Friday's data put pressure on the US dollar, as they indicated the presence of problems in the economy, especially those related to the industry. The inflation report in the eurozone in the morning did not help buyers of risky assets much, however, the bulls managed to avoid the sale of the euro, which kept the upward trend.
According to the report, the consumer price index (CPI) of the eurozone in October this year increased by only 0.1%, and 0.7% compared to the same period in 2018, which is certainly better than the reduction that was observed earlier. However, economists had forecast inflation to rise by 0.2% and 0.7% respectively. The core consumer price index, which does not take into account volatile categories, showed growth of 0.1% in October this year, as well as the eurozone consumer price index excluding tobacco products. The report on the growth of the positive balance of foreign trade of the eurozone in September to 18.7 billion euros against 12.6 billion euros in September 2018 was ignored by traders.
All the focus was shifted to the statistics on the US economy, as well as the Fed's report on financial stability.
Already after the release of data that the Americans increased their purchases in October of this year, it became clear that traders completely ignored the dollar growth at the end of the week. Even positive data did not lead to the strengthening of the US dollar against risky assets. Thus, the US Department of Commerce said retail sales rose by 0.3% in October compared with the previous month, while economists expected sales to grow by 0.2%. Let me remind you that back in September, a decrease of this indicator by 0.3% was noted.
Data on industrial production disappointed traders, which indicates the persistence of rather high problems in the sector. According to a report by the US Federal Reserve, industrial production in the United States declined in October this year. At the same time, a decrease is observed for the third time in the last four months. The main problems due to which there is a decrease in the indicator lie in the slowdown in global economic growth and continuing trade tension.
Thus, industrial production in the United States in October 2019 fell by 0.8% compared to the previous month, while economists expected it to fall by only 0.5%. Problems remain in the manufacturing industry, where production fell by 0.6%. Excluding automobiles, manufacturing in the US manufacturing industry fell by 0.1% in October.
A slight decline in oil harmed import prices. A report from the Department of Labor indicated that US import prices in October 2019 fell by 0.5% compared to September, while economists had expected prices to decline by 0.2%. The decrease was due to a fall in prices of imported oil in the US in October by 3.7% compared with the previous month. Compared to October 2018, import prices fell by 3%.
As noted above, the report on the financial stability of the Federal Reserve System affected the US dollar, as it was clear from it that the regulator plans to keep interest rates low for quite a long time.
The report indicates that higher asset prices and high debt of companies remain the main risks for the economy, and the deterioration of the liquidity situation in some markets may lead to new unexpected events. Low-interest rates are expected to remain so for a long period. However, despite this, the report pointed to a sustainable financial sector and moderate risks to the economy.
Inventory data for US companies, which remained unchanged in September from the previous month, were ignored by the market, even though 0.1% growth was expected.
The indicator of business conditions in the area of responsibility of the Federal Reserve Bank of New York in November decreased slightly compared to the previous month but remained in positive territory. According to the data, the Fed-New York manufacturing index in November 2019 fell to the level of 2.9 points against 4 points in October.
As for the technical picture of the EURUSD pair, further growth will be limited by the resistance of 1.1080, the breakthrough of which will provide a new influx of buyers and test the highs of 1.1120 and 1.1180. However, without good fundamental statistics on the eurozone, it is unlikely to be possible to reach these levels quickly. Given the fact that the current growth is still only an upward correction of the downward trend, which was formed on November 4, we can count on the attempt of sellers of risky assets to return to the market. This requires a breakdown of the support of 1.1040, which will increase the pressure on the trading instrument and push it back to a minimum of 1.1020. So far, this level is decisive in how the market trend will develop further.
