EUR / USD, GBP / USD.
The main event on Friday last week was the signing of the law for the 2018 budget by the US President. The budget allotted 1 trillion dollars for external borrowing in the current year. In the previous week, the Treasury attracts 7 billion through the placement of 30-year bonds and 90 billion through short-term bills. The interest rate of 100 billion a month will undoubtedly increase the demand for dollars and strengthen it in the market. Well, the major obstacle to strengthen the dollar was already beaten, it remains to be clear communicating the government's strategy to investors. This strategy undoubtedly has a particular beneficial effect on the stock market. The two-week swing of the stock market by 12% shows signs for further growth and expected to survive quietly at least one more rate hike, only if the entire first half of the year will grow. It is more difficult to develop on the foreign exchange market. If investors restore their interest in risk, counter dollar currencies will also continue their ascent. But if market demand for the dollar becomes the prevailing factor, we will see a further decline in the euro and pound.
UK economic indicators came out worse than forecast. Industrial production in December fell by 1.3% with the expectation of -0.9%, while the trade balance for December was -13.6 billion pounds against the forecast of -11.6 billion pounds. The UK GDP forecast from NIESR for the month of January was 0.5% against 0.6% in December. The volume of production in the construction sector came out better than the expected forecast, showing an increase of 1.6% against expectations of 0.0%. Moreover, the British pound decreased by 87 points. In the euro area, Italy's industrial production increased to 1.6% against expectations of 0.7%. In France, the same indicator showed an increase of 0.5% against the forecast of 0.1%. The euro showed a symbolic growth of 5 points.
Today at 7:00 PM in London, the US will report on the budget for January, indicating an expected surplus of $ 50.2 billion against the deficit of 23.0 billion in December. In the current situation, we maintain the previous forecast for a moderate increase in counter-dollar currencies and expect the single European currency to rise by 1.2365, and the British pound to rise to 1.3980-1.4000.
AUD / USD.
On Friday, the Australian dollar was able to stop the decline following the general trend of the American counterpart with 35 points growth. At the same day, oil lost more than 3%, iron ore -1.1%, and copper -1.3%.
Today, the markets during the Asian session showed mixed dynamics. The Australian stock index S & P / ASX200 is down by 0.34%, China A50 is up by 0.57%, and Indonesian JKSE + 0.11%. The yield on Australian government bonds is growing over the range of securities. In Japan, markets are close in observance of the national holiday.
In Australia, the mood index of NAB Monthly Business Survey for January will be issued tomorrow, with a forecast of 10 against 11 in December. On Thursday, a slight deterioration in the employment indicators is expected. The data for the euro area is also expected to be delivered, but important indicators or the USA are predicted with good forecasts particularly, retail sales for January are expected to grow by 0.5%, while growth of industrial production is 0.2%, and the number of new home builds 1.23 million to 1.19 million in December. Thus, the "Australian" will be completely influenced by foreign markets this week.
The immediate task of AUD / USD is to overcome the resistance zone of 0.7850 / 80. The target is 0.7945. Commodity markets began some corrective growth, as oil in the Asian session adds more than 1%, while the index of industrial metals grows by 1.04%.
* The presented market analysis is informative and does not constitute a guide to the transaction.
