The global markets continue to nervously fluctuate amid the conflicting US economic statistics. First, and in some ways already equal to the Chinese economy, the American one still clearly shows an unambiguous prospect of recovery, and then growth.
From the positive data released on Thursday, we should highlight the publication of the number of initial applications for unemployment benefits, which declined to 406,000 against the forecast of 425,000, and interestingly, the previous values were also revised downward to 444,000. This is actually the whole optimism almost ends. At the same time, the value of GDP for Q1 remained at the same level until the final revision – 6.4% against the forecast of growth to 6.5%. And although core orders for durable goods rose to 1.0% in April against the expected 0.8%, they were still significantly lower than the March figures, and even revised up to 3.2%. The index of unfinished sales in the real estate market, which collapsed by 4.4% in April against the forecasted growth of 0.8%, also added negativity.
All this points to the fact that all the forecasts about a more active recovery of the US economy in view of the still-raging pandemic are not coming true. Earlier in the winter, the Fed and the US Treasury predicted strong economic growth, accompanied by soaring inflation. So far, only the effect of the latter factor is observed, but the growth of the economy is still far from expected. Nevertheless, it was assumed that America would be on the track to sustainable economic growth by summer.
What are the reasons that hinder this process?
There are several of them, but two main reasons will be single out – the COVID-19 pandemic that has not faded, which, despite the massive vaccination of the country's population, is still the most important regulator of processes in the national economy, and the corruption of the US population by massive support measures, which led to the fact that a significant number of the working population employed in low-paid jobs, began to prefer not to work and live on benefits from the government. That is why we are not seeing an increase in employment, which led to problems in the US economy.
The US stock market as a whole rose on Thursday. Investors clearly prefer stocks of long-term growth companies that experienced problems during the pandemic. We expect this process to continue.
As for the currency market, the US dollar is trading against major currencies in different directions. We believe that there is no need to say that the situation is somewhat beginning to differ significantly from last week. The main reason for the consolidation of the US dollar is the expectation of the publication of employment figures next week, which could give it both positive and negative impulse.
Forecast of the day:
The EUR/USD pair remains in a short-term upward trend, but shows all signs of the beginning of consolidation in anticipation of next week's US employment data. We believe that if the pair holds above the level of 1.2160, it will consolidate in the range 1.2160-1.2265.
The GBP/USD pair is also consolidating in the range of 1.4100-1.4225, where it can stay today. We can buy the pair on a decline with possible growth to 1.4225, and then to 1.4300.