Analysis

USD moves horizontally against GBP and EUR and strengthens against the JPY.

United States of America. USD moves horizontally against GBP and EUR and strengthens against the JPY.

Today the market is waiting for the US labor market data release. The day before, Fed Chairman Jerome Powell positively assessed its condition. In the report for the housing conference in Washington, the head of the regulator noted that the American economy is now working very well, new jobs are constantly being created, wages are gradually increasing, and in general the labor market is very strong. However, the November statistics can refute these statements. It is predicted that the unemployment rate will remain the same (3.7%) and Nonfarm Payrolls may decrease from 250K to 200K. Leading indicators also reflect a decrease in the number of jobs created. ADP Employment Change fell from 225K to 179K, and November Initial Jobless Claims reached 223K, which is higher than in October (213K). Also, investors are waiting for the development of the situation around the arrest of the Chief Financial Officer of Huawei, Meng Wanzhou, which could lead to a breakdown in the trade truce between the United States and China. According to American experts, the issuance of Wanzhou to the United States could jeopardize the leadership of any American company that operates in China.

Eurozone

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

Published today, EU Q3 GDP did not meet market expectations. The indicator stayed at the level of 0.2% QoQ and fell from 1.7% QoQ to 1.6% QoQ. German Industrial Production data were poor, too. In October, it fell by 0.5%, which may affect German GDP negatively. Also, European investors are focused on the situation in Italy. In the afternoon, Italian media reported that friction around the new budget would force Economy Minister Giovanni Tria to resign but this data has not yet been confirmed.

United Kingdom

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

Traders are focused on parliamentary hearings on Brexit. British parliamentarians have two days left to discuss the deal, after which a vote on it will be held on December 11. So far, Prime Minister Theresa May cannot get approval for the terms of the treaty with the EU. Deputies are concerned about the fact that the UK will not be able to cancel special rules of customs regulation for Northern Ireland without the consent of the EU. According to Bloomberg, May may postpone the voting date to a more distant date to get some time for negotiations. If the approval of the House of Commons is not received, the UK will have about a month to issue a withdrawal from the EU without a deal, submit a new version of the deal for consideration or decide on a new referendum.

Japan

JPY weakens against USD and EUR and moves horizontally against GBP.

Today’s Japanese economic data were ambiguous. The household spending index in October grew by 1.8% QoQ after a decrease by 4.5% QoQ a month earlier and fell by 0.3% YoY. The average wage increased by 1.5% instead of the expected 1.0%. Also today, the head of the Bank of Japan, Haruhiko Kuroda, reiterated the need to preserve ultra-soft monetary policy. He stated that at that stage there was no need to reduce asset purchases by the regulator.

Australia

AUD continues to weaken moderately against its main competitors – EUR, JPY, GBP, and USD.

AUD is under pressure of the uncertainty in relations between China and the United States. Investors are waiting for the development of the situation and the response of China to the arrest of the Chief Financial Officer of Huawei Meng Wanzhou. Also, the currency in negatively affected by poor Construction PMI release. In November, the figure fell for the fourth consecutive month, this time from 46.4 to 44.5 points.

Oil

During the day, oil quotes are rising.

The price is supported by the latest data from the EIA report, according to which oil reserves in the United States dropped sharply for the first time in ten weeks. The volume decreased by 7.323 million barrels. Today, investors are also awaiting the final decision of OPEC on the volume of production limitation and the publication of data on the number of oil rigs in the United States from Baker Hughes. The last time their number increased from 885 to 887 units. The continuation of the trend may affect oil prices negatively.

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