The US inflation has remained unchanged, which is more positive than negative on the wave of rising concerns about global consumer price increases. This is albeit inflation is at its highest level since 2008. The important thing is that inflation has stopped growing. In this case, we should have seen the dollar's further rise, and not its decline, which is what actually happened. In other words, something went wrong. The thing is that the US dollar is clearly overbought, and so, something more substantial was needed for its further growth. For example, an inflation decrease, which many had hoped for. Unfortunately, inflation has remained unchanged. Nonetheless, it is worth paying attention to the extremely modest scale of the dollar's weakening, which looks more like a slight disappointment. Nothing has changed fundamentally.
Inflation (United States):
Today's trading began with the publication of several UK macroeconomic data, which were ignored. In particular, the first estimate of the GDP in the second quarter was not impressive, although the economic decline of -6.1% was replaced by a growth of 22.2%. The result seems just fantastic, but it's all about the effect of a low base since the British economy showed a decline of -21.4% in the second quarter of last year.
In general, it is quite difficult to draw any serious conclusions based on these data. Industrial production, whose growth rate slowed from 20.6% to 8.3%, has a similar case. That is, the influence of the low base effect is still felt here. However, industrial production fell by -0.7% in monthly terms, although they expected an increase of 0.5%. In turn, this indicates the instability of the recovery of the British economy. In other words, the data are quite negative. And although the pound has not declined yet, it clearly has nowhere to grow.
GDP (UK):
Today, the growth rate of the European industrial production data should slow down from 20.5% to 10.9%. Everything is generally just terrible since it looks like a collapse of industrial production. But, zero growth is expected only in monthly terms. We are talking about the fact that statistics still suffer from the low-base effect, which distorts all the data and does not allow us to draw any conclusions based on them. In other words, industrial production may be ignored.
Industrial production (Europe):
Meanwhile, US applications for unemployment benefits will definitely not be ignored. The number of initial requests should be reduced by 20 thousand, and the number of repeated requests by 80 thousand. We are talking about further improvement of the situation in the labor market, although the United States Department of Labor report already showed an unprecedented decline in the unemployment rate.
It is worth noting that the labor market is no less important than inflation since its condition is a much more significant factor. Here, it turns out that the US dollar is likely to resume growth. The only thing that can somewhat restrain it is the producer price index, which should grow from 7.3% to 7.5%. This growth will inevitably lead to an increase in inflation.
There is no doubt that this indicator has an impact on inflation, but it is not so strong that such a slight acceleration in the growth rate of producer prices affected consumer prices. In any case, these data will still do their job, and the growth of the US dollar will not be so serious.
Producer Price Index (United States):
The EUR/USD pair rebounded from this year's base area, resulting in a reduction in the volume of short positions. If a pullback does not transition to a correction, then a downward spiral towards the level of 1.1700 may emerge in the market.
The GBP/USD pair was not able to break through the pivot point of 1.3800, instead, its price rebounded. If it fails to consolidate above the resistance level of 1.3900, then a reversal may occur.
