Theresa May ruled out a second Brexit referendum. The growth potential of the euro is limited. A good US retail sales will support economic growth in the 4th quarter of this year.

The US dollar continued to decline yesterday against the euro, despite the good macroeconomic indicators for the US economy, as well as the positive performance of the head of the Federal Reserve System, Jerome Powell.

In the afternoon, a report came out that showed Americans continue to increase their spending, which is a good sign of a sustainable economy.

Basic data

According to the US Department of Commerce, retail sales increased by 0.8% in October this year compared with $ 511.5 billion in the previous month. In comparison to the same period in 2017, sales increased by 4.6%. Economists had expected a 0.5% increase in sales. Let me remind you that consumer spending provides the main growth of the US economy, accounting for about 2/3 of GDP. Given that the sales season has not yet begun, good October performance could lead to a larger growth in the 4th quarter of the US economy this year.

Production activity in the area of responsibility of the Federal Reserve Bank of New York has grown but expectations regarding activity in the future have not changed. According to the Fed-New York, the manufacturing index was at 23.3 points in November of this year against 21.1 points in October. A positive index indicates an increase in activity in the sector. Economists predicted that the index will be 20 points.

According to the US Department of Commerce, the inventories of companies in the United States increased by 0.3% to 1.97 trillion US dollars in September. Economists had expected stocks to grow by 0.3% compared with August.

Speech by the Fed chairman did not lead to an increase in the US dollar, although Powell spoke about the positive outlook for the American economy.

The head of the committee said that the US economy is in good shape but it is necessary to closely monitor wage growth, which was not as fast as economists had hoped. Powell is also confident that a good October report on employment in the future will have a positive impact on the growth prospects of the US economy and raising interest rates.

As for the technical picture of the EUR/USD pair, buyers of risky assets for today will once again attempt to break through a large resistance level of 1.1350. A breakthrough of which will open up a real perspective on updating the highs in the 1.1390 and 1.1410 areas. If buyers leave the market, it is fraught with good downward movement with a return to the lower border of the channel in the area of 1.1280.

As for the British pound, the resignation of British ministers yesterday could significantly affect the plans of the Bank of England, which needs to rethink its policy of raising the key rate. It is possible that the Central Bank will take a cautious stance and abandon the expected tightening of monetary policy by the market.

Yesterday afternoon, British Prime Minister Theresa May once again stated that her approach was based on national interests being paramount, adding that the course she outlined in the Brexit agreement was right for the country. It is her script that protects the rights of the British, and nothing else. If Ireland does not provide support, an agreement with the EU without it is impossible. At the end of the speech, Theresa May made it clear that there would be no second Brexit referendum.