Analysis

GBP today is strengthening against the main competitors – USD, EUR, and JPY

United States of America, USD is weakening against its main competitors – GBP, JPY, and EUR.

On the eve of the New Year holidays, the US-China trade negotiations are in the center of attention of the market again. On Saturday, there was a telephone conversation between PRC Chairman Xi Jinping and US President Donald Trump, after which, both leaders expressed optimism. Trump said in his Twitter that the negotiations are moving along very well, and Chairman Xi noted that the parties want to achieve stable progress. Washington is currently preparing a new government delegation for a visit to Beijing and a new round of trade negotiations to be held on January 7.

Eurozone

EUR is weakening today against GBP and JPY but is strengthening against USD.

Before the New Year holidays, the activity of European investors remains reduced. The focus is on Italy, whose parliament approved the budget for the next year the day before. According to the agreement with the EU, the budget deficit should be 2.04% instead of 2.4%, as previously assumed. In addition, the costs of introducing a lower retirement age and a number of social programs in the country were reduced.

United Kingdom

GBP today is strengthening against the main competitors – USD, EUR, and JPY.

British investors are also preparing for the New Year holidays. The focus is on Brexit situation. A new vote on the deal in the House of Commons is scheduled for mid-January but for now, responsible persons are commenting on the situation. Thus, British Trade Minister Liam Fox, in an interview with the Sunday Times, estimated the chances of a British exit from the EU if the deputies rejected the draft transaction 50-50 and called on the deputies to support the agreement. Meanwhile, the US ambassador to the UK, Woody Johnson, confirmed the position of President Trump that a separate trade agreement between the countries would not be possible if the UK deal with the EU takes place.

Japan

JPY today is strengthening against EUR and USD but is weakening against GBP.

JPY is supported by the entry into force of the new Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). It involves 11 countries, including Japan, sharing 13% of the global economy. The United States does not participate in the contract, because President Trump found it more profitable to conclude bilateral transactions. The CPTPP provides for restricting tariffs on agricultural and industrial products, easing restrictions on investments and increasing the level of intellectual property protection. Also, investors reacted positively to the data, according to which the PRC and Japan can continue the trade dialogue at the highest level. In March-April, a meeting of the delegations of the two countries is possible to discuss the development of bilateral trade and cooperation in the field of technology and infrastructure. Thus, Japan and China are looking for spare trading markets in the context of a conflict with the United States.

Australia

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

On the eve of the New Year holidays, the activity of Australian investors is reduced. However, AUD is supported by positive data on the US-China trade negotiations.

Oil

Today, oil quotes are growing.

Oil prices are growing due to positive progress in US-China trade negotiations. On the eve, the leaders of the countries were very optimistic. The conclusion of a broad deal will remove the fear of a slowdown in the world's leading economies. Also, the quotes are supported by the EIA report data, according to which the oil reserves in the US declined for the third week in a row, this time by 0.046 million barrels. The number of active rigs in the United States, according to Baker Hughes, rose to 885 units last week.

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