The movement of the Dollar and the Euro will depend on the FED and the ECB statements on Friday | IFCM
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The movement of the Dollar and the Euro will depend on the FED and the ECB statements on Friday

  • IFC Markets
    2023/02/27
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    2023/02/20
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The US dollar index remained almost unchanged last week. As expected, the majority of the American macroeconomic data released was moderately negative. It also suspended the dollar "rally", which lasted for four weeks. However, the American indicators ​were not so important that they would cause a full retracement. In addition, there was a release of quite poor performance of the EU economic indicators, which contributed to the euro depreciation and provided support to the dollar. Thus, the US Retail Sales in July was reported unchanged on Wednesday, meanwhile the index was expected to grow 0.2%. Of course, on one hand, it can be considered as a negative factor for the dollar, but on the other hand, there was bad news for the euro as well. The same day there was the data report on the EU industrial production in June being decreased 0.3%, despite its growth forecast of 0.4%. As a result, this day was finished by the dollar rate hike. But it dropped on Thursday, due to a rise in the US Initial Claims to 311,000 people. It was more than expected. The EU GDP and CPI coincided with the outlook and did not have any impact on the market. The U.S. dollar index continued to decline on Friday, due to another insignificant, but negative US economic data. More important American data for the Forex market is to be released this week. CPI, Housing Starts and Building Permits for July will be published on Tuesday. The July Fed meeting materials are to be published on Wednesday. Initial Claims, Existing Home Sales, Philadelphia Fed manufacturing index and Leading index are to come out on Thursday. The main event of this week is expected on Friday: Janet Yellen will be giving a speech at the symposium in Jackson Hole. We assume that it will define the further movement direction of the dollar index. In our opinion, regarding the data forecasts, on Tuesday and Wednesday - they look quite positive, and on Thursday - negative. Therefore, the Fed opinion concerning the state of the American economy will be very important. Basic information for the euro will be released on Thursday and Friday. At first, a few business activity indices (PMI) and Consumer Confidence Index are to be published. The speech of the ECB President Mario Draghi will also be given in Jackson Hole on Friday. In conclusion, we note that important information on the British pound and Canadian dollar is to be released this week. In recent weeks, they have noticeably weakened against the US currency. The data is going to strengthen this trend, or will contribute to the trend change.

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