European session review: US dollar rose slightly against the euro

The following data was published:

(Time / country / index / period / previous value / forecast)

6:00 Germany Industrial Production (m / m) June -1.3% 0.7% 0.8%

7:15 Switzerland Consumer Price Index m / m in July 0.1% 0.5% -0.4%

7:15 Switzerland Consumer Price Index y / y in July -0.4% -0.3% -0.2%

8:30 Eurozone indicator of investor confidence from Sentix August 1.7 4.2

The euro fell slightly against the dollar, returning to the opening level. In general, the USD is consolidating after Friday's rally, which was caused by the publication of US labor market data. Recent statistics has been very supportive, which convinced investors in the stability of the economy and forced them to reconsider the forecasts regarding the timing of rate hikes. Today futures on interest rates suggest that the market takes into account a 15% probability of a rate hike in September and 43% in December.

The further decline of the euro hampered by returning risk appetite, as well as today's data for Germany and the euro zone. Ministry of Economy of Germany said that the seasonally adjusted industrial production in June increased by 0.8% compared with the previous month. Ministry of Economy of Germany said that the seasonally adjusted industrial production in June increased by 0.8% compared with the previous month. Economists had expected an increase of 0.7%. Manufacturing output increased by 1.5%, whereas in construction it fell by 0,5%. The data also showed that in the 2nd quarter, the industrial sector recorded a decline of 1% compared to the 1st quarter. " Overall, today's data weakened fears of a hard landing of the German economy in the 2nd quarter" said ING economist Carsten Brzeski

A survey presented by Sentix research group, showed that investor sentiment in the euro area improved significantly in August, as markets have examined the initial shock of the UK decision to leave the European Union. According to the data, investors confidence indicator rose in August to 4.2 points compared with 1.7 points in July. Analysts had expected the index to rise only 3.0 points. The sub-index of expectations rose in August to 4.8 points versus -2.0 points in July. However, the sub-index assessing the current conditions in the euro area deteriorated to 3.8 points from 5.5 points, reaching its lowest level since February last year. Investors more positively assess the prospects of Germany - the expectations index rose to 7.0 from 2.7 in July.

The pound has fallen sharply against the dollar, but then recovered in response to the resumption of risk appetite. However, Friday's data on US labor market and the Bank of England's readiness for aggressive policy easing continues to put pressure on the pound. Recall, last week the Bank of England lowered its rate to a record low and increased the volume of bond purchases to soften the negative impact of Brexit. Central Bank officials also signaled that they could even reduce the rate more. In general, the last stimulus program indicates a strong concern of officials about the economic outlook.

The course of trading was also affected by the expectations of tomorrow's statistics on industrial production in the UK. It is expected that by the end of June, industrial production increased by 0.2% in monthly terms and by 1.6% y/y. Meanwhile, production in the manufacturing sector is likely to contract by 0.2% in the month and increased by 1.3% y/y.

EUR / USD: during the European session, the pair has dropped from $ 1.1104 to $ 1.1079

GBP / USD: during the European session, the pair fell to $ 1.3031, but then partially recovered

USD / JPY: during the European session, the pair rose to Y102.45