EUR/USD: Fitch on display

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A rich news on both sides of the Atlantic for the Pair of Euro / Dollar currencies, but a relative stability of the courses, the day after a Council of Governors of the European Central Bank. A meeting struck by the French political and budgetary situation.

Unsurprisingly, the powerful monetary institution has left its “rent” from the unchanged Euro, based on a mastery of the trajectory of inflation.

“Growth in the euro zone is more robust than expected, unemployment is maintained at historically low levels, and inflation projections converge on the target of 2% (” the disinflation process is finished “). So many encouraging signs which allow the ECB to preserve a monetary policy deemed adapted to the current situation, and which seems to indicate that the policy should not evolve for a while”. Thuin, head of capital market strategies at Tikehau Capital.

The actor management manager retains this sentence: “” The risks on inflation are more balanced “. In terms of inflation, the ECB is confident but refuses to lower the guard. The investors keep in mind that several factors could relaunch inflationary pressures in the coming months: the depreciation of the euro, the rise in wages, or the effects of the budget boosts deployed by certain member states are So many factors to watch. “

Madame Lagarde was naturally questioned at a press conference on the French situation, while the waltz of successive governments of E Macron continues.

“Regarding the growing risk of political instability, especially in France, the president of the ECB has just stressed that the bond markets were normally operated, without any particular liquidity problem. In any case, the use of the instrument for the protection of the transmission of monetary policy has not been addressed by the Council of Governors,” noted Alexandre Perricard, president of Uzès Gestion.

A rather reassuring view of the approach of the publication this evening of an updating of the note of the French debt by the Fitch agency.

The most important macroeconomic statistics of the week was published Thursday besides the Atlantic: these are CPIs, for consumer prices (Consumers’ Price Index), one of the most direct measures of inflation. No surprise, inflation increases, by +2.7% to +2.9% at an annual rate, for the widest product basket, therefore including food and energy. However, it was expected.

The day before the operators were already aware of an inflation indicator, with barometer value that, the prices for American production for the month of August. And against all expectations, the production price index (PPI) fell 0.1% while the consensus awaited an increase of 0.3%. They had increased by 0.7% in July.

Enough to pave the way more towards a drop in rates from September 17, already paved by J Powell from the Jackson Hole symposium, and consolidated after the publication of the last federal relationship on private employment health.

“This report on prices shows once again that customs duties have for the moment had only a very limited effect on American inflation. The great caution displayed by Jerome Powell this year on the subject now seems overwhelmed by the degradation of the labor market, which is very clear. The Fed will therefore be able to resume its calmly rate cycle”, notes Bastien Drut, responsible for strategy and economic studies.

To follow at 4:00 p.m. the preliminary data, always very followed, of the confidence index of American consumers (U-Mich), awaited stable at 58.2.

At midday on the foreign exchange market, the euro was treated against $ 1,1720 approximately.

Key graphics elements

The pair of Euro / dollar currencies is in the marked ascending phase, background, above an oblique right that makes sense. We have represented this linear level of graphic support in black. In the immediate future, we will keep an eye attentive to the relative positioning of the mobile averages at 20 (in dark blue) and 50 days (in orange) to optimize the entry points.

Medium term

In view of the key graphic factors that we have mentioned, our opinion is neutral in the medium term on Euro dollar parity (Eurusd).

We will keep this neutral opinion as long as the EURO Dollar (EURUSD) prices are positioned between the USD 1,1608 support and the resistance to 1,1835 USD.

Daily data graphics