​Euro and British Pound Are Falling Down Again (Weekly Review)

The most important events of the last trading week include the meeting of the U. S. Federal Open Market Committee. Although it was not expected to take any action at this stage, participants of the financial market give great importance to the prospects for further tightening of monetary policy by the Federal Reserve in the light of the continuing harsh criticism by the US President Donald Trump of increased interest rates, which he believes have negated the potential effect from the trade wars he launched because of the steady growth of the American currency.

In full compliance with market expectations, the FOMC decided at the last meeting not to increase the interest rate, but in the rate statement it confirmed its intention to stick to the chosen course and increase the interest rate at the next meeting in December. Thus, the US dollar, which already enjoys support under the conditions of the interest rate differential, continues to strengthen against its main competitors, including the EUR, which ended the week with a fall to 1.1316, and at the start of a new week it broke through support around the 14th figures and fell to the level of 1.1268, which significantly worsens the prospects for the single currency.

The upheavals around the conditions for the termination of UK membership in the EU leave the British pound in a vulnerable position. Optimism, fueled by the statements of the parties being just about to achieve consensus on Brexit, pushed it higher and higher, but on the growth against the USD to the level of 1.3172, the GBP was sold, due to which the weekly close was below the psychological level of 1.3000. The news that the EU has rejected the proposals of the British Prime Minister Theresa May has plunged the pound bulls in horror, and it has already tested the level of 1.2856. Now, the most probable is its fall in the direction of the 27th figure, and after it the EUR may share the same movements.

Schedule for this week:

Monday, November 12
09:00 GMT – Italy. Industrial Production;
USA.  Veterans Day;
19:30 GMT – USA. FOMC Member Daly Speaks.

Tuesday, November 13
02:15 GMT – PRC. Direct Foreign Investments;
07:00 GMT – Germany. Harmonised Index of Consumer Prices (HICP);
07:00 GMT – Germany. Consumer Price Index (CPI);
09:30 GMT – United Kingdom. Claimant Count Change;
09:30 GMT - United Kingdom. ILO Unemployment Rate (3M) (Sep);
09:30 GMT - United Kingdom. Average Earnings Index + Bonus (3M/Y) (Sep);
09:30 GMT - United Kingdom. Average Earnings ex Bonus (3M/Y) (Sep);
10:00 GMT - Germany. ZEW Current Conditions;
10:00 GMT - Germany. ZEW Economic Sentiment (Nov);
15:00 GMT – USA. FOMC Member Lael Brainard Speaks;
19:00 GMT – USA. Federal Budget Balance (Oct).

Wednesday, November 14
23:30 GMT – Australia. Westpac Consumer Sentiment;
23:50 GMT – Japan. GDP (QoQ) (Q3);
23:50 GMT – Japan. GDP (YoY) (Q3);
02:00 GMT – PRC. Industrial Production (YoY) (Oct);
02:00 GMT – PRC. Retail Sales;
07:00 GMT – Germany. Gross Domestic Product (GDP);
07:00 GMT – Germany. GDP (YoY) (Q3);
09:30 GMT – United Kingdom. Consumer Price Index (CPI);
09:30 GMT - United Kingdom. Core Consumer Price Index (CPI);
10:00 GMT – Eurozone. GDP;

10:00 GMT – Eurozone. Industrial Production;
13:30 GMT – USA. Core Consumer Price Index (CPI);
13:30 GMT – USA. Consumer Price Index (CPI);

13:55 GMT – USA. Redbook Index.

Thursday, November 15
23:00 GMT – USA. Fed Chair Powell Speaks;
23:50 GMT – Japan. Foreign Bonds Buying;
23:50 GMT – Japan. Foreign Investments in Japanese Stocks;
00:30 GMT – Australia. Unemployment Rate;
00:30 GMT – Australia. Employment Rate;

01:00 GMT – Australia. Inflation Expectations;
01:30 GMT – Australia. Reserve Bank of Australia Assistant Governor Debelle Speaks;
09:30 GMT - United Kingdom. Retail Sales;
09:30 GMT - United Kingdom. Retail Sales ex Gas;
13:30 GMT – USA. Initial Jobless Claims;
13:30 GMT – USA. Retail Sales;
16:30 GMT – USA. Federal Reserve Chair Jerome Powell Speaks.

Friday, November 16
21:30 GMT – New Zealand. Business NZ Purchasing Managers Index (PMI);
08:30 GMT – Eurozone. European Central Bank President Draghi Speaks;
10:00 GMT - Eurozone. Consumer Price Index (CPI);
10:00 GMT - Eurozone. Core Consumer Price Index (CPI);
13:00 GMT – Germany. Bundesbank President Weidmann Speaks;
14:15 GMT – USA. Capacity Utilization Rate;
14:15 GMT – USA. Industrial Production.

Author: Anthony Porter, IAFT Analyst