Analysis

The European currency today is strengthening against the yen and the US dollar

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

The investors are following the trade negotiations of China and US. President Trump said that he did not intend to raise tariffs on Chinese imports until the end of the talks. The president also noted that he could have intervened with the arrest of the Chief Financial Officer of Huawei Meng Wanzhou, if it had helped to conclude a deal with the PRC. Recall that yesterday the Chinese authorities detained the former Canadian diplomat Michael Kovrig. Many experts believe that this is an element of pressure on Canada in order to avoid the extradition of Meng Wanzhou to the United States. One way or another, Meng Wanzhou was released on bail.

Tonight the data on inflation will be published in the United States. In November, the consumer price index is expected to fall from 2.5% to 2.2% on an annualized basis, but the basic consumer price index, one of the main indicators for the interest rate decision, will grow from 2.1% to 2.2%. The implementation of the forecast can strengthen the position of the US currency, as it will create another reason to raise the Fed rate.

Eurozone

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

In general, the European currency is supported by the October data on the volume of industrial production in the Eurozone. On a monthly basis, the indicator grew by 0.2%, and at an annualized rate significantly exceeded market expectations, having increased by 1.2% – this is the biggest growth since June of the current year.

On Thursday, the market awaits the ECB meeting with an interest rate decision. It is likely to remain at the same level of 0.00%. On a press conference with Mario Draghi the hints on the future policy of the regulator can be made.

Great Britain

The British currency today is strengthening against its main competitors – USD, JPY and EUR.

The pound is strengthening, despite the growing political uncertainty in the UK. Among the Conservative Party there are enough members to demand the removal of Teresa May from the post of chairman – there should be a vote on this issue tonight. However, the chances that May will retain her post are quite high. She needs to get a simple majority of votes (158) in order to remain prime minister. Currently, 110 conservative deputies have publicly supported her, including Foreign Minister Jeremy Hunt, Finance Minister Philip Hammond and Interior Minister Sajid Javid. Many deputies believe that Teresa May’s demotion will not help the UK to make a better deal with the EU; moreover, there will be more political problems.

Japan

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

Data on orders for engineering products in Japan were weaker than market expectations. In October, on a monthly basis, the figure rose by 7.6% instead of the expected 10.2%, and in annual terms ­it rose by 4.5% instead of the expected 5.9%. On the other hand, the December business activity index in the service sector of Japan increased by 1.9%, which is the most significant growth since 2014. In general, Japanese investors continue to follow the trade negotiations between China and the United States, counting on their positive outcome.

Australia

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

In the absence of significant economic releases, the currency movement is technical in nature. Investors are following the negotiations between the United States and China, which, according to President Trump’s comments, are in full swing. In addition, investors are concerned about the state of the Australian real estate market, which continues to experience difficult times. Thus, according to the latest data, due to the tightening of the credit policy by Australian banks, property prices in Sydney alone have fallen to 30-year lows, which can put serious pressure on the Australian economy as a whole.

Oil

During the day, oil quotes are rising.

largest Libyan field of El Sharara due to the attack of militants and by the data of the weekly API report. According to the latter, the volume of US oil reserves fell sharply, by 10.180 million barrels. At the same time, gasoline reserves fell by 2.480 million barrels, while distillate stocks slightly increased by 0.712 million barrels.

Tonight the market is waiting for a report on oil reserves from the EIA, which can also confirm the reduction but to a lesser extent – by 2.990 million barrels. The implementation of the forecast can support oil prices, but the growth prospects look limited. The overall pressure on the quotes is exerted by world trade instability, threatening a recession in leading economies and a reduction in the consumption of petroleum products. In addition, investors are not convinced that the cuts on OPEC production (1.2 million barrels per day) will eliminate the glut of the market. Finally, the impact of US sanctions on Iran’s oil trade: a number of large importers (China, India) were withdrawn from them, which allowed President Hassan Rouhani to declare the good condition of Iranian oil exports.

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