Yesterday's data from the UK and the Eurozone were terrible. Against this background, the US dollar has continued its strengthen, and the counter-dollar currencies did not show the expected correction. UK Core CPI remained unchanged, the rising by 1.6% in January. General Consumer Price Index increased from 1.6% y/y to 1.8% y/y, but the forecast was 1.9% y/y. Retail Price Index released with a decrease by 0.6%, the markets had expected a smaller decline by 0.4%. HPI rose from 6.1% to 7.2%.
Meanwhile, Industrial Production in the Euro zone fell by 1.6%. ZEW Economic Sentiment in Germany fell from 16.6 to 10.4. The same indicator for the Eurozone as a whole amounted to 17.1 against 23.2 in January. Eurozone GDP for the 2nd quarter in the 2nd evaluation has been revised with a decrease from 0.5% to 0.4%.
Main news of yesterday - it was the speech of the Fed's Janet Yellen in front of the Senate. She stated that in case of continuation the employment growth and inflation, the Fed can increase the speed of rate hikes. Assessment of the Fed on the average job growth is 190 thousand, in January there was created 227 thousand. Investors assume 2.5 rate hikes this year in average. Dallas Fed President Robert Kaplan supported the earlier rate hikes.
EURUSD pair went down to the middle of 1.0520-1.0620, and intends to continue the downward movement. We predict the breakout of 1.0520 and further price reduction to 1.0460. There is a similar situation with GBPUSD: pair is trading in the middle of 1.2400-1.2500, we expect decline of the pound 1.2315. Also, markets did not respond to a natural disaster in California, according to preliminary estimates, the damage is more than $100 billion. Donald Trump has not given any comments.