Market Review

Key releases

United States of America

Today, USD strengthens against JPY and moves horizontally against EUR and GBP.

USD is growing, despite the alarming external background. On Friday, it was reported that the meeting of President Donald Trump and Chairman Xi Jinping, which had been an indispensable condition for the US administration to conclude a large trade deal, would not take place until March 1. Now the market hopes for the extension of the truce in the trade conflict between the United States and China. Consultations of the US and Chinese officials begin in Beijing today, and the main round of talks will take place at the end of the week.

Also, the likelihood of a re-closure of the US government has a negative impact on the market, since negotiations between Republicans and Democrats failed because of the desire of the democratic part of Congress to limit the number of places for migrants to be held in custody. The last closing cost the US economy from 6 to 11 billion dollars, which is likely to adversely affect the US Q1 GDP. The new Shutdown may worsen the situation.

Eurozone

EUR is weakening today against USD but is strengthening against JPY and GBP.

As there is a lack of significant economic releases, EUR movement is technical in nature. Investors are focused on the Brexit and the upcoming new round of trade negotiations between the United States and China. The EU and UK negotiator teams led by Michelle Barnier and Steve Barkley should again discuss the controversial issues of the deal. At the end of the week, the American delegation led by Finance Minister Stephen Mnuchin and sales representative Robert Lighthizer will hold talks in Beijing with Chinese Deputy Prime Minister Liu He. Their success may lead to the extension of the trade truce and the abolition of the threat of the introduction of new US import duties.

United Kingdom

GBP is strengthening against JPY today but is weakening against USD and EUR.

GBP is under pressure from a poor economic statistics block published today. The Q4 2018 growth of the UK economy was the worst since 2012. The indicator dropped from 0.6% QoQ to 0.2% QoQ and from 1.6% YoY to 1.3% YoY. The volume of industrial production in December decreased by 0.5% MoM and by 0.9% YoY. Automobile production suffered the most, falling by 4.9%.

Japan

JPY is weakening today against its main competitors – EUR, GBP, and USD.

Today is a day off in Japan; the stock exchanges are closed, so the movement of JPY is of a technical nature. On Tuesday, investors are waiting for the publication of January data on the volume of orders for machine-building equipment in Japan. The last time the figure fell by 18.3%. If the trend continues for the fourth month in a row, JPY will be under pressure.

Australia

AUD is weakening against USD and EUR and is moving horizontally against GBP and JPY.

Due to a lack of significant economic releases, the movement of the Australian currency is technical in nature. On Tuesday, investors are waiting for the publication of data from the Australian construction market. It is predicted that in December the volume of housing loans will reduce for the second month in a row, this time by 0.2%. The volume of investments in real estate in November fell by 4.5%, and in December it the trend may develop. The implementation of forecasts will affect the instrument negatively.

Oil

Today, oil prices have moved horizontally. The morning decline was replaced by growth and restoration of lost positions.

The market background remains negative. On Friday, it became known that the meeting of the leaders of the PRC and the United States would not take place until March 1, the deal would not be signed, and the threat of a new increase in US export duties remained. This week, US-China trade negotiations will continue in Beijing but their prospects are vague. Additional pressure on prices has increased the number of US Baker Hughes Oil Rigs count, which has risen from 847 to 854 units.

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