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21.02.2020

Manufacturing and Services PMIs. UK, 11:30 (GMT+2)

At 11:30 (GMT+2), preliminary data on Manufacturing and Services business activity indices in the UK for February will be released. The indicators are compiled from the enterprises responses about their purchasing activities and supply situations. At the same time, the attitude of purchasing managers to the current economic situation and prospects for its further development is evaluated. It is expected that the Manufacturing PMI will decrease from 50.0 to 49.7 points and again move to the stagnation zone, while Services PMI will drop from 53.9 to 53.4 points. If the forecast proves right, GBP may fall under pressure.

DJIA: general review

Dow Jones index slightly deviated from the historical high at 29500.0 and is trading at 29100.0. There was no short-term reaction to the publication of FOMC protocols, but key aspects of the report can set goals for a long-term trend in the index. Firstly, the federal funds rate was kept in the target range of 1.50%–1.75%, which is quite appropriate for the current monetary policy. Secondly, the general inflation rate remains below 2%, which allows us to expect a decrease in the indicator in the future.

Manufacturing and Services PMIs. EU, 11:00 (GMT+2)

At 11:00 (GMT+2), preliminary data on Manufacturing and Services business activity indices in euro area for February will be released. The indicators are compiled from the enterprises responses about their purchasing activities and supply situations. At the same time, the attitude of purchasing managers to the current economic situation and prospects for its further development is evaluated. It is expected that the Manufacturing PMI will decrease from 47.9 to 47.5 points, while Services PMI will decline from 52.5 to 52.2 points. The implementation of the forecast can put pressure on EUR.

GBP/USD: strong dollar controls the market

The GBP/USD pair moves within the downward channel of 1.2870–1.3100. Since last week, the upper limit of the range has shifted downward. The rate depends on USD dynamics and ignores the vast positive UK macroeconomic statistics: reducing the number Claimant Count to 5.5K with the forecast of 22.6K, reducing the deficit in the growth of CPI to –0.3% against the expected –0.4%, and finally, the growth in retail sales for January to 0.9% against the forecasted 0.7%.

Manufacturing and Services PMIs. Germany, 10:30 (GMT+2)

At 10:30 (GMT+2), preliminary data on Manufacturing and Services business activity indices in Germany for February will be released. The indicators are compiled from the enterprises responses about their purchasing activities and supply situations. At the same time, the attitude of purchasing managers to the current economic situation and prospects for its further development is evaluated. It is expected that the Manufacturing PMI will decrease from 45.3 to 44.8 points, while Services PMI will decline from 54.2 to 53.8 points. The implementation of the forecast can put pressure on EUR.

XAU/USD: gold prices are rising

Gold prices show steady growth during today’s Asian session, updating record highs of February 2013. The quotes are supported by the continuing uncertainty surrounding the further spread of the coronavirus. Despite all the efforts of the Chinese authorities, as well as the relatively stable statistics of cases, investors are extremely sensitive to any new cases recorded outside of China.

Morning Market Review

EUR shows a slight increase against USD during today's Asian session, consolidating near three-year lows, once again updated on Thursday. Market problems dominate over EUR, which has been showing the worst results since 2015. Negative macroeconomic statistics, the threat of a recession in the German economy, as well as the uncertain prospects for trade negotiations with the UK negatively affect the dynamics of the instrument. At the end of the week, investors expect the publication of statistics on business activity from Europe, but the forecasts again do not promise anything good for EUR. Manufacturing PMI in Germany may fall in February from 45.3 to 44.8 points; Markit Composite PMI may decline from 51.2 to 50.8 points. In addition, on Friday, traders expect the publication of January statistics on consumer inflation in the euro area.