​Anxiety Over the Euro and the Pound Remains (Weekly Review)

2018-12-05
In general, the past week can be called relatively calm. The speeches of the President of the European Central Bank, Mario Draghi, and the head of the Bank of England, Mark Carney, had no significant impact on the dynamics of the euro and, accordingly, the British pound. In the absence of any positive changes in the process of the UK’s exit from the European Union, there was little chance for the British Central Bank to increase the interest rate, and the GBP remained under pressure.

The euro, in its turn, despite the consent of the Italian government to make concessions to Brussels on controversial points in the draft budget, was also under pressure, but it, like the pound, got some help from the US Federal Reserve President Jerome Powell, or rather his comments that gave speculators some hints of a coming pause in tightening monetary policy. The fact triggered fairly large-scale sales of the USD, against which the euro and the pound managed to win back some of the losses incurred before, but amid ongoing problems and differential in interest rates, their growth was used for sales, and with the start of the new week the pressure on them may continue.

Prior to the G20 summit, where the head of the PRC Xi Jinping was scheduled to meet the US President Donald Trump, the Japanese yen was under pressure at first, but the USD paired with the JPY was limited by the 114th figure. Investors did not suggest a breakthrough in the trade conflict between the countries, and, avoiding unnecessary risk, by the end of the week they partially got rid of the longs in the pair. Nevertheless, the differential in interest rates still does not justify dollar sales for the yen, while against the background of technical factors, a decrease in the direction of the 112th figure is possible. Still we cannot predict the trend reversal yet.

Schedule for this week:

Monday, December 3
08:55 GMT – Germany. Markit Manufacturing Purchasing Managers Index (PMI);
09:00 GMT – Eurozone. Markit Manufacturing Purchasing Managers Index (PMI);
09:30 GMT – United Kingdom. Markit Manufacturing Purchasing Managers Index (PMI);
10:00 GMT – Eurozone. Unemployment Rate;
14:30 GMT – Canada. Manufacturing Purchasing Managers Index (PMI);
15:00 GMT – USA. ISM Manufacturing Purchasing Managers Index (PMI);
15:00 GMT – USA.  ISM Prices Paid Index (Nov).

Tuesday, December 4
00:00 GMT – Eurozone. European Court of Justice Hearings on Brexit;
03:00 GMT – Australia. Reserve Bank of Australia Interest Rate Decision;
03:00 GMT - Australia. Reserve Bank of Australia Rate Statement;
09:15 GMT – United Kingdom. Bank of England Governor Mark Carney Speaks;

09:30 GMT - United Kingdom. Construction Purchasing Managers Index (PMI);
13:55 GMT – USA. Redbook Index.

Wednesday, December 5
00:30 GMT – Australia. GDP (QoQ) (Q3);
01:45 GMT – PRC. Caixin Services Purchasing Managers Index (PMI);
08:55 GMT – Germany. Markit Services Purchasing Managers Index (PMI);
09:00 GMT – Eurozone. Markit Services Purchasing Managers Index (PMI);
09:00 GMT – Eurozone. Markit Composite Manufacturing Purchasing Managers Index (PMI);
09:30 GMT - United Kingdom. Markit Services Purchasing Managers Index (PMI);
13:15 GMT – USA. ADP Nonfarm Payrolls;
14:45 GMT – USA. Markit Composite Purchasing Managers Index (PMI);
14:45 GMT – USA. Markit Services Purchasing Managers Index (PMI);
15:00 GMT – Canada. Bank of Canada (BOC) Interest Rate Decision;
15:00 GMT - Canada. Bank of Canada (BOC) Rate Statement;

15:00 GMT – USA. ISM Services Purchasing Managers Index (PMI);
15:15 GMT – USA. Federal Reserve Governor Jerome Powell Speaks.

Thursday, December 6
00:30 GMT – Australia. Trade Balance;
00:30 GMT - Australia. Import/Export;
07:00 GMT – Germany. Factory Orders;
09:05 GMT – Australia. Reserve Bank of Australia Assistant Governor Debelle Speaks;
13:30 GMT – USA. Trade Balance;
13:30 GMT – USA. Initial Jobless Claims;
15:00 GMT – USA. Factory Orders;
15:00 GMT – Canada. Ivey Purchasing Managers Index (PMI).

Friday, December 7
07:00 GMT – Germany. Industrial Production;
10:00 GMT – Eurozone. GDP;
13:30 GMT – USA. Nonfarm Payrolls (Nov);
13:30 GMT - USA. Unemployment Rate;
13:30 GMT - USA. Average Hourly Earnings;
13:30 GMT – Canada. Unemployment Rate;
13:30 GMT - Canada. Employment Change;

15:00 GMT – USA. Michigan Consumer Sentiment Index.

Author: Anthony Porter, IAFT Analyst

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