The US dollar index is consolidating near 99.50. Yesterday US retail sales data were released. As expected, the statistics were disappointing, as the growth was only 0.2% against the forecast of 0.5%. In addition, the survey conducted by the Federal Reserve Bank of New York showed that credit conditions continue tightening due to a serious increase in the interest rate by the Fed. So, it has become more difficult for US households to get new loans, and the number of applications is actively declining. New York Fed experts reported that the overall loan refusal rate reached its highest level since June 2018, amounting to 21.8%. Against this backdrop, the likelihood of an early end to the current tightening cycle has increased.
SELL STOP 99.60/TP 99.00/SL 99.80
EUR/USD
The EUR/USD pair is trading at 1.1220. In the absence of significant economic releases, the euro is driven by external factors. Investors are waiting for the release of June data on inflation in the eurozone: on an annual basis, core inflation could have reached 5.4%, pushing European Central Bank (ECB) officials to raise interest rates again. It’s worth noting that Netherlands central bank President Klaas Knot has already said that the ECB would closely monitor the statistics coming to the market in order to prevent increased pressure on the economy. Knot also added that this month the rate would be increased. Against this backdrop, we recommend maintaining long positions on the EUR/USD pair.
BUY STOP 1.1240/TP 1.1340/SL 1.1210
AUD/USD
The AUD/USD pair is trading near 0.68. Investors ponder the minutes of the recent monetary policy meeting of the Reserve Bank of Australia. The document states that before deciding to keep the interest rate at the same level of 4.1%, officials discussed the possibility of raising it by 25 basis points. Moreover, the regulator allows a further “hawkish” policy in the future against the backdrop of high energy prices and decreasing production volumes. Such rhetoric of the authorities may cause further growth of the Australian dollar, given that the rate in Australia is still lower than in other advanced economies, which are also fighting inflation.
BUY STOP 0.6800/TP 0.6860/SL 0.6780
