EUR / USD, GBP / USD
Yesterday, the main event of the last days happened: the US Congress passed a bill on tax reform. However, despite such an expected event, large businesses issues including the reduction of profit tax to 21% was overshadowed by a small collision which was the current financing of budgetary expenditures. The expenses is expected to be completed already by tomorrow and the new budget comes into force on January 1. If the president succeeds in signing it, they must urgently, until Friday, decide whether to continue funding government spending. At these events, investors did not start making forward decisions. So if investors are inactive, the initiative is intercepted by speculators. They managed to squeeze the dollar, even against economic data. The eurozone's balance of payments for October amounted to 30.8 billion euros against the forecast of 33.4 billion while the German producer price index in November added 0.1% against expectations of 0.2%. In the UK, the balance of retail sales from CBI in December fell from 26 to 20 with the expectation of 21. In the US, home sales in the secondary real estate market for November increased from 5.50 million to 5.81 million while expecting a more modest growth to 5.53 thousand. Foreign exchange players also played up the stock market. The S & P500 declined by 0.08% while European indices were deep in "red" with the DAX losing 1.11% and Euro Stoxx 50 falling by 0.88%).
Against the growth of the euro, the British pound fell by 10 pp on the negative assessment of the IMF of the current and prospective economy of the UK that has withdrawn from the EU. Today, there are data on net borrowings of the public sector of the UK over the past month. The forecast is 8.3 billion pounds against 7.5 billion in October. In the euro area, the consumer confidence index for December is expected at 0.0 points against 0.1 earlier.
The United States expects a moderate positive sentiment. The final estimate of the GDP for the third quarter is predicted without change at 3.3%. The volume of corporate profits for the same period is expected to increase by 0.9%. The price index for personal consumption expenditure may show a quarterly growth of 1.6% versus 1.5% in the second quarter. The October housing price index is forecasted to increase by 0.2%. Weaker than the previous indicators may be the index of industrial activity in the district of Philadelphia for the month of October which was at 21.5 against 22.7. Data on initial applications for unemployment benefits were at 231 thousand against 225 thousand a week earlier.
It seems to us that the psychological pessimism with working off the euro is in the range of 1.1820-1.1900. This is something we mentioned in yesterday's review and is now over. Now we go on the turn of the pessimism of the reverse order. Today, there are parliamentary elections in Catalonia which are most likely to win supporters of the independence of the autonomy. It is possible to reduce the quotation to 1.1820 and further to 1.1755. The British pound is waiting in the range of 1.3225 / 45.
USD / JPY
Japanese investors were able to discard fears about the adoption of tax reform in the US and the national currency yesterday rose by 50 points. The index of business activity in all sectors of industry and services in Japan known as All Industries Activity for the month of November increased by 0.3% with the forecast at 0.4%.
Today, the key event was the decision of the Bank of Japan to keep the monetary policy unchanged. However, the Central Bank decided to maintain verbal pressure on the markets. They said, "we should take an additional softening if inflation is not reached on time" (2018). This positive stress still could not bring the stock index Nikkei 225 into the growth zone. The index declined by 0.06% so far while the Chinese Shanghai Composite is growing by 0.48%. However, the South Korean Kospi SEU is losing 1.40% on the Daily Telegraph's information about developing a US preemptive strike against North Korea. In particular, the Pentagon is considering a strike plan at the launch sites of Korean ballistic missiles and weapons stores. However, while there are no direct statements on this matter, we are waiting for the yen to rise in the range of 114.70 / 90 amid the strengthening of the US dollar.
