EUR / USD, GBP / USD
The situation on the market from the second half of last week can be described simply as the strongest increase in risk appetite. At the beginning of the month, we were watching the opposite picture which was a thorough preparation of the market for the strengthening of the dollar. However, the scrapping came quickly and strongly. There are three reasons for this growth. The first one is the breakthrough of Germany and France in promoting the idea of a more integrated EU, which even laid the foundation for the coalition agreement of the German parties CDU / CSU (A. Merkel) and SPD (M. Schulz). The second reason is the qualitative improvement in the Brexit situation with the tough scenario of the Brexit supposedly being no more after it became obvious on last Friday's talks and the agreement between Spain and the Netherlands who striked a "soft" deal. The third reason was the beginning of investors' doubts in the three Fed rate hikes this year, not to mention the recent forecasts of the largest banks on the four rises. Speaking on Thursday, William Dudley expressed his fears about a strong increase in inflation, which could break out due to tax cuts. Of course, this alludes to a slowdown in the tightening. And Dudley considered increasing rates through the prism of rising costs of servicing the public debt, which in 2017 reached $ 263 billion a year. In general, the Fed is already positively assessing Trump's economic reforms. This is a clear sign of their coordinated future work. Despite the obvious overheating of the stock market, its growth may continue for several more months. Also, there was a rumor that the ECB will raise the rate at the end of this year.
Thus, if the events are not short-lived, the good economic indicators for the USA will now play on the growth of the euro, as it happened from August 2012 to January 2013 and after a brief break until April 2014. Then, growth was stopped by the burst of the Greek crisis.
On Friday, it happened: retail sales in the US for the month of December increased by 0.4%, Core Retail Sales also added 0.4%, the base CPI in December added 0.3%, and the total CPI increased by 0.1%. Inventories of companies for the month of November increased by 0.4%. Based on the new data, the Atlanta Federal Reserve raised its GDP forecast for the fourth quarter from 2.8% to 3.3%. The stock index S&P 500 added 0.68% while commodities, metals and agricultural futures, in their own way, rose in price. The euro jumped by 167 points while the pound added 189 points.
Over the weekend, new events became known including the confirmation of the transaction of D. Trump with the Fed and the Democratic Party. This is the recognition of American singer Moby (Richard Melville Hall) about his CIA assistance in spreading untrue information about Trump's connections with Russia through his blogs. Mobi also acknowledged that the US sought to increase the pressure on Iran in the middle of last year. And last Friday, Washington extended sanctions against Iran with consideration of the possibility of renewing sanctions on the nuclear program until the withdrawal from the agreement on the Iranian atom. These events confirm our long-standing assumption about the collapse of the "Trump case" and the rapprochement of the opposing parties.
From these new positions, even raising the threshold of the US national debt can be seen not as an increase in demand for the dollar and its strengthening in the Forex, but as an increase in investments in infrastructure and new state orders that will develop the economy and further increase appetite for risk. However, only time can confirm the current trend.
Today is a public holiday in the US. In the euro area, the trade balance will come out in the November estimate with a forecast of 22.4 billion euros against 19.0 billion in October. We are looking forward to the growth of the euro to 1.2365 and the pound sterling's rise to the range of 1.3830 / 60.
AUD / USD
So, the United States has embarked on a new stage of forceful pressure on Iran. The consequence of this may be an increase in the prices of oil, minerals, metals, and the corresponding growth in the Australian dollar. However, as for the cost of oil, it will still fall as the United States opened almost the whole shelf off the Atlantic and the Pacific, including Alaska (90% of the area) for drilling. This also includes the participants in the OPEC + agreement who are preparing to exit the program in connection with the rise in oil prices and the practical impossibility of influencing the supply. However, the question of the fall in the price of oil is not a near-term prospect. On Friday, AUD / USD added 23 points on the general wave of growth of counter-dollar currencies. Significant economic data for Australia came out today and tomorrow, it will come out there. On Wednesday, there will be index of consumer confidence for January and on Thursday, data on employment (forecast for new jobs +18 thousand) will be published. We are waiting for the "Aussie" at 0.8030.
