Vang SJC

Yesterday, pair EUR/USD soared nearly 0.9% because dollar was under intense pressure from the negative CPI and less hawkish statement from Fed.

EUR/USD closed at $1.1117, compared with the opening price $1.1018

US Consumer price index (CPI) rose only 0.1% in July showing deflation, due to air freight recorded its biggest slide since 1995. The FOMC minutes implied hike rate is approaching but less likely in September.

While the US labor market has a positive progress, Fed wants a better unemployment rate than 5.3% . At the same time inflation is believed to remain low for long time, because the price of commodities, including crude oil, plummeted and Chinese goods are becoming cheaper (especially after the yuan depreciation).

Today, the pair continued impressive gains yesterday, trading at $1.1131 at 12:49 pm GMT+7, up 0.1% compared with the opening price ($1.1117).

After pass the most difficult hurdle in the German parliament on biding vote, European Stability Mechanism (ESM) has approved 86 billion euro bailout for Greece yesterday. The first disbursements of 13 billion euros will be conducted today (August 20th), just in time for Greece to repay 3.2 billion euros to the European Central Bank (ECB). This means there will be a large amount of euro was poured into the market, probably creating downward pressure on the currency.

Tonight the US will announce the Unemployment claims, Existing home sales and Philly Fed manufacturing index. In general, the US labor market is progressing well, sentiment on the housing market is also increasing, so the data can be positive enough to support for the dollar. Philly manufacturing index in July is expected to rise to 6.9 from 5.7, a positive sign for the US economy.

Forecast: US positive data might drive EUR/USD to edge down to about $1.1059. In the opposite case, the news may help the pair to rise to around $1.1200, after falling to $1.1090.

Ban Mai