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The market seriously ignores any macroeconomic data at all, which at least happened yesterday. But after the publication of all kinds of statistical data, the dollar was suddenly under strong pressure and this was reflected in all major currencies. Investors were suddenly worried about the prospects for the economic recovery in the US. The fact is that, unlike Europe, the United States still cannot accept any plan to support the economy. Instead, Democrats reject the Republican plan and vice versa. It's just that the presidential elections will take place in a month, and American politicians are busy with other personal things than its economy. Unfortunately, the American political class often puts its own interests above the interests of society, especially when there is a great opportunity to declare themselves the saviors of America. However, we can consider the Democrats and Republicans as the two applicants. So it is not possible to agree on anything there. At the same time, the Democrats have a majority in Congress, which means that they are the one who prevent the adoption of support measures. At first, they rejected the Republican plan and now, they have a long and painful discussion of their own plan. Everything looks like they are just waiting for the results of the presidential elections, after which they plan to adopt their plan, and blame Donald Trump why the economy failed.
In fact, there will be no adopted plan to support the economy before the elections. In the meantime, several large American companies have announced upcoming massive layoffs – the two largest air carriers announced this just yesterday. So, the bill goes to tens of thousands of jobs; therefore, support measures are urgently needed, especially in the form of direct cash assistance. In other words, business directly says that if the plan to support the economy is not urgently adopted, then massive layoffs will begin. The worst thing is that big business forms the labor market. One job in a large business, especially when it comes to industry, creates up to ten jobs in the service sector, in which small and medium businesses are most widely represented. That is, if large companies plan to lay off several dozen workers, then the entire economy will immediately lose hundreds of thousands of jobs. The moral of this is that the current recovery of the labor market as well as the entire economy may only be temporary, which scares investors and will frighten them for a long time.
Yesterday's macroeconomic statistics were somewhat better than forecasts, although it was ignored by the markets. So, if preliminary estimates of UK GDP for the second quarter showed growth in the rate of economic decline from -2.1% to -21.7%, then the final estimates showed that they accelerated to -21.5%. It is only a slight difference, but still better than forecasts.
GDP Change (UK):
The situation is similar in the United States, where the rate of decline in GDP Q2 was assumed to be -9.1% until recently. In fact, the economy is down by -9.0%, although the economy was growing by 0.3% in Q1. But what is much more interesting is employment, which increased by 749 thousand, against the forecasted growth by only 610 thousand. As we can see, everything is not bad in terms of the labor market recovery. However, all this does not matter in the light of recent statements by a number of large companies.
Employment Change (United States):
In the light of new circumstances and increased risks, few people will pay attention to macroeconomic statistics today. So, in Europe, the unemployment rate is expected to rise from 7.9% to 8.2%. To simply put it, Europe is still suffering while the labor market in the United States is already recovering. However, the risk of a new surge in unemployment in the US rose sharply, which became more relevant compared to months ago.
Unemployment rate (Europe):
It is precisely due to these fears that today's data on applications for unemployment benefits in the United States will also be almost ignored. Although the number of initial applications for unemployment benefits should decline from 870 thousand to 855 thousand, It is much more important that the number of repeated applications for unemployment benefits may decline from 12,580 thousand to 12,300 thousand. It turns out that the US labor market continues to recover confidently.
Number of initial claims for unemployment benefits (United States):
The EUR/USD pair has returned again to the limits of the previously passed side channel 1.1700/1.1900, where coordinates 1.1755 became the variable resistance level. We can assume that if the price fails to hold above 1.1755, we will be pulled into a variable gap between the levels of 1.1710/1.1755.
Like the European currency, the GBP/USD pair is in the correction stage where there is a high speculative interest. We can assume that if the price holds above 1.2940, a further movement towards the psychological level 1.3000 is not excluded.
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