United States of America
USD is weakening against its main competitors – EUR, GBP, and JPY.
USD was under pressure due to the statements of Fed Chairman Jerome Powell at the meeting of the Economic Club in Washington. He confirmed that the regulator was ready to wait for the clarification of the economic situation before raising the rate again. However, other monetary tightening measures are likely to be implemented. Powell said that the Fed's balance would be significantly reduced but he did not mention the timing and volume of the procedure. Also, the head of the regulator noted that the long Shutdown may adversely affect the American economy. In particular, both the Fed and ordinary investors would stop receiving the full amount of economic data and this may lead to the adoption of wrong economic decisions.
News of the trade negotiations between China and the US is still encouraging the market. On the eve, of the US Treasury Secretary Stephen Mnuchin said that it can go to a higher level. It is predicted that Vice Premier Liu He will visit Washington in late January, and negotiations will continue.
Today, December US inflation data will be published. Core CPI is expected to stay at the level of 2.2% YoY, and the Consumer Price Index may drop from 2.2% to 1.9% and for the first time since August 2017 decrease below the target of 2.0%. The implementation of the forecast may have additional pressure on USD.
EUR today is strengthening against USD and JPY but weakens against GBP.
As there is a lack of significant economic releases, EUR is trading under the influence of American and British news. Investors remain optimistic about the negotiations between the United States and China. In the near future, the discussion of the deal may become more specific. Also, EUR is supported by the ongoing Shutdown of the US government and the Fed's intention to wait with the next rate hike. On Monday, investors are waiting for the publication of the November data on EU Industrial Production, which are expected to be poor. The indicator can fall by 1.3% MoM and by 2.1% YoY. The implementation of the forecast will affect EUR negatively.
GBP today is strengthening against the main competitors – EUR, USD, and JPY.
GBP is reinforced by rumors that Brexit may be delayed as the legislative framework is not ready yet. Its final date may be shifted from March 29 to a later date.
Today’s UK economic statistics was ambiguous. On the one hand, in November, Construction Output grew by 0.6% MoM and by 3.0% YoY, which exceeded market expectations. On the other hand, GDP growth over the past three months has decreased from 0.4% to 0.3%. In November, the volume of Industrial Production fell by 0.4% MoM and by 1.5% YoY. November trade deficit rose to 12.02 billion pounds.
JPY today is strengthening against USD and weakening against GBP and EUR.
JPY in under pressure due to an increase in investor demand for risky currency associated with the hope of successful trade negotiations between China and the United States, as well as to the negative economic statistics. Japan’s Personal Consumption Spending index YoY declined for the third time in a row. In November, the decrease was 0.6%. This jeopardizes the achievement of the inflation target of 2.0% and the growth of the Japanese economy.
AUD today is strengthening against EUR, JPY, and USD and is moving horizontally against GBP.
AUD is growing due to the strong Retail Sales data. In November, the figure rose by 0.4% and was the best in five months. The highest growth was shown by sales of clothes (1.5%) and household goods (1.2%). However, the Construction PMI fell for the fifth time in a row, as expected, this time from 44.5 to 42.6 points.
Today, there was no unidirectional movement of oil prices observed, the morning rise was replaced by a decrease in prices.
"Black gold" is supported by investors' hopes for a positive outcome of China-US trade negotiations and the end of the trade conflict in the near future. In addition, quotes are rising against the background of the Norwegian Petroleum Directorate, which reported a likely reduction in production by 4.8% to 1.42 million barrels per day in 2019, which is the minimum figure for the last 30 years. In the evening, investors are waiting for the publication of the Baker Hughes report on active oil rigs in the United States. Last week, their number decreased from 885 to 877 units. A further decrease in the indicator can additionally support the instrument.
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