The European currency continued to strengthen its positions against the backdrop of weak fundamental statistics on the part of the United States, as well as contradictory statements by representatives of the Federal Reserve System.
Yesterday, data came out that indicated that production orders in the US in January this year declined. Despite the fact that experts predicted falling orders, the report still created some pressure on the US dollar. The drop in orders directly indicates a worsening of the situation in the manufacturing sector.
According to the report of the US Department of Commerce, production orders in January 2018 fell by 1.4% compared to the previous month, to 491.69 billion US dollars, while economists expected a decrease in orders by 1.5%. Data for December were revised for the better. Originally reported growth of 1.7%, while the final estimate was 1.8%.
Excluding orders in the transport sector, production orders in January increased by 0.4% compared to December.
Worry also causes a decline in orders for durable goods, which speaks of the economy of US consumers. According to the report, orders for durable goods fell by 3.6%, while orders for short-term goods rose by 0.8%, to $ 251.66 billion.
Returning to the topic of the trade war, attention should be paid to yesterday's speech by the US Treasury. According to Mnuchin, the duties will not be applied to Canada and Mexico in case of successful negotiations on the North American Free Trade Agreement. Thus, the main attention from the US, as expected, will be concentrated only on the European Union and on fees for its countries. Mnuchin added that the US does not want to unleash the trade wars, and the exception for Canada is made only because it is a very important trading partner for steel.
This week, representatives of the Fed continue to speak.
Yesterday, Lael Brainard said that as increasing inflation accelerates, incremental rate increases will be appropriate. She is also confident that inflation will reach the Fed's target of 2%, but full employment is also an important task for the Fed. The representative of the Federal Reserve is also confident that strengthening foreign economies should increase the demand for exports from the US.
As for the technical picture, the demand for risky assets at current levels will gradually slow down. The new large long positions on the European currency paired with the US dollar will be noticeable only after the decline to the level of support 1.2350, which recently acted as a serious resistance.
