14.08.201710:05 Forex-elemzések és áttekintések: Weak dollar is a chance for the euro

Eurozone

The dynamics of the euro in the absence of significant macroeconomic publications were largely determined by news from overseas and technical factors.

According to the CFTC report, the net long-term value of euro continues to rise and reached a record high in 6 years published on Friday. There is a chance for euro to update the maximum from August 2 amid rising of risk aversion and the approach of a new financial year in the US, which almost certainly will cause a serious crisis in the work of the Trump and Congress administrations.

An estimate of the GDP growth in the eurozone for the second quarter will be published on Wednesday and expectations are neutral. The inflation report for July is scheduled to be released on Thursday. However, the focus will be on ECB's publication of the minutes since the market is looking for new signals regarding the pace of exit from the stimulus policy. Support is found in the 1.1665 / 82 zone where the growth will most likely be at 1.1892 / 1923 with the target at 1.24 for the month's outlook.

United Kingdom

For the week, the British pound traders looked for reasons to resume growth but failed to do so. The quarterly growth rate of GDP declined by 0.2%, according to NIESR. This confirms the slowdown of the economic trend wherein a weaker pound could not induce growth. The trade balance goes much further into the negative territory after the results in June turned out to be worse than the forecasts of experts.

Brexit is picking up its pace.

On Tuesday, a large report on production prices and consumer inflation in July will be published. The report is important since it is essential to the rate decision of the Bank of England.

Report on the labor market for June will be published on Wednesday. Experts predict that the unemployment rate will not change. Nonetheless, there is a minimal reason to wait for positive results since the average weekly income growth declined in the recent months and remains too low. The lack of growth in wages will have a negative impact on the state of the economy.

The retail sales report will be released on Thursday and there is no reason to expect positive results. Hence, there is a risk for the pound to decline even much lower by the end of the week. The cancellation of the dollar may be the only way to prevent the fall which still cannot be ruled out.

Oil and ruble

The OPEC report published last week turned out to be better than expected. A cartel of oil-producing nations forecasted an increase in demand for oil this year by 0.1 million barrels. It is similarly forecast per day while they have also assumed the possibility to maintain the current level of production in 2018. Global reserves will be reduced by 68 million barrels, which in itself will have a powerful effect on stabilizing the oil market.

At the same time, the U.S. gasoline stocks are growing while China is reducing imports which are negative signs. Currently, the oil market shows a bullish tone and there is a possibility of Brent to increase by 53 dollars per barrel and will be much higher by the end of the week.

Russia's GDP growth was significantly higher by 2.5% year-on-year compared to the forecast. The Inflation fell to 3.9% with the surplus of foreign trade amounted to 59.6 billion dollars in the first half of the year. It is 33.4% greater in the same period a year ago.

Slow inflation and overall economic growth led to an improvement in the business climate and lending conditions. Sberbank has made an unprecedented decline in the lower mortgage lending bracket to 7.4%.

A noticeable improvement in the economic situation can lead to the reduction of the Bank of Russia key rate by 0.5% in the next meeting. However, this step is unlikely to have a negative impact on the ruble exchange rate. It is justifiable for the demand for the Russian currency to increase and move to 56 rubles/dollar.