Another portion of disappointing statistics on the US made the EUR/USD pair fly to the upper boundary of the trading range 1.1-1.14. At the same time the market ignored the information about the acceleration of eurozone GDP in the first quarter by 1.6%, the largest in four years, - rightly focusing the attention to the problems of the German economy, and showed increased activity in the release of US indicators. Should we blame for the EUR/USD spurt only the retail sales, which fell short of the expectations of experts for four of the last five months? It may be doubted. Zero growth after the revision of figures for March - from + 0.9% to + 1.1% looks no worse than the + 0.2% in April after 0.9% in the previous month. Yes, people still prefer to spend their savings, which is likely to go for more serious shopping in the future.
A more problematic situation is with inventories and import prices. The first indicator in March rose 0.1% while the forecast being + 0.2%, which allowed Barclays and Macroeconomic Advisers estimate lower the GDP for the first quarter - to -0.6% and -0,8%, JP Morgan Chase - from minus 0.8% to -1%. Isn't it too much cutting? In addition, the January-March is all about the past, and the same Macroeconomic Advisers believes that the current dynamics of stocks will accelerate GDP in the second quarter. Import prices in annual terms in the last 36 months increased only five times, and there is no need to blame only the oil. Excluding this factor, the dynamics of the indicator are not pleasing the eye, which puts a spoke in the wheel of inflation and the Fed's desire to increase the federal funds rate.
Dynamics of import prices - USA
Source: Zero Hedge.
Actually, it is more probable that the guilty factor is the revaluation of the dollar. In the spring the situation with it has radically changed, as well as with the black gold, so it is easy to predict the medium-term growth in import prices.
Maybe it is better to leave away the latest statistics on the US, which are not so bad to be the cause of moving the EUR/USD up to this peak? Maybe Steel ETF should be blamed, the ETFs that are focused on the operation of hedging currency risks, which are gradually abandoning their strategies, effective for the period of unchallenged dominance of the US dollar? Bloomberg drew attention to the fact that their assets in 2015 exceeded the assets of hedge funds, which once again confirms the importance of operations of these financial institutions for FOREX.
ETF assets and hedge funds
Source: Bloomberg.
By the way, in favor of the assumption that the US indicators were not as bad as the investors regarded it, you can note that practically there did not change the likelihood of the Fed's tightening of monetary policy: the chances of October are estimated at 37%, in December - 52%. Before the release of statistics on US was 40% and 56%. If we add to this the claims of Greece creditors to raise to at least 3 billion euro the demands in the budget due to the additional tax revenue, and also a statement of the popular portal ZeroHegde that repayment of Athens 750 million euro to the IMF was a simple farce, the situation is illogical. Someone wanted to get the stops above fourteen figures, but maybe we once again witness the market principle of "if everyone is buying, who is selling them?"