17.08.201703:30 Forex Analysis & Reviews: The Dollar Grew and the Market's Focus Now is the Fed Meeting Minutes

Strong data on retail sales and their volume gave markets optimism about the state of the US economy and supported the dollar.

According to the presented statistics, the base retail sales index jumped 0.5% in July against the forecast of growth by 0.3% and the June value of 0.1%. The volume of retail sales also increased significantly, by 0.6%, with expectations of an increase of 0.4% and a June figure of 0.3%. The data really turned out to be strong, and not only contributed to the growth of optimism in equity markets in the US, but also in Europe. And, of course, they became an incentive for the local growth of the US dollar on the wave of reducing the degree of tension around the verbal skirmish between Washington and Pyongyang.

In addition to these positive data, on Tuesday there were still figures of the index of manufacturing activity NY Empire State, which showed a strong growth in August to 25.2 points against the forecast of growth to 10.0 points and the July value of 9.8 points.

But if the dollar on Tuesday turned out to be a favorite in the world foreign exchange market, then the euro and the British pound along with the Japanese yen became one of the main outsiders. The yen fell against a background of a certain decrease in geopolitical tensions, but sterling and the euro became hostages to weak statistical data. The euro fell under the sell-off even before the release of statistics from the US due to published weak data on Germany's GDP for the second quarter.

According to the presented data, Germany's GDP grew significantly lower than expected in the second quarter, 0.6% in the quarter against the forecast and the previous value of 0.7%, year on year, growth slowed to 0.8% against the expectation of a 1.9% increase against the previous value of 3.2%.

Sterling fell due to the release of weaker than expected figures on consumer inflation, which in annual terms remained at the previous level of 2.6%, and for the month fell by 0.1%.

Data from Germany, respectively, reduced expectations that the ECB could decide in September to announce the elimination in 2018 of incentive measures. And sterling declined markedly due to a drop in expectations that the Bank of England will raise rates this year.

Today, the focus of the market will be the promulgation of the protocol of the July meeting of the Federal Reserve on Monetary Policy. It can have both negative and positive impact on the dollar exchange rate.

Forecast of the day:

The pair EURUSD is trading above the level of 1.1720. It can resume the decline if the minutes of the Fed meeting do not reduce expectations on rates and specify the scope for reducing the balance of the regulator. Against this background, the price may fall after overcoming the level of 1.1720 to the level of 1.1625.

The pair GBPUSD is trading above the level of 1.2845, overcoming which could lead to a drop in the price to 1.2750. At the same time, if the protocol reveals an increase in concerns by FOMC members about the lack of inflation, the pair may adjust to 1.2965. But, despite this, we believe that the pair will continue to decline, so it must be sold on growth.