​U.S. Dollar Turned Out to be under Bears Control (Weekly Review)

Last week activity of participants of the foreign exchange market and, consequently, volatility remained rather low, which, however, did not prevent the Euro from playing back a little over two hundred points paired with the U.S. Dollar. Released macroeconomic statistics for France, Germany and Eurozone was generally not bad, which created a favorable background for its recovery, and weak data on Housing Starts and Durable Goods Orders in the USA contributed to maintaining pressure on the USD.

The news that the USA and China intend to begin the process of settling trade disputes became one of the reasons for speculators to fix profits on long positions in "anti-risk" assets, which were, with respect to the US trade wars with the PRC and EU, as well as the US-Turkish crisis, the U. S. Dollar and of course the Japanese Yen. In the context of an appetite for risk, both currencies were under pressure from competitors throughout the week, and the U. S. Dollar managed to win back some of the losses in a pair with the JPY.

The published minutes of the last FOMC meeting were generally positive for the USD, but it could not keep the U. S. Dollar from bear movement. In addition, Jerome Powell in his speech at Jackson Hole reaffirmed his commitment to the course of gradual tightening of monetary policy, which also did not provide adequate support to the USD, because the bulls regarded his "milder", as they thought, comments as a concession to Trump after his displeasure to the Federal Reserve. Nevertheless, the differential of interest rates remains a strong argument in favor of dollar purchases, and the risks for it are borne by the trade wars unleashed by the United States.

The schedule for this week: 

Monday, August 27
08:00 GMT – Germany. IFO Business Expectations;
08:00 GMT – Germany. IFO Business Climate Index;
12:30 GMT – the USA. Chicago Fed National Activity Index.

Tuesday, August 28
08:00 GMT – Germany. Consumer Loans; 
12:55 GMT – the USA. The Redbook Index; 
13:00 GMT – the USA. The S&P/CaseShiller House Price Index.

Wednesday, August 29
01:00 GMT – Australia. HIA New Home Sales MoM; 
06:00 GMT – Germany. Gfk Consumer Climate Index; 
12:30 GMT – the USA. The Personal Consumption Expenditure (PCE) Prices (QoQ) (Q2);
12:30 GMT – the USA. Gross Domestic Product (GDP) (Q2);
12:30 GMT – the USA. GDP Price Index;
12:30 GMT – Canada. Current Account; 
14:00 GMT – the USA. Pending Home Sales. 

Thursday, August 30
22:45 GMT – New Zealand. Building Consents; 
23:50 GMT – Japan. Retail Sales Index; 
23:50 GMT - Japan. Retail Sales;
23:50 GMT – Japan. Foreign Bonds Buying; 
23:50 GMT – Japan. Foreign Investments in Japanese Stocks;
08:00 GMT – Germany. Unemployment Change; 
08:00 GMT - Germany. Unemployment Rate;
08:30 GMT – the United Kingdom. Mortgage Approvals;
09:00 GMT – Eurozone. The Business Climate Indicator; 
12:00 GMT – Germany. The Consumer Price Index (CPI);
12:00 GMT – Germany. Harmonised Index of Consumer Prices (HICP); 
12:30 GMT – Canada. Gross Domestic Product (GDP);
12:30 GMT – Canada. GDP (YoY) (QoQ) (Q2);
12:30 GMT – the USA. Initial Jobless Claims; 
12:30 GMT – the USA. Personal Spending; 
17:30 GMT – Germany. Bundesbank President Weidmann Speaks.

Friday, August 31
23:30 GMT – Japan. Unemployment Rate;
23:30 GMT – Japan. Jobs/applications ratio; 
23:30 GMT – Japan. The Consumer Price Index (CPI);
01:00 GMT – PRC. Manufacturing Purchasing Managers Index (PMI);  
01:00 GMT - PRC. Services Purchasing Managers Index (PMI); 
06:00 GMT – Germany. Retail Sales;
09:00 GMT – Eurozone. The Consumer Price Index (CPI);
09:00 GMT – Eurozone.  Core Consumer Price Index (CPI);
09:00 GMT – Eurozone. Unemployment Rate; 
13:45 GMT – the USA. Chicago Purchasing Managers Index (PMI).

Author: Anthony Porter, IAFT Analyst