FOMC Meeting minutes were published at 6 p.m. on Wednesday. According to minutes ‘members noted that while there had been some improvement in economic conditions over the intermeeting period and the overall outlook remained favorable, significant risks and uncertainties attending the outlook remained.’ What is notable is that two FOMC members dissented with the Board’s decision – E. George and E. Rosengren. Both believe that the situation is stable and doesn’t require additional monetary policy accommodation.
EUR/USD weakened and dropped from 1,10980 to 1,10860 but the strongest impulse the market got was on PMI indices in France and in Germany. According to Markit Economics the situation slightly improved – German PMI was released at 43,6 (the forecast was 43,0); French index was published at 53,3 against the forecast 52,5. We cannot forget that this data is preliminary and the revised fact is being released on 2-nd September.
USA PMIs were disappointing. Manufacturing index fell below 50 (49,9) and Services index is slowing down too (50,9).
Unfortunately for European currency bulls USD remains strong. If Powell is not ‘too hawkish’ tomorrow EUR/USD will have a chance to hit 1,10300 soon.
Also, tomorrow new home sales for July are being published. Economists are optimistic. The forecast is +649K – better than the previous month. We are not so sure about this, appealing to MBA statistics. MBA mortgage market index was falling down in July. Mortgage applications were not rising.
Picture 1. MBA mortgage market index
Today we would like to pay your attention to EUR/CHF. EUR is touching its resistance line and as usual there are two possible options here. If the pair breaks the trend line up the target may become 1,09865. There are signals from indicators to buy, but we strongly recommend to wait for the breakthrough.
Picture 2. EUR/CHF 1D TF