FX.co ★ US dollar ignored weak statistics and continue its growth

The US dollar increased despite disappointing US macroeconomic reports. It is like an elephant from a fable that follows a chosen path, although it is distracted by the barking of a dog, that is, in this context, negative statistics.

Last night, the indicated currency rose amid shocking macroeconomic data from the United States. Nevertheless, reports on industrial production that came out later turned out to be better than forecasts and supported the dollar's growth. According to the US Department of Commerce, retail sales in monthly terms declined more than expected – by 1.1% instead of 0.3%. At the same time, the June figure was revised upward from the previous 0.6% to 0.7%. The sharp drop in the US retail sales is due to low sales of cars, as well as a noticeable decline in consumer demand amid the activation of the delta strain of COVID-19.

Industrial production turned out to be in the best position: it grew stronger last month than forecasts – by 0.9% against the expected 0.5%. The increase in the level of industrial production in the United States is due to significant support from the manufacturing industry.

The US currency has benefited from the decline in macro statistics. However, its growth stopped after the release of the report on the growth of industrial production in the United States, but then resumed strengthening a little later. In view of this, the sellers of USD were the losers: they failed to sell the US dollar at the peak of negative statistics. At the same time, the EUR/USD pair corrected by 0.5%, that is, to the level of 1.1720, remaining under the pressure of disappointing statistics.

On Tuesday evening, the euro declined against the dollar to 1.1715. To date, the US dollar has tried to strengthen its position, having established itself in the status of the main currency. On the morning of Wednesday, the EUR/USD pair was trading around the level of 1.1716, with varying success trying to go beyond the current range.

From the point of view of technical analysis, there is a certain imbalance in the EUR/USD pair. The pair has to hold current positions since it is gradually losing its "bullish" momentum against the background of crossing the 20-day moving average. The technical indicators continue to decline, which indicates a growing "bearish" pressure.

According to analysts, negative macro statistics in the United States are associated with investors with a long process of curtailing stimulus programs from the Fed. Experts believe that the continuation of the current trend may lead to an increase in risk appetites and promote USD sales.

Currency strategists at HSBC bank believe that the US dollar will remain in the leading positions, rising on the crest of the wave of the global economy. The bank noted that it has reached a peak, having provided significant support to the US dollar. They expect that the dollar will significantly strengthen by the end of 2021 and in 2022.

"The slowdown in the growth of the global economy and the gradual movement of the Fed to normalize monetary policy (DCP) contribute to the growth of the dollar against most world currencies. This trend will continue until the end of 2021 and in 2022," HSBC summarizes.