EUR / USD, GBP / USD
Congressmen from the United Staes decided to go along with the game of "shutdown" and the financing of the budget was extended yesterday until February 8. However, they temporarily returned the contest to the borders of the battle area. But the market showed a steady indifference to the entire event. The stock market continued to grow (S & P 500 0.81%), the single European currency increased to 40 points, and the British pound gained 133 points.
Moreover, European investors also by weakened by the extension of German parties negotiations on the coalition. Today, inter-party negotiations already begin. The issue about the continuing loans to Greece was solved during the Eurogroup meeting. Risk correlation continued to full extent, as yields on government bonds grew, gold prices fell, and commodity indices moved up. Even cryptocurrencies became cheaper which served an indicator of growth for the investors' interest in traditional and real values.
Today, the sentiment index in business circles of Germany and the eurozone ZEW for January was released. The German index is projected to rise to 17.8 from 17.4, the eurozone index to 29.7 from 29.0. The consumer confidence index in the euro area for January is expected to increase from 0.5 to 0.6 points. In the UK, public sector borrowing for December is expected to decline from 8.1 billion pounds to 4.2 billion pounds. The UK balance of production orders from the CBI may fall, as the January forecast is down to 13 versus the original forecast of 17. In the US, the business activity index in the manufacturing sector of Richmond for the current month is expected to decrease from 20 to 19. The market creates a favorable environment for the session of the ECB meeting on Thursday, which is expected to shift in sentiment toward earlier folding of incentives.
We are expecting the euro at 1.2365, while pound sterling in the range of 1.4045 / 75. Furthermore, the pound may rise to 1.4150.
AUD / USDEUR
On Monday, the Australian dollar rose by 23 points after the growth of European currencies. Today in the Asian session, the "Australian" dollar returned to its original positions under the pressure of commodity markets, which shows that iron ore, depending on the stock exchange, lost from 0.2% to 1.0%, and oil with the transition to a new futures contract traded in both directions, while non-ferrous metals slightly increased in price. Also, the Australian currency was pressured by the Japanese yen, which did not receive the expected support for the announcement of the Bank of Japan meeting result this morning and lost 25 points. The Bank of Japan also maintained forecasts for the economy and inflation unchanged, the GDP for the current year came in 1.4% YoY, the core inflation for 2019 is predicted at 1.4% YoY, while 0.7% YoY on GDP growth and 1.8% YoY on inflation.
The yields on Australian government bonds are falling on all types of securities. Five-year plans, in particular, are reduced from 2.495% to 2.475%.
Obviously, the Australian dollar forms some consolidation in the absence of new incentives for growth. We are expecting for the completion of the consolidation followed by an increase to 0.8150.
* The presented market analysis is informative and does not constitute a guide to the transaction.
