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Analytics for a week (16-22.12)

Euro \ dollar: Last week results and forecast for the upcoming period.

 

 

The euro / dollar rose last week to 1.1117. At the auction, quotes reached their maximum value since mid-August of the current year, and only one point did not reach the level of 1.1200.

The main reasons for the growth of the single currency were the victory of the Conservative Party in the parliamentary elections in the UK and the coordination of the first phase of the trade deal between the USA and China. Both events significantly reduce geopolitical and economic risks, so the demand for the euro is strengthening. The pair left the trading range 1.1000–1.1100, in which it was located for more than a month, but by the end of the week it returned to the upper limit of the range.

According to analysts at BNP Paribas, economic growth in the Eurozone is slowing sharply, and some countries, in particular Italy and Germany, are now close to a recession. Analysts cite the main reason for the decline in EU foreign trade due to reduced demand, especially from emerging economies. Last week, the Bundesbank lowered forecasts for economic growth and inflation in Germany for 2020. The estimate of GDP growth was halved from 1.2% to 0.6%. Recent data from the EU have shown some improvement, which is probably not yet systematic. A slight recovery in consumer price growth is unlikely to continue. Moreover, according to some estimates, inflation will return to about 1%, as a result of lower oil prices. Thus, the growth of the single currency will be limited by the weak performance of Germany and the Eurozone as a whole.

The European Central Bank at the first meeting with the new president kept interest rates unchanged. Christine Lagarde noted signs of economic recovery and stated that it is not a “hawk” or “dove” and will use those monetary policy tools that are best suited at a certain point. The markets almost ignored the outcome of the meeting, since the rhetoric was general in nature and no key statements were made. The ECB continues to plan to buy securities at 20 billion euros per month for an unlimited time to restore inflation to 2%.

The euro / dollar retreated on Friday from the level of 1.1200 and fell by almost 75 points. The abolition of new trade duties on imports of goods from China will certainly give a new short-term impetus to growth. However, weak inflation and a slowdown in activity in the manufacturing sector will not allow developing corrective growth into a full-fledged upward trend. In the long term, we still expect a decline in quotations back to the level of 1.1000 with a further continuation of the fall to the area of ​​1.0800.

In our forecast for the coming week, we assume an increase in the euro / dollar to resistance levels of 1.1130, 1.1150, 1.1175, 1.1200 and 1.1240.

Economic statistics next week.

In macroeconomic statistics coming out next week, the following indicators can be distinguished:

Monday

In Australia, the PMI will be released in the manufacturing sector, and in Japan - an indicator of business activity in the manufacturing sector. China will publish a housing price index, retail sales and industrial production data. A press conference will be held by the National Bureau of Statistics of China.

In the UK, Rightmove Housing Price Index will become known. In France, Germany, the UK and the Eurozone will publish indicators of business activity in the manufacturing sector and in the service sector. In the Eurozone will also come out cost data per unit of labor. The UK will present the minutes of the meeting of the Committee on Financial Policy and the report on financial stability.

In Canada, published data on investments in national and foreign securities. The US will publish the index of business activity in the manufacturing sector of the Federal Reserve Bank of New York, an indicator of activity in the services sector and an indicator of the market value of housing.


Tuesday

Westpac consumer sentiment survey and Reserve Bank business optimism index will be published in New Zealand. In Australia, there will be a minutes of the Reserve Bank meeting, data on mortgage loans and investment loans for the construction of houses.

In the UK, the unemployment rate, the number of applications for unemployment benefits and the change in average wages are unveiled. The Confederation of British Industrialists will present a change in the volume of industrial orders. In the Eurozone will publish the trade balance.

Canada will release production supplies. In the United States will publish the Redbook retail sales index, changes in the number of building permits, industrial production data and the number of open vacancies JOLTS. Boston Fed Chairman Eric Rosengren will give a speech. The American Petroleum Institute will present changes in oil reserves last week.


Wednesday

In New Zealand, the quarterly balance of payments and current account will be published. In Japan, there will be a general trade balance, data on imports and exports. In Australia, published an index of leading economic indicators Westpac.

In Germany, the assessment of the current situation will become known, indicators of producer prices, business optimism and economic expectations will come out. In the Eurozone, a meeting of the Central Bank will take place on issues not directly related to monetary policy. ECB President Christine Lagarde will deliver a speech. In the UK, there will be indices of basic and basic consumer prices, retail prices and producer prices,. The Eurozone will also publish inflation data, including basic and basic indicators of consumer prices. The National Bank of Switzerland will submit a quarterly report.

Lal Brainard, representative of the US Open Markets Committee, will deliver a speech. In Canada, the consumer price index will become known. Energy Information Management will present changes in commercial oil inventories in the US last week.


Thursday

New Zealand will publish data on imports and exports, the overall trade balance and economic growth indicator for the third quarter of 2019. Japan will present investment data in national and foreign securities. A meeting of the Bank of Japan will take place, the regulator’s decision on the interest rate will become known, and a press conference of the Bank’s management will be held. Australia will publish data on full and part-time employment, the unemployment rate and the rate of sales of new homes.

Switzerland announces import and export data and general trade balance. In the UK, retail sales data will be released. The Confederation of British Industrialists will present a retail report. A meeting of the Bank of England will take place, the decision on the interest rate and the planned volume of asset purchases will become known. The British regulator will publish a report on monetary policy and the minutes of the meeting.

In Canada, there will be wholesale sales data and an ADP employment report. In the United States will publish the number of initial and repeated applications for unemployment benefits, the index of business activity in the manufacturing sector of Philadelphia and sales data on the secondary housing market. Energy Information Management will present changes in natural gas reserves last week.


Friday

In New Zealand will publish the consumer confidence index ANZ. In Japan, the consumer price index will be released. A meeting of the People’s Bank will be held in China, the decision on changing the interest rate will become known.

In the UK and Germany, consumer confidence indices from Gfk will be released. In the Eurozone will publish the balance of the current account. In the UK, published the indicator of economic growth for the third quarter, balance of payments and total commercial investment. The Bank of England will submit a quarterly report. In the Eurozone, the level of consumer confidence is unveiled.

In Canada, there will be data on retail sales and a housing price index in the primary market. In the United States will publish annual GDP data, the price index of personal consumption expenditures, personal income indicators