20, August 2013

EUR/USD (a 4-hour chart)

EUR/USD (a 4-hour chart)

Economic calendar of the first half of the week is nearly empty. But on Thursday we expect publication of key figures of the week in the sphere of European business platforms of processing industry and the sphere of services. Economists expect the improvement in these indicators for the Republic of Germany in August compared with the previous month. In these expectations the currency of the EU will attempt to grow.

Weaker-than-expected U.S. economic data weighed on the dollar, dropping it against all major currencies. The uncertainty about the prospects for the U.S. economy has led to volatility in the foreign exchange market. Unfortunately, the economic reports only added to the question of what the Fed is doing the right thing by planning to narrow asset purchases this year. Consumer confidence in the U.S. retreated from 6 year high in August; the index of the University of Michigan consumer sentiment fell to 80 from 85.1. Details of the report showed less optimistic about current conditions and future prospects of the U.S. economy. Not surprisingly, the sluggish job growth, reducing the threat of incentives and reduction of stocks in the month of August made Americans less optimistic.

Last Thursday, surprisingly, the dollar index DXY fell, while Treasury yields broke through resistance to make new highs. Analysts rush to put forward the reasons for divergent actions. Analysts were divided on the question of reasons for the discrepancy. Some analysts pointed out that the bond market (falling prices and rising yields) reflects the "narrowing" of the program, and the weakness of the DXY at the end of last week, reflects an economy that is already weakened before the first "narrowing" of the Fed.