EUR / USD, GBP / USD
On Tuesday, the counter dollar currencies continued to decline due to general geopolitical pressure and the increasing divergence of the monetary policy by the Fed and the ECB. The American stock market closed with minimal changes as the S&P 500 came in at + 0.01%, Dow Jones at -0.05%, while US sales of new homes for August showed a decline to 560K against 580K in July, and the Consumer Confidence Index from the Conference Board for September weakened to 119.8 from 120.4. But the euro was down 54 points and the pound by 9 points. The euro fell to the levels where it traded two months ago. We believe that without the emergence of the US-DPRK conflict, the market would be deployed from approximately the same peaks (1.20). On other occasions, as of yesterday, Janet Yellen "helped" investors not to think about the statement with regards to the firm intention for another rate hike even if the inflation rate will not reach the target 2.0%. The price of the euro is above 1.20 which the Fed could not stand anymore. According to news, there were predictions that rates would increase even faster than the market expectations. The two American indices came in favor for the dollar, such as Richmond's business activity index in the manufacturing sector for the month of August 19 versus August 14. Along with the house price index of the 20 largest US cities in July, showing an increase of 5.6% YoY to 5.8 % YoY.
Durable good orders for August will be released today, with a forecast of 1.0% versus -6.8% earlier, the base figure is expected to grow by 0.2% against 0.6% in July. Unfinished sales in the secondary real estate market in August are expected to be trimmed by 0.5% after a decrease of 0.8% in July. This indicator can be ignored. In the evening, Lael Brainard will speak on "Inequality in the labor market". If she mentioned again Yellen's speculation about strong prospects in the labor market, this could be a confirmation from the Fed in agreeing to the policy.
In the afternoon, the dollar may stall from developing the offensive due to the expected positive data from the Europe. Money supply in the euro area for last month may increase from 4.5% to 4.6% YoY, while the balance of UK retail sales from CBI for the current month may came in by 6 against -10 earlier.
The main event of the day could be the presentation of President Donald Trump about the detailed plan for tax reform. Regardless of the amount that will be reduced to corporate tax, either 20 or to 25 percent, this remains to be a good news for the dollar.
We are expecting that the price of the euro is fixed in the range 1.1745 / 75 before the publication tomorrow for the final US GDP estimate for the 2nd quarter. The British pound is expected in the range 1.3380-1.3400 and further at 1.3320.
AUD / USD
The Australian dollar quickly reached the first target level at 0.7870, even without the influence of commodity prices, as the iron ore continued to decline yesterday by -0.96% and the oil seems affected on the worsening relations between Turkey and Kurdistan after the independence referendum. The Australian dollar declined against the background of the general strengthening of the US dollar. Despite the worsening scenario in politics, the gold under the pressure of the dollar becomes cheaper.
The industrial profits data of Chinese companies is scheduled today. The profit for August has increased by 24% against the same period a year earlier. The profit for the period of January to August grew by 22%. Chinese stock indices came up after the news, but this growth only blocked the morning drop in the indices. As of this writing, Shanghai Composite gained 0.03% only. The Australian S&P / ASX 200 is down to 0.18%. Meanwhile, everything in India, is not also good, as Nifty 50 is losing 0.09%, and the industrial production is balancing about zero on an annual basis. Moreover, India's money supply contracted from 7.0% to 6.6%, while the trade balance deteriorated from -11.45 billion dollars to - 11.64 billion. And, yields on a 5-year government bond for this week jumped from 6.54% to 6.69%.
We are expecting for the "Australian" in the range of 0.7810 / 30 and further to 0.7750.
