Analysis

Forex. Today, USD is weakening moderately against EUR

United States of America. Today, USD is weakening moderately against EUR, growing against GBP and moving horizontally against JPY.

US investors are focused on the trade conflict between the United States and China. During the last APEC summit in Papua New Guinea, Mike Pence said that the United States could double existing duties on Chinese goods and would not change course until China changes its ways. Chinese President Xi Jinping replied that protectionism in the modern world is short-sighted and doomed to failure. As a result, because of the trade disputes between China and the United States of America, the APEC leaders did not sign the final summit declaration. Thus, investors' hopes for Trump and Xi Jinping to conclude an agreement within the G20 meeting melted away. The US administration launched a list of requirements of 142 points towards the PRC, and last week, China presented a list of possible concessions, which, however, did not satisfy the United States. Now, further escalation of the conflict seems more likely than the reconciliation of the parties.

On Tuesday, October US construction market data will be published. It is predicted that Building Permits will decrease from 1.270 million to 1.260 million, and Housing Starts may increase from 1.201 million to 1.225 million.

Eurozone

EUR is strengthening against USD and GBP and is moving horizontally against JPY.

European investors are following the situation around Brexit in the hope that British Prime Minister Theresa May will be able to cope with the internal opposition and approve the treaty. Otherwise, there will be no new negotiations, and the UK will leave the EU without a deal. According to the head of European Council, Donald Tusk, the current version of the treaty provides the limitation of the damage caused by Brexit and ensures vital interests and principles of the 27 member states, and of the European Union as a whole. However, not all European countries agree with the view. So, Spain opposed the draft deal. This country disputes Gibraltar with Britain and insists that the agreement would not apply to it. If Teresa May still manages to persuade the British parliament, and the EU leadership persuades Spain, then the EU summit to discuss the deal will take place on November 25.

Great Britain

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

In the morning, GBP was supported by news that the Prime Minister intends to appeal to representatives of large British businesses in order to gain support and secure approval of the deal with the EU by parliament. Probably, the British business will really support the current version of the deal, as the alternative hard Brexit will cause it considerable damage. However, in the afternoon, GBP was corrected downwards due to the news that Spain has claimed to the Brexit agreement because of Gibraltar.

Japan

JPY is now strengthening against GBP and is moving horizontally against EUR and USD.

Investors are focused on Japanese trade data. In October, the trade deficit amounted to 449B yen. At the same time, the volume of exports grew by 8.2%, and the volume of imports increased by 19.9%. Separately, imports of goods from the United States grew by 34% due to food, oil, gas, and cars. However, exports of goods to the United States increased by 12%. Currently, Japan is trying to reduce the trade surplus with the United States to prevent the introduction of higher import duties on their cars.

Australia

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

The Australian currency is under pressure from the comments of US Vice President Mike Pence, who attacked China and said that the US administration could double import duties on Chinese goods. He made market doubt in the possibility of a trade agreement between China and the United States at the G20 summit. In case of an escalation of the US-China trade conflict, there is a threat of a 0.3% reduction in Australian GDP by 2022 ($36 billion).

On Tuesday, the Reserve Bank of Australia Meeting Minutes will be published, which may contain hints of further actions of the regulator.

Oil

During the day, oil prices were corrected downwards.

The instrument is under pressure of the Baker Hughes US Oil Rig Count, which grew for the second week in a row and amounted to 888 units. Increasing the production capacity of shale oil companies in the future threatens to increase US oil reserves, which, in turn, will affect the prices negatively.

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