04.03.2019 10:35 AM
EURUSD: Fundamental indicators of the American economy are declining, but there is no reason for excitement

The euro rose after weak reports on the US economy, but buyers of risky assets did not receive support from major players, which led to profit taking and a decrease in the trading instrument in the afternoon.

A weak report on the spending of Americans indicates their more attentive attitude and some concern about the pace of economic growth. However, there is no reason to worry.

According to the US Department of Commerce, personal expenses in December 2018 fell by 0.5% compared with the previous month. With income, the situation remains more favorable. The report indicates that personal income in January decreased by 0.1%, but in December 2018, the growth was 1.0%.

Expenditure data in January was not provided due to the partial suspension of government work. Economists had expected spending to fall by 0.3% in December and revenue growth by 0.3% in January.

Activity in the US manufacturing sector is slowing. According to IHS Market, the final PMI purchasing managers index for the manufacturing sector in February 2019 fell to 53.0 points against 54.9 points in January. Index values above 50 indicate an increase in activity. Economists had expected the index to be 54.0 points in February.

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In Market, it is noted that the decrease in the index may be temporary, as manufacturers say a steady improvement in the state of the sector.

US consumer sentiment worsened at the end of February, and it is not surprising. As stated in the University of Michigan report, the final consumer sentiment index in February 2019 fell to 98.3 points from 95.5 points last month. Economists predicted that the index will be 95.8 points.

The main decline in sentiment is associated with a partial suspension of the US government and volatility in the stock market. It should be noted that the overall level of trust remains quite positive.

As for the technical picture of the EURUSD pair, it remained unchanged. Buyers still need a return to the resistance level of 1.1385, and sellers have a breakout and consolidation below the support of 1.1354. In the first scenario, you can wait for the update highs in the region of 1.1420 and 1.1460, while the second scenario will lead to an update of the minimum in areas 1.1320 and 1.1280.

On Friday, the Canadian dollar collapsed against the US dollar after it became known that Canadian economy growth slowed down in the 4th quarter. This happened due to a sharp decline in investment, as well as a fall in household spending.

According to the National Bureau of Statistics of Canada, the gross domestic product of Canada in the 4th quarter of 2018 grew by 0.4% year on year, amounting to 2.063 trillion Canadian dollars. Let me remind you that back in the 3rd quarter, GDP growth was 2.0%. Economists had expected GDP growth in the 4th quarter to be 1.0%. For the whole of 2018, Canada's GDP growth was 1.8% against 3.0% in 2017.

Jakub Novak,
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