The US retail sales data released this Monday showed 0.5 percent rise in June, and last month’s spending growth was revised to 1.3 percent from 0.8 percent, confirming the accelerating consumer spending in the second quarter.
Federal Reserve Chairman Jerome Powell maintained an upbeat outlook for the U.S. economy during his semiannual testimony before the Senate Banking Committee on Tuesday. The prospect on continuing to raise interest rates still remains strong despite the uncertainty over Trump administration’s trade policy. The DXY remained indifferent to an upward revision in the Atlanta Fed GDP Now estimate and softened before the testimony, closed at 94.27 on Monday, but surged further because of Powell’s hawkish tone. At the time of writing, the index is traded beyond 95.
The GBP/USD pair fell to a 10-months low level on Wednesday after the data showing that UK’s inflation grew at a rate of 2.4% in June, falling short of expectation and diminishing chances for interest rate hike by the Bank of England. Before the inflation figures, the employment data released showing a record high job creation while the wage growth slowed to a weaker rate compared to the past months. Theresa May’s leadership remains challenged as David Davis, Britain’s chief Brexit negotiator resigned late Sunday. And the divisions in UK’s government over incoming Brexit prompted raised political uncertainty and prompted more bearish market sentiment.
Euro weakened against major counterparts ahead of the release of Eurozone CPI, closing at 1.1611 on Wednesday. The final data reached 2.0% on a yearly base in June, while the core annual inflation came in at 0.9% which fell short of the expectation of 1%. And in reaction to Fed’s hawkish comments about the US economy strength, the EUR/USD pair slumped to a three-week low. Some eastern European countries are eyeing on the adoption to the common currency zone. Bulgaria has made progress on meeting the formal criteria and other countries like Croatia and Romania are putting forward plans. On Wednesday, US published June’s homebuilding and housing statistics-both housing starts and building permits dropped by a lowest level in past two or three years, showing the downside pressure on both sides of the housing market. The residential investment data could have impact on economic forecast for the second quarter. In short term, the pair price will test the retracement zone at 1.1650.
On April 17th, I Know First issued 3-month forecast for the currencies. During the prediction period, I Know First Algorithm gave USD/ARS a signal of 13.08 with the predictability of 0.45, suggesting we have very strong confidence that this pair would surge and gave bullish view on dollar against Argentina Peso. we gave GBP/USD a signal of -0.92 with the predictability of 0.58, suggesting we had bearish view on this pair and indicated that pound would fall against dollar. The actual movement was -8.53%, which mirrored our forecast. Our algorithm also successfully predicted EUR/USD movement based on algorithms by providing a signal of -1.06 and a predictability of 0.37. The actual movement of this pair was -5.81% in the forecasting time period.
Algorithmic Currency Forecast: The table on the left is the forex forecast for the forex outlook produced by I Know First’s algorithm. Each day, subscribers receive forecasts for six different time horizons. Note that the top 54 currencies in the 1-month forecast may be different than those in the 1-year forecast. In the included table, only the relevant currencies have been included. The boxes are arranged according to their respective signal and predictability values (see below for detailed definitions). A green box represents a positive forecast, suggesting a long position, while a red represents a negative forecast, suggesting a short position.