In general, yesterday can be again described as standing still. More precisely, nothing has changed at the end of the day. Although, the dollar initially has somewhat given up its position but then, the single European currency and the pound began to retreat. At the same time, they began to decline almost immediately after the text of the minutes of the meeting of the Board of the European Central Bank was published. True, there is some delay since the text is impressive and it takes some time to read it -not to mention, comprehension. As a matter of fact, we saw nothing new in it. All of these were already voiced by Mario Draghi during a press conference following the results of the last meeting of the Board of the European Central Bank. The refinancing rate will remain unchanged, at least until the middle of next year. Also, the text of the protocol once again expresses the concern of the Board of the European Central Bank about macroeconomic dynamics, but the most important thing is that none of the board members believes in speedy recovery of inflation. This already means that the question of raising the refinancing rate will be postponed more than once. Also, the European Central Bank decided to reduce the cost of prolongation of lending to European banks, which in essence is a kind of measure to mitigate monetary policy. It is the only thing that turned out to be something new, thereafter, investors almost did not pay attention to the American statistics, which was moderately negative.
As expected, inflation has slowed down from 1.8% to 1.6%, but investors are ready for this since the publication of preliminary data. However, the monthly data showed that prices rose by 0.1% and did not remain unchanged, as previously expected. Hence, the slowdown in inflation may be temporary. Therefore, we can say that it is too early to panic; just keep on being afraid. At the same time, the total number of applications for unemployment benefits increased by 14 thousand, instead of decreasing by 10 thousand. In particular, the number of initial applications for unemployment benefits actually decreased by 13 thousand, which should have increased by 1 thousand. The number of repeated requests, instead of a decrease of 11 thousand, showed an increase of 27 thousand. However, the market clung more to indirect data indicating the temporary nature of the slowdown in inflation.
Today, there are not so many statistical data, although they can be very interesting. In particular, Europe is expected to deepen the decline in industrial production from -0.4% to -1.6%, which naturally does not add to investor confidence in the bright future of the European Union, as well as the single European currency. In the United States, data on producer price growth rates are published, which should slow down from 1.8% to 1.6%, as well as inflation in general. In many ways, this will somewhat force a lower level of optimism, regarding the hope that a slowdown in inflation is temporary but both of these news will level each other.
The single European currency may initially decline slightly but after the publication of data on producer prices in the United States. Everything will return to where it began. So, by the end of the day, the single European currency will remain in the region of 1.1250 - 1.1275.
The picture of the pound is similar, hence, it will likely hang around 1.2525.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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