to remain at the same level of 0.1%. Nevertheless, despite the alarming signals coming from a number of European countries, the results demonstrated by Germany can improve pan-European statistics.
GDP (Europe):
Today, good news can be shared by Misty Albion, as retail sales growth in the United Kingdom should accelerate from 3.1% to 3.7%, which seriously compensates for the sad fact of lower inflation.
Retail Sales (UK):
Nevertheless, all this pales against the backdrop of data on producer prices in the United States, which sparkled with new colors after yesterday's inflation data. The fact is that so far, despite an unexpected increase in inflation, a decline in the growth rate of producer prices from 1.4% to 0.9% is still forecasted. Apparently, the surprise is really so impressive that no one even bothered to revise the forecasts. Thus, it is highly possible that the data will turn out to be significantly better than forecasts, which will become the reason for the steady growth of the dollar.
Manufacturer Prices (United States):
The euro / dollar currency pair has been testing the psychological level of 1.1000 for several days, forming extremely weak fluctuations within it. It is likely to assume that the stagnation within the control value will not last long, and it is worthwhile to carefully analyze the behavior of the quotation. Due to this, if the downward interest is retained, the main move may resume.
The pound / dollar currency pair, after the impulse jump on Monday, went into the accumulation stage of 1.2815 / 1.2865, showing extremely weak activity. It is likely to assume that in the event of a break in the existing boundaries, local acceleration may occur. Thus, it is worthwhile to carefully analyze the price fixing points.
