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28.07.2015 18:19

American focus: the dollar significantly higher against the euro

The Canadian dollar has appreciated sharply against the US dollar, reaching a maximum at the same time July 16, due to a sharp rebound in oil prices and the publication of weak data on US consumer confidence. However, experts note that in general the oil remains in line with the bearish trend, dropping from highs last year, more than $ 60. Recall that the cyclical minimum was recorded in January at $ 43.89 per barrel.

With regard to statistics, the report submitted by the Conference Board, showed that US consumer confidence index fell in July to a level of 90.9 points against 99.8 points in June (revised from 101.4 points). Economists had expected the index was 100.0 points.

The report said that the expectations index fell to 79.9 in July from 92.8 in June, while the current situation index fell to 107.4 points from 110.3 points. The share of consumers who believe that business conditions are "good" decreased to 24.2 percent from 26.1 percent, while the number of reported otherwise remained almost unchanged - at the level of 17.9 percent. As regards the situation in the labor market, the percentage of respondents who reported a sufficient number of jobs fell from 21.3 percent to 20.7 percent, while those who argue the opposite, increased to 26.7 percent from 26.1 percent. The proportion of consumers expecting their incomes rise, decreased from 17.6 percent to 17.0 percent, while the number is expected to decline, rose to 11.2 percent from 10.6 percent. "Consumer confidence fell sharply in July after rising in June. Consumers continue to positively evaluate the current conditions, but their short-term expectations have worsened this month. The less optimistic outlook for the labor market, and perhaps the uncertainty and volatility in the financial markets caused by the situation Greece and China, seems to undermine the confidence of consumers, "- said Lynn Franco, director of economic indicators The Conference Board.

The euro retreated from session low against the dollar, but still continued to show a marked decline. Little support for the European currency had data on US consumer confidence, which were worse than experts' forecasts. Meanwhile, the dollar strengthened after the sell-off in the Chinese stock markets undermined demand for risky assets. On Monday, shares in Shanghai collapsed maximum sessional pace in eight years, and continued to decline on Tuesday, despite expectations of additional stimulus from the government.

Dollar growth expectations also contribute to the outcome of the meeting of the Federal Reserve's monetary policy. Investors hope to get any indication as possible rise in interest rates. Fed Chairman Janet Yellen earlier this month mentioned the possibility of raising interest rates in 2015, the regulator, if the growth will continue unabated. If the Fed's statement to be made on Wednesday, will contain hints at tightening monetary policy, investors will be strengthened in the view that interest rates could be raised in September.

We also add that on Thursday is scheduled publication of US statistics on economic growth for the second quarter. The data is expected to show economic recovery after the recession in the first quarter caused by the severe winter conditions.

The pound rose against the dollar significantly, received major support from the UK GDP data. Also contributed to the growth of the pound weak statistics on the US potrebdoveriyu. Recall, the growth of the UK economy in the 2nd quarter accelerated to improve the prospects for the second half of the year, but the question is how long the Bank of England will keep interest rates at record lows. According to data released on Tuesday the National Bureau of Statistics, the UK GDP in the 2nd quarter increased by 0.7% compared with the previous quarter and by 2.8% compared to the same period of the previous year. These data are preliminary, but they point to the UK's economic recovery after a slowdown in Q1, when GDP growth was only 0.4%. Restoring growth in the UK was due to strong activity in the services sector, which is a little disappointing in the beginning of the year, but now, apparently, will be supported by rising incomes and low inflation.

Market Focus

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  • Australian unemployment rate stable at 5.6% in June
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