Euro touches multi-month bottom on Thursday

Posted 14 February, 2019

The euro to US dollar exchange rate has touched a 3-month bottom on Thursday and even slightly regained positions afterwards. The rate was recorded at $1.1290. At the same time, the US dollar is getting support from increasing yield of 10Y state bonds and steady inflation reports in the USA.

According to the recent reports, January CPI did not change even despite an anticipated increase of 0.1% m-o-m. At the same time, the core inflation moved up by 0.2% m-o-m in line with the forecasts. At the same time, it should be mentioned that the US dollar shows no response to the announcement that the US state debt hits an all-time high of $22 trillion.

The market became disappointed after the release of the euro-area industrial results unveiled yesterday. The index dropped by 0.9% m-o-m (forecast – 0.4%). The weakening continues fueled by lower output of capital products and slacker investments features.

The second half of the week is full of economic reports. In particular, Germany and the euro-area about to post preliminary GDP results in Q4 2018. Germany is expected to improve the rate by 0.1% q-o-q following the 0.2% downturn recorded in Q3, while the euro-area figures are likely to be at 0.2% q-o-q, which means stable growth since Q3. At the same time, the euro can slacken more in case of below-expectations reports from Germany. Notably, the latter is the euro-area driving force, which means that its weaker positions will depress the rest in the EU.

The USA will release retail sales results for December today. The figures can either improve slightly though may remain weak m-o-m.  The possible insignificant rise may not misinform, as we should remember that December is a sell out period in the USA, which entails good rates. However, it is worth remembering the last autumn when the Americans refused to spend money. As a result, this situation can signal about slacker confidence in the US economy and thus the labour market can become the next to post negative dynamics.

Previous forecast

15 February, 2019 17:53

← Oil market likely to stay highly volatile

The oil prices have kept improving step-by-step in the second half of the week. The Brent quotes have not only checked the $65 handle but even managed to hit it reaching some $65.14/bbl. As a result, the oil market posts quite positive week especially taking into account insufficient luck for an upward break observed lately. In th short run, persisting optimism may assist Brent prices in taking roots above the $65/bbl handle. However, this scenario can be confirmed only after the break of the 65.50 handle.

Oil market likely to stay highly volatile

Next forecast

13 February, 2019 15:09

Euro-area figures put pressure on euro →

A new set of negative reports has hit the euro area by the middle of the week. According to the available data, the regional industrial production dipped by 0.9%, while expectations were voiced at 0.4%. Notably, this downturn has been the major since the global financial crisis. After the 3-month bottom recorded yesterday, the euro still can be depressed by the European economic reports, Brexit and new fears of the global economy state. In the near term, the euro-to-US dollar rate will keep facing negative risks.

Euro-area figures put pressure on euro
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