Eurozone
Indices of business activity in the euro area indicate a steady increase in optimism. Composite index PMI Markit rose to 12-year level, exceeding pre-crisis indicators. The volume of production orders in Germany exceeded forecasts in December, the indicator of investor confidence Sentix, despite a slight decrease, keeps at historical highs.
The flyweight added a report on retail sales, in December there was a decrease of 1.1%, the euro did not react, as the forecasts of experts were exceeded slightly.
Mario Draghi, speaking on Tuesday in the European Parliament, did not comment on the record drop in the stock markets. Noting that the ECB is monitoring the development of the Brexit talks, Draghi added that eurozone countries need to be prepared for different outcomes, including the absence of an agreement on the withdrawal of the UK from the EU.
The serenity of Draghi calmed the players. Today, the markets in Europe opened in the green zone, the euro has a chance to resume growth if support for 1.2295 stands at the end of the day.
The United Kingdom
The pound before the meeting of the Bank of England and the publication of updated macroeconomic forecasts still looks convincing. The pullback from the highs, which occurred against the backdrop of a fall in stock markets and risk aversion, looks like an ordinary, long-awaited correction, and bulls are likely ready to begin the offensive again.
The NIESR Institute traditionally published a forecast for the development of the economy before the BoE meeting, the document was optimistic. The forecast for GDP growth for 2018 is raised to 1.9%, as well as in 2019, inflation will remain for some time at the level of 3%, but by next year it is expected to decrease to 2.4%.
The most important is the forecast on the rate, NIESR assumes that tomorrow the Bank of England will leave the current policy unchanged, and the increase will occur at the next expanded meeting in May this year.
NIESR usually quite accurately predicts the behavior of the Bank of England and changes in macroeconomic forecasts, and therefore the pound's reaction to the outcome of the meeting can be positive. Since no one expects a rate hike, this factor will not cause any movement, but it is likely that the forecasts will improve, and the positive will cause the bulls to advance into the offensive against the background of the growing likelihood of accelerating the policy of monetary normalization.
Thus, the growth of the pound is constrained by the growth of anti-risk sentiment and concerns about the outcome of the negotiations on the UK's withdrawal from the EU, but on the whole, a positive information background promotes investment growth. The failure in the economy after Brexit has not happened, and investors are playing out better forecasts, which leads to an increase in demand for the pound.
The main support is 1.3834, the pound will try to return to the resistance level of 1.4277, further actions will depend on whether it will be able to overcome this level or not.
Oil and ruble
The collapse of oil quotations is a consequence of the fall of stock markets and the panic flight of investors from risk, but even against a background of strong shocks, the decline from the maximum reached on January 25 did not exceed 5%, which indicates a fundamental strength.
The main factors remained the same, the restoration of the world economy, growing demand, control of the level of OPEC+ production and a high probability of prolonging the agreement for another six months. On Wednesday, oil supported the API, oil reserves in Cushing fell by 1.05 million barrels, in addition, stock indices partially regained the fall. Today, there will be official data from the EIA, before publication, oil is likely to be traded in a narrow range.
The ruble reacted to the collapse of the markets by a decrease, but the weakening was not deep. If the anti-risk sentiment in the markets persists, the ruble continued its slow weakening and will be able to move to the range of 57.50 / 58 rubles / dollar, at the same time there is doubt that this option will be a priority. Today, the Finance Ministry will sell OFZs for 35 billion rubles, the proposal could weaken the bulls, but even fears of a reduction in the rate of Russian banks on Friday sales of the Russian currency do not cause. Fundamentally, the ruble has strong support, the easing will be of a local nature, following the results of the week, a decline to 56.20 / 56.30 rubles / $ is likely.
