News that representatives of China and the United States held telephone talks allowed risky assets to stay at their levels. As it became known, the negotiations were quite positive, which raises hopes for the possibility of concluding an interim deal. According to the data, Chinese Vice Premier Liu He had a telephone conversation with US trade representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin. Immediately after that, the Ministry of Commerce of the PRC reported that the parties had reached a consensus. First of all, we are talking about the protection of intellectual property, which is so sought by the American side. Let me remind you that the Communist Party of China and the Cabinet of Ministers issued an order to strengthen protection on this issue, which allowed to resume negotiations.
Today, data on consumer sentiment in Germany will be released, which may improve in December this year. According to the leading indicator, the growth of expectations about the economic outlook, as well as the calculation of an increase in household income, supported the index.
The GfK research group report indicated that the consumer confidence index in December 2019 will be 9.7 points against 9.6 in November. Economists had expected the December index to remain unchanged. Experts of the center note that a sharp increase in the level of confidence of German consumers allowed to keep the German economy from recession in the 3rd quarter of this year. The subindex of economic expectations in November rose to 1.7 points, and the subindex of income expectations increased to 45.5 points.
As for the technical picture of EURUSD, the very low volatility in the first half of the day left the forecasts unchanged. The breakthrough of the support of 1.1005 will lead to the renewal of this month's lows in the area of 1.0989 and the area of 1.0950. The worsening of US-China trade relations will be an important component in the bearish movement of risky assets. The upward trend is limited to the upper level of 1.1040, the breakout of which will lead to the return of risky assets to the area of the maximum of 1.1060 and 1.1090.
The British pound returned to earth after the release of another report conducted by ICM commissioned by Reuters, which indicated that the number of respondents supporting the conservatives fell to 41%, but the number of supporters of the Labor Party, on the contrary, rose to 34%. This is bad news for the pound, as the lack of a majority in the Lower House will not allow Boris Johnson to pass Brexit without parliamentary approval.
Another important statement, but relating to Australia, tool place today in the first half of the day. The Australian dollar has shuddered after the possibility emerged that the Reserve Bank of Australia may enter quantitative easing policy territory for the first time. Before this step, there are only two interest rate cuts. The RBA Governor spoke about this in more detail today.
Philip Lowe said that there may come a time when quantitative easing is needed, but this issue will be considered only if the key rate is lowered to 0.25%. This will mean that the Central Bank has approached the zero-rate zone. Lowe said he is very hopeful of other options and quantitative easing is not currently on the agenda.
Such statements led to a sharp spike in volatility in the AUDUSD pair, but eventually, the balance returned to the market. Philip Lowe also pointed out that negative interest rates are extremely unlikely, as the probability of a recession is low, and rising house prices are not much of a concern.
As for the technical picture of the AUDUSD pair, the bulls need to stay at these levels, as only this scenario will lead to the renewal of the resistance of 0.6840 and the return of leadership positions. If the support breaks 0.6770, we can expect AUDUSD to fall further to the lows of 0.6739 and 0.6680.
