It is not clear why they gathered yesterday. I can't remember a more pointless meeting of the Federal open market Committee. While they sat there and chatted, everyone waited and worried. They were nervous and we were worried. All sorts of thoughts are there. And in the end, they came out. They were so beautiful, they began to strike their chest and swear on blood that they were ready to do everything necessary to save their native economy. And that's all. No specifics as to what exactly they are ready to do. Finally, however, they also threw in the phrase that this is the deepest and most severe economic recession in their and our lives. And we were waiting for a detailed explanation of what and under what circumstances the Federal Reserve System will do. Moreover, with instructions on the timing and the like. So, we are just waiting. And it does not matter that the market is wildly overheated, and the single European currency with the pound is not just overbought, but is still at such high levels that have not been seen since 2018. This is all due to the fact that the American macroeconomic statistics began to deteriorate rapidly, and the Federal Reserve System behaves as if it has no idea what to do in the current circumstances. At this rate, European currencies can rise to the values of 2017. But most importantly, market participants still have no idea what to expect from the Federal Reserve System and uncertainty frightens investors the most.
But let's be honest, at least the pound had reason to rise. The data on the lending market were really encouraging. The volume of mortgage lending increased by 1.9 billion pounds, and even 40.0 thousand mortgage loans were approved. This, of course, is not as much as in normal conditions, but in the current situation, this is enough. Moreover, only 9.3 thousand mortgage loans were approved in the previous month. Thus, the activation in this direction can be seen. However, the volume of consumer lending declined by 0.1 billion pounds. But the reduction is insignificant, and there are practically no changes. On the other hand, the real estate market is very important for the UK. So overall, the data is clearly positive.
Number of approved mortgages (UK):
However, the day began with a slight weakening of the single European currency and the pound. This is largely due to the fact that the dollar is really oversold and the market needs a correction. But the reason for it is somehow not very good. In addition, the unemployment rate in Europe is expected to increase significantly from 7.4% to 7.8%. But against the background of the United States with its all-time record unemployment rate, this looks somewhat modest especially since a few years ago, the unemployment rate in Europe was noticeably higher. So the current growth is not even impressive, although there is no reason to be happy.
Unemployment rate (Europe):
But what really needs to be expected today is preliminary data on US GDP for the second quarter, from which they should show a quarterly decline in the economy as much as 33.0%. And yes, at least since the 50s, that is, from the moment such statistics began to be kept and such strong recessions have not been encountered. There were a little over 10%, just in those very 50s, and that's all. So the American statistics should set a kind of record again. However, with a negative sign. After all, such negativity will overshadow absolutely everything, even a reduction in the number of applications for unemployment benefits. After all, the number of initial applications should be reduced from 1,416 thousand to 1,400 thousand. The number of repeated requests may decline from 16,197 thousand to 16,000 thousand. However, it should be noted that the rate of decline in the number of applications for unemployment benefits has recently slowed down significantly. Now, it's time to talk about the stabilization of the labor market. But stabilization at such a high level of unemployment that it is rather a very negative factor that will not just slow down the recovery of the economy, but rather drag it down. So no matter how you look at it, there are no reasons for the growth of the dollar. It doesn't matter that the market is overheated and needs a correction.
GDP Growth Rate (United States):
The EUR/USD currency pair has updated the local maximum once again, touching the levels of 1.1800 with shadows. It is difficult to hide overbought, but this fact does not stop speculators; thus, if the quote still manages to consolidate above 1.1810, then a move towards 1.1850 is not excluded. The corrective move has been overdue for a very long time and traders still see it as a possible prospect. In this case, it is possible to consider the corrective course of the first step in case of price consolidating below the level of 1.1750.
The GBP/USD currency pair has touched the psychological level of 1.3000, where a slowdown occurred within the boundaries of 1.2950/1.3010. Depending on the points of price consolidating relative to the boundaries of the slowdown, it is possible to determine a local surge in activity.
- Buy positions should be considered above 1.3010, with the prospect of a move to 1.3050.
- Sell positions should be considered below 1.2940, with the prospect of a move to 1.2885.
