Analysis

The US currency is strengthening today against its main competitors

USA. The US currency is strengthening today against its main competitors – the pound, the euro and the yen.

Investors are still reacting to the yesterday’sFOMC Meeting Minutes and are waiting for the G20 summit results. According to the Minutes, the majority of the members of the regulator considers it necessary to increase the rate one more time in December. However, some officials are concerned that the rate is now close to neutral, and its further increase may put pressure on inflation. Nevertheless, the market is waiting for three more increases next year.

At the G20 summit in Buenos Aires there should be a meeting between President Trump and PRC Chairman Xi Jinping. No one expects a breakthrough in negotiations, however, it is likely that some documents will be agreed upon, on the basis of which further negotiations will be possible. Apparently, both sides will be forced to make compromises. The introduction of the new increased duties promised by Trump in the event of a failure of the negotiations will put new pressure on the PRC economy, and the country's GDP will decline for the second quarter in a row (now it’s 6.5%). At the same time, the US administration is under pressure from its own companies, which suffer losses from tariff increases, in some states this has already led to job cuts and even bankruptcies. Moreover, according to recent studies, the rise in prices for Chinese goods in 2019 may lead to an increase in the expenses of each American citizen by $915, and for the average family by $2,400. Thus, agreements are crucial by both parties.

Eurozone

The European currency is weakening today against the US dollar and the yen, but is strengthening against the pound.

The European currency is under pressure of a weak preliminary data on inflation in the Eurozone. In November, the consumer price index fell from 2.2% to 2.0%, and the basic consumer price index from 1.1% to 1.0%. According to Eurostat, the rise in prices was due to the increase in the cost of energy and food, but the November decline in oil prices could put additional pressure on inflation. On the other hand, the weakening of the euro is hindered by strong data on retail sales in Germany. In October, they rose sharply by 5% after a decrease in September by 2.8%. Also, investors are following the issue with Italian budget. Italian Prime Minister Giuseppe Conte announced that, in accordance with the requirements of Brussels, he is working to reduce the national budget deficit for the next year.

Great Britain

The British currency today is weakening against its main competitors – the euro, the yen and the US dollar.

British Prime Minister Theresa May is still trying to convince MPs and the public to approve the Brexit deal. At the present time, in the words of her opponents, May switched to intimidation tactics, explaining that a British exit from the EU without a deal will lead to significant losses for the economy. According to the latest analysis of the British treasury in the event of a tough Brexit, the British economy will lose 3.9% within 15 years after the country's withdrawal from the European Union. And according to the calculations of the Bank of England, a “divorce without a deal” could result in a decline of the British economy by 8% in the first months after the country's withdrawal from the EU. A vote in parliament on a deal with the EU is scheduled for December 11, and so far, May’s supporters have no majority. On the eve of the vote Teresa May and Labor Party leader Jeremy Corbin should hold a debate on Brexit, but so far they can not agree on a television channel that will broadcast them.

Japan

The Japanese currency today is strengthening against the euro and the pound, but is weakening against the American dollar.

The Japanese currency is supported by the growth of industrial production in Japan. According to preliminary data, in October, production increased by 2.9%, after a decrease of 0.4% in September. In annual terms, the indicator of industrial output rose from 2.5% to 4.2%. The growth was achieved mainly due to an increase in the production of electronic engines and vehicles. At the same time, the unemployment rate in Japan in October rose from 2.3% to 2.4% for the first time since July.

Australia

The Australian dollar is weakening moderately against its main competitors – the US dollar, the euro, the yen and the pound.

Australian investors today are watching the G20 summit in Buenos Aires, and above all, paying attention to the meeting of the leaders of the United States and China, which should conduct trade negotiations. Investors hope that some agreements will be reached, because the escalation of the conflict puts serious pressure on the Australian economy. Going to the summit, Australian Prime Minister Scott Morrison called on Trump and Xi Jinping to come to a compromise, because the ongoing tensions pose real threats to the global economy.

Oil

Oil during the day adjusted downward.

Oil quotes are falling in anticipation of the meeting of Saudi Crown Prince Mohammed bin Salman and Russian President Vladimir Putin. Investors are monitoring whether the parties can agree on a new reduction in oil production. Experts point out that this may not happen, since Saudi Arabia does not want to cause discontent of the current American administration, which is in favor of reducing world oil prices. President Trump personally asked the Saudi authorities to increase production, before the elections to the Congress, which was done. Whether the kingdom will now go against its American allies is not clear. In addition, on the eve of the summit, President Putin said that the price of $60 per barrel (the current price of Brent) is quite convenient for the Russian economy, which also raises doubts about the decline in production.

In the evening, investors are waiting for the release of data on the number of American oil rigs from Baker Hughes. Last time their number has decreased from 888 to 885 units. Continuing downward trend may support oil quotes.

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