Reducing the tension around the coronavirus allowed investors to switch their attention to economic data, as well as company reports for the fourth quarter.
The values of production indicators released in both Europe and America this week showed that business activity can be kept above the threshold of 50 points, but at the same time, problems, especially in Europe, remain quite serious.
The eurozone economy has remained slow since the start of the new year. German production orders declined 2.1% in December. This value remains the most noticeable, while an increase of 0.6% was predicted. On this wave, the single currency has turned down together with the dollar again and is currently trading below the level of 1.0990. Additional pressure on the pair was also exerted by positive values of applications for unemployment benefits, which declined from 217,000 to 202,000 with a forecast of decline to 215,000. The level of productivity in the non-agricultural sector in the 4th quarter of last year increased to 1.4% against the forecast of an increase of 1.6 % and indicator decline in the third quarter by 0.2%.
Another negativity for the single currency is the speech of the head of the ECB C. Lagarde on February 5, which did not give any signals for a likely update of the regulator's monetary rate in the near foreseeable future.
On the other hand, trading in stock markets in Asia took place in negative territory, despite the growth of the US market the day before. This is due to investors' expectation of the publication of data on trade in China. The values of which could weaken against the background of the situation around the coronavirus in the "heavenly places."
Today, the focus of the market will be the publication of a report on unemployment in the United States. According to the forecast, the number of new jobs is expected to grow by 160,000 in January against the December level of 145,000. The unemployment rate is expected to remain at a historically record level of 3.5%.
What could be the reaction to the data presented? If the values turn out to be significantly higher than expected, this will lead to a local increase in the dollar exchange rate across the entire spectrum of the currency market. But at the same time, we believe that this strengthening, if it is, will only be local, since the Fed's overall monetary policy remains "soft" and a steady increase in the dollar is not expected.
Forecast of the day:
EUR/USD is trading below the level of 1.0990. In the wake of strong US employment data, it will continue to decline to 1.0950, and then to 1.0900.
GBP/USD will also rush down to 1.2900 and 1.2835 after falling below 1.2920 against the backdrop of possibly strong statistics from America.
