US macroeconomic reports continue to disappoint, but the US dollar is strengthening its position against the basket of major currencies with enviable persistence. For example, according to the results of today's release of data on retail sales, the EUR/USD pair impulsively declined to the bottom of the 17th figure. Although it was in the red zone, complementing the contradictory fundamental picture on the eve of the economic symposium in the city of Jackson Hole. This illogical behavior of the greenback is explained by the growth of anti-risk sentiment in the foreign exchange market. And the dollar is the beneficiary of the current situation, despite some problems.
Let me remind you that last Friday, a disappointing consumer sentiment index from the University of Michigan was published, which is a leading indicator of future spending. This month, it has fallen sharply, ending up at the level of 70.2 points (with a forecast of growth to 81 points). This is the weakest result in the last ten years. The comments to the report indicate that in the first half of the year, American consumers showed a "sharp decline in confidence", which is most likely due to the spread of the Delta coronavirus strain.
Key data on the growth of US inflation were published two days before this report was released, which also did not impress investors. The consumer price index has slowed down its growth, which has been observed over the past four months.
Today's report on the volume of retail trade in the United States only added to this picture. All components of the release were in the red zone, falling short of the forecast values. So, according to analysts' expectations, the overall indicator in July was supposed to fall to -0.2%. However, in reality, it came out much lower – at the level of -1.1%. Excluding car sales, the indicator showed a similar dynamic: with the forecast of a decline to the level of 0.2% (from the previous value of 1.6%), the indicator fell into the negative area, to the target of -0.4%.
But despite everything, the dollar is growing throughout the market. Such an abnormal, at first glance, situation is explained by a combination of fundamental factors. First of all, the dollar took advantage of the growth of anti-risk sentiment among traders. The general nervousness was caused by the situation in Afghanistan, China's pressure in the digital sphere and the COVID panic in New Zealand.
So, today it became known that a few days before the capture of Kabul, negotiations were held in Doha between representatives of the United States, the Taliban and the Afghan authorities. They agreed to stop the fighting and organize a transition of power in exchange for the resignation of Ashraf Ghani. However, the flight of the latter put an end to the agreement reached. According to Bloomberg, the American ambassador to Afghanistan is still in Doha, where he is trying to find new ways to resolve the situation, but in vain. The issue of ensuring peace in the Afghan capital in particular and in the country as a whole remains unresolved. According to a senior source of the agency, no changes in this direction are expected: the Taliban now have all the power in Afghanistan, "and they clearly do not want to divide it." Against the background of such a news flow, some analysts started talking about the possible expansion of the Taliban outside of Afghanistan.
As for the "Chinese issue", which also causes concern for traders, here the "war" is going on on the digital front. The Chinese authorities announced that in the near future they will develop new laws to regulate the sectors that have recently become large against the background of the entire Chinese economy (digital economy, internet finance, artificial intelligence, big data and cloud computing). According to media reports, Beijing is concerned about the excessive increase in the power of Internet giants. The main concern is the monopolization of various sectors of the internet economy and the excessive concentration of capital. For example, the total capitalization of Alibaba, Ant and Tencent in the year before last was about $2 trillion. Beijing considers the current situation "unacceptable", anticipating a possible threat of the transfer of control over Chinese companies into the hands of international structures. Against this background, the People's Republic of China announced the tightening of the rules for the entry of Chinese companies on foreign exchanges.
Anti-risk sentiment in the market has also increased "thanks" to New Zealand. This country defeated the pandemic at the beginning of the year – isolated cases of coronavirus infection were registered at the entry of citizens after foreign trips (that is, during the 14-day quarantine period). However, yesterday in Auckland, the first case of infection was detected inside the country. The reaction of the authorities was instant and harsh – because of one case of coronavirus, the country was "closed" for quarantine. And all this happened on the eve of the next meeting of the Reserve Bank of New Zealand, which should announce an interest rate increase (which many experts already strongly doubt).
Returning to the US retail sales data, it should be noted that the decline in indicators was due to a shortage of cars (production of cars slowed down due to a global shortage of semiconductors) and other goods. At the same time, experts note that spending on services can keep the US economy on the path of "strong growth" in the current quarter. Analysts interviewed by Reuters emphasize that the lion's share of consumer spending falls on services such as education, healthcare, and travel. While the only category of services in the retail sales report concerns the restaurant sector (which naturally sank in the States due to the spread of the delta strain). Probably, it is for these reasons that traders actually ignored today's release, demonstrating increased demand for the US currency.
Thus, any more or less large-scale corrective rise in the EUR/USD price can still be used to open short positions - to the middle of the 16th figure. From a technical point of view, the pair on the daily chart is located between the middle and lower lines of the Bollinger Bands indicator, as well as below all the lines of the Ichimoku indicator, which indicates the priority of the downward movement. The main support level (the target of the downward movement) is 1.1650 - this is the lower line of the Bollinger Bands on the daily chart.
