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01.02.2019 09:44 AM
Overview of the foreign exchange market on February 1, 2019

On the whole, it was a rather calm day yesterday, which is not surprising, since market participants had to take a breath after the meeting of the Federal Commission on Open Market Operations. The single European currency, as expected, fell a little, not only because of a rebound after a sharp rise on Wednesday but also because of preliminary GDP data, which showed a slowdown in economic growth from 1.6% to 1.2%. The level of unemployment in Europe remained unchanged, at around 7.9%. And it is precisely the negative because of GDP data that did not allow the single European currency to start growing against the background of American statistics. The fact is that the number of applications for unemployment benefits increased by 122 thousand, which is very, very much. In particular, the number of initial requests increased by 53 thousand, and repeated ones by 69 thousand. However, a little later the negative was somewhat smoothed by data on sales of new houses, which grew by 16.9% during the month, which is also impressive.

We should also pay attention to the ruble, which opened yesterday with a strong gap. This is a market reaction to the results of the meeting of the Federal Commission on Open Market Operations. It's just that these very results became known after the close of trading in the ruble, and investors played them back yesterday morning.

Today, a report by the US Department of Labor will be published, the content of which raises many concerns, especially against yesterday's data on applications for unemployment benefits. At the moment, it is predicted that absolutely all indicators will remain unchanged and the pace of creating new jobs will only slow down. If the previous report said that 312 thousand new jobs were created, now there should be only 165 thousand. However, this is still quite a lot, especially since in the previous period there were a lot of them. So if forecasts are confirmed, the dollar will be able to strengthen its position.

But European inflation data, albeit preliminary, is likely to be regarded very negatively. It is expected that inflation will slow down from 1.6% to 1.4%, which will really make everyone believe that until next year there will be no wait for an increase in the refinancing rate. So the single European currency will have to fall to 1.1400.

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The pound, which yesterday steadfastly held its ground, today can give up the slack. The reason may be the data on the index of business activity in the manufacturing sector, which should be reduced from 54.2 to 53.5. Thus, the pound will fall to 1.3050.

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Mark Bom,
Analytical expert of InstaForex
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