The USD is in demand. Overview for 19.07.2021

EURUSD fell a little bit; the “greenback” is in demand again. 

The major currency pair is changing its direction again. The current quote for the instrument is 1.1800.

The American currency has a lot of market sympathies after the statistics confirmed that the national economy was recovering. For example, the Retail Sales report published last week showed that the population’s demand for goods remains quite high despite a slight advantage in favour of services. In June, the indicator added 0.6% m/m after plunging by 1.7% m/m in May and against the expected decline by 0.4% m/m. 

At the same time, the Core Retail Sales added 1.3% m/m against the expected growth by 0.4% m/m. 

The components of the report show that sales increased at electronics & appliance stores, gasoline stations, clothing & clothing accessories stores, general merchandise stores, miscellaneous store retailers, and restaurants and bars. On the other hand, motor vehicles' sales dropped 2.0%, as a global semiconductor supply squeeze hit production.

The preliminary report on the Consumer Sentiment from the University of Michigan turned out to be weak. The indicator dropped to 80.8 points in July after being 85.5 points the month before, although it was expected to improve up to 86.5 points. The actual reading is the lowest over the last five months and raises concerns about the inflation boost. 

The Current Conditions dropped to 84.5 points, the lowest reading over 11 months. The Consumer Expectations went from 83.5 points in June to 78.4 points this month. 

The US Federal Reserve said that there were no reasons to be afraid of high inflation because it was temporary. However, the market response suggests otherwise.