The euro continued to decline against the US dollar, as did the British pound. Many experts have talked about the fact that the current soft monetary policy in the eurozone will continue for at least two to three years before the European Central Bank at least remembers the possibility of its change. The main problem, as in many other countries, remains low inflation, with which the European regulator cannot cope. At the beginning of this year, the ECB said that interest rates would remain unchanged until the first half of 2020, inclusive.
As for inflation, the new president of the European Central Bank, Christine Lagarde, will need to try to return it to its target value. Some experts believe that Lagarde may change the approach to inflation altogether and change its target level, which is now just under 2.0%, which will make it easier to achieve it in the future.
Yesterday's data on the sharp decline in non-agricultural labor productivity in the US in the 3rd quarter of this year did not have much impact on the US dollar. According to the report of the US Department of Labor, productivity decreased by 0.3% compared to the 2nd quarter of this year, while economists had expected growth of 0.9%. Compared to the same period the previous year, productivity growth was 1.4%.
The speeches of the Federal Reserve representatives this week are not original, as they are mostly about the same thing.
President of the Fed-Chicago Evans yesterday said that the Fed has moved policy into a soft mode, and this is done to achieve the inflation target of 2%. In his opinion, the neutral rate on federal funds is about 2%.
The President of the Federal Reserve Bank of New York, John Williams, noted in an interview that the committee will determine the policy based on the incoming data, and the three rate cuts that occurred this year are very effective in terms of leveling risk. Many Fed leaders, like Powell himself, have repeatedly pointed out that the future policy course will depend on the incoming data, so it would be premature to write off the December reduction in interest rates.
As for the technical picture of the EURUSD pair, sellers will continue to focus on breaking the support of 1.1050, which will increase pressure on the trading instrument and lead to updating lows of 1.1020 and 1.0970. The areas of 1.1090 and 1.1130 can be considered as stable resistance levels.
GBPUSD
Today, all attention will be focused on the decision of the Bank of England, which, most likely, will leave the key interest rate at 0.75%. However, the opinions of bank managers may be divided. Some members of the committee may likely vote to lower the interest rate, as the economic growth rate is reduced, and the uncertainty associated with Brexit and global economic growth continues to persist.
It is also expected that the Bank of England will revise its inflation forecasts downward, which eliminates the need to keep rates high. This will further weaken the position of the British pound against several world currencies. Revision of the forecast for economic growth in the negative direction may exert momentary pressure on GBPUSD.
As for the technical picture of the GBPUSD pair, the negative scenario from the Bank of England will lead to an update of the lows of October 24 in the area of 1.2790, on which a lot will depend. The breakthrough of this support will cancel out all the bulls' plans for a possible return of the pair shortly to the area of 1.3020 highs. If the market reaction to the regulator's report is positive, the bulls will try to catch the resistance of 1.2915, the breakthrough of which will provide the pound with a new wave of growth to the highs of 1.2940 and 1.2980.
Oil
Oil fell from a high of 57.75 per barrel on the WTI mark to the area of 56 dollars after yesterday's report, which indicated that commercial oil inventories in the United States rose significantly.
According to the US Department of Energy, for the week from October 26 to November 1, commercial oil inventories rose by 7.9 million barrels to 446.8 million barrels, while analysts expected an increase in reserves of only 1.4 million barrels. Gasoline inventories fell by 2.8 million barrels to 217.2 million barrels, and distillate inventories fell by 622,000 barrels to 119.1 million barrels. The load on oil refining capacities decreased by 1.7 percentage points to 86.0%.
As for the technical picture of oil, a good level of support is seen in the area of $55 per barrel, however, to achieve it, the bears need to overcome the area of $56.
