The US dollar rose against the background of another good fundamental statistics for the United States, while the risks of slowing economic growth in Germany increased, and the likelihood of the UK leaving the EU without an agreement increased even more.
According to yesterday's data, orders in the manufacturing sector of Germany in December last year declined due to falling demand from non-eurozone countries. This again confirms the fact that the growth of Europe's largest economy in the 4th quarter will remain fairly weak.
According to the report of the Federal Bureau of Statistics of Germany, orders in the country's manufacturing sector in December decreased by 1.6% compared with November, while economists had expected an increase of 0.3%. The bureau also expects the current lull in the German manufacturing sector to continue. Compared to December 2017, orders in the manufacturing sector in Germany decreased by 7.0%.
USA
Data on the US economy were more positive.
According to a report by the US Department of Labor, labor productivity in the US manufacturing sector increased in the 4th quarter. However, it should be noted that the report is limited due to the recent partial suspension of government work.
According to the data, labor productivity in the industry in the 4th quarter of the year 2108 increased by 1.3% per annum after rising by 1.1% in the 3rd quarter. The report does not contain data on labor productivity outside agriculture. Due to the recent suspension of government work, the report on specific labor costs was also not published. Economists predicted that overall productivity in the 4th quarter increased by 1.6%, while unit labor costs rose by 1.7%.
Good news for American President Donald Trump. As indicated in the report from the US Department of Commerce, the US foreign trade deficit in November 2018 decreased by 11.5% compared with the previous month, reaching 49.3 billion US dollars. Economists had forecast a deficit of $ 54.3 billion. Imports in November declined by 2.9% compared with the previous month, while exports declined only by 0.6%.
Let me remind you that last year, in order to reduce the deficit of foreign trade, the administration of US President Donald Trump imposed a number of countries on duties on goods of foreign manufacture.
Yesterday, the US Federal Reserve Chairman Jerome Powell also delivered a speech, during which the discussion focused on the need to study the economy. Speaking at the next forum, Powell noted that monetary policy is a powerful tool for stabilizing economic growth and mitigating negative phenomena in the economy. The Fed Chairman did not comment on the outlook for the US economy or the monetary policy of the Fed.
As for the current technical picture of the EUR / USD pair, buyers urgently need to return to the resistance level of 1.1370. As long as trade is conducted under this range, sales of the European currency will most likely prevail in the market, which could lead to a further trend decline in risky assets in the minimum region of 1.1340 and 1.1290. In the case of an upward correction, which is expected by the euro a long time ago, a breakthrough of 1.1370 will lead to the demolition of a number of stop orders of sellers, which will form an increase in EUR / USD with a maximum test of 1.1400, where the demand for a trading instrument will again decrease.
Great Britain
It should be recalled that today in the afternoon a decision of the Bank of England on interest rates will be published, which may keep the downward movement in the GBP / USD pair, which has been observed since the beginning of this week. Pressure on the pound will increase only under the condition that the regulator will revise for the worse its predictions about the prospects for economic growth for this year.
It is also necessary to closely monitor the negotiations of the British Prime Minister Theresa May with the EU leaders, who currently have not brought the proper result that many traders and investors expect. We are talking about the postponement of the UK withdrawal from March of this year to a later one.
