Analysis

Today, the euro is weakening to the pound and the Japanese yen but is strengthening against the US dollar

United States of America, Today, the US dollar is weakening against its main competitors - the euro, the pound, and the yen.

The euphoria of the market after a meeting of the US President Donald Trump and PRC Chairman Xi Jinping begins to calm down, which puts pressure on USD. As expected, the trade conflict was not resolved, its escalation was only postponed for three months. The main negotiations are still ahead. Larry Kudlow, the chief economic adviser of the US administration, is counting on a quick breakthrough, primarily on the issue of protecting American intellectual property in the PRC; however, as seen from the decline in the dollar, the market does not believe these comments.

Published yesterday, data on the ISM index of business activity in the US manufacturing sector were above market expectations. Instead of a decline, in November, it rose from 57.7 to 59.3 points, which provided short-term support to USD.

Eurozone

Today, the euro is weakening to the pound and the Japanese yen but is strengthening against the US dollar.

The single currency is supported by news on the Italian budget issue and Brexit. Italian Prime Minister Giuseppe Conte told the media that in the near future he will submit a new budget plan for the next year to the EU authorities. At the same time, Conte admitted the possibility of reducing state debt from 2.4% but did not disclose specific figures, citing the confidentiality of the negotiations. Also today, the representative of the European Court of Justice (ECJ) said that the UK has the right to unilaterally cancel its decision to withdraw from the EU without the consent of its members. Theoretically, this makes it possible for Prime Minister Theresa May, in case of a failure of the deal in the British Parliament, to cancel the Brexit procedure, avoid its rigid version, and leave the country within the European Union.

On Wednesday, investors are waiting for the publication of European data on Services PMI. In November, the indicator is expected to remain at the level of 52.2. Tomorrow, the head of the European Central Bank Mario Draghi will speak in Frankfurt. The speeches of such high-ranked officials have traditionally attracted the attention of investors, as they may contain hints on further steps of the regulator in the field of monetary policy.

United Kingdom

GBP is now strengthening against the euro and the US dollar and shows a mixed dynamics with the yen.

In addition to the decision of the ECJ, which considered the unilateral cancel of Brexit by the UK to be legitimate, the pound is supported by comments of the head of the Bank of England Mark Carney and strong data from the construction sector. Today Carney and his deputiesBen Broadbent, Jon Cunliffe, and Sam Woods answered questions from the Parliament’s treasury committee. The regulator noted that the simultaneous happening of all the risks of a "tough" Brexit will not happen. Earlier, BoE warned that a “divorce without a deal” could result in a decrease in the British economy by 8% per year, housing prices will fall by 30%, the unemployment rate will rise to 7.5%, and inflation - to 6.5%. In November, Construction PMI grew for the second month in a row, from 53.2 to 53.4.

On Wednesday, investors are waiting for the publication of British data on Services PMI. According to forecasts, in November, it may rise from 52.2 to 52.5, which will support the British currency.

Japan

Today, JPY has an ambiguous dynamics with the pound and is strengthening against the euro and the US dollar.

Investors "digest" a truce in the US-Chinese trade war, concluded for 90 days, and continue to monitor the situation. Hiroshige Seko, the Minister of Economy, Trade and Industry of Japan, noted that the threat of the introduction of new tariffs still exists, and, therefore, the trade war can be continued. The market is also preparing for a trilateral meeting of Japan, China, and South Korea to discuss the creation of a free trade zone, which in the future may include 20% of world turnover. The meeting will be held on Thursday and Friday in Beijing.

Australia

Today, AUD is strengthening against the US dollar and weakens against the yen, the euro and the pound.

Today, investors are focused on the decision of the Reserve Bank of Australia on an interest rate. The regulator, as expected, left it at the level of 1.50%. The RBA head, Philip Lowe, noted that the growth of household income remains weak and the level of debt is high. The official also highlighted the problems of lending and a significant decline in housing prices. These conditions forced the RBA to keep the rate the same.

On Wednesday, data on Australian GDP in Q3 2018 will be published. The indicator is expected to decrease from 0.9% to 0.6% QoQ and from 3.4% to 3.3% YoY, which may put pressure on AUD.

Oil

During the day, oil prices are growing.

Quotes are rising amid waiting for the OPEC meeting and possible decision to reduce production. In the evening, the market is waiting for the weekly API report on the US crude oil reserves. If the trend to increase them continues (the last time growth was 3.43 million barrels), then prices may be under pressure again.

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