Progress in trade negotiations and the likelihood of the abolition of mutual duties of the US and China support the US dollar and put pressure on gold, which declined significantly this week. Yesterday, the Ministry of Trade of China said that after difficult negotiations, it is likely that the parties will simultaneously cancel duties in the same amounts. However, this will be done only after the first phase trade agreement is signed. China is optimistic about the results of the current negotiations and considers them constructive. However, it is worth noting that a number of the most important issues relating to the intellectual property of American companies operating in China have not been resolved. However, the first phase of the agreement does not include these problematic points, and most likely will be signed shortly.
Yesterday's data on the US labor market helped the dollar to strengthen its position against the euro and the pound. According to a report by the US Department of Labor, the number of initial applications for unemployment benefits for the week of October 27 to November 2 fell by 8,000 to 211,000. Economists had expected the number of applications to be 215,000. The four-week moving average fell by 250 and amounted to 215,250. The number of secondary applications for the week from October 20 to 26 fell by 3,000 and amounted to 1.689 million.
But the data on consumer lending in the US did not please investors much, as it indicated a slowdown in growth. According to the report, consumer lending in the United States in September of this year grew by only 9.51 billion dollars, after an increase in August by 17.84 billion dollars. The slowdown in lending, albeit indirectly, is a leading indicator for the pace of retail sales, which may show weaker growth in the 3rd quarter of this year.
The speech by Fed President-Atlanta Bostic was no different from the statements made by his colleagues earlier this week. Rafael Bostic believes that current interest rates are at the right levels and now is the time for the Fed to watch the data before changing policy again. The risks of the representative of the Fed attributed the tension in trade relations, as there is already some evidence of a negative impact on the economy.
As for the technical picture of the EURUSD pair, further bearish momentum will directly depend on the market reaction to the breakdown of the intermediate support of 1.1045. Fixing below this level may increase the pressure on risky assets, and the update of yesterday's low will push the trading instrument to the area of 1.1020 and 1.0990. If the bears do not receive the necessary support from the roar, the upward correction in the euro will be limited to the resistance of 1.1090, from where the big players have been trying to build a bearish trend for the last two days.
AUDUSD
The Australian dollar ignored the new inflation forecasts that were given today by the Reserve Bank of Australia. According to the report of economists, inflation for June 2020 should reach the level of 2.0%, against 1.75%. As for the forecast for GDP growth, in June 2020, it was revised in the negative direction to 2.5% from 2.75%. The lowering of the forecast is directly related to the trade conflict between the USA and China, which affects Australia's services sector. Short-term bearish risks for the Australian economy are also associated with housing.
