Eurozone
The growth of industrial production in the eurozone increased in August by 1.4% compared to July, an annual growth rate of 3.8%, and the highest level growth rate over the past nine years. Strong data has been expected by the market. Currently the focus is on the ECB meeting on October 26, which may announce changes in the monetary policy.
The ECB's leadership is trying to extinguish the bullish sentiments of investors. Mario Draghi said on Friday that inflation in the euro area remains too weak, despite the acceleration of economic growth. As Draghi said at a meeting in Washington, the inflation rate towards the ECB's target level of just under 2% "is not yet convincing enough," which means that "significant monetary accommodation" is still required. ECB Vice President Vitor Constancio said about the same - inflation expectations "never materialized" and the approach of inflation near the target level "has become quite a challenge."
The ECB's guidance makes it clear - one should not base on excessive expectations, and the bank will do everything possible to prevent the strengthening of the euro. Formally, low inflation gives the right to the bank to postpone the exit of the stimulus program, and the euro, accordingly, loses the driver of growth.
On Tuesday, inflation data will be released in September, and they will largely clarify the future expectations for the euro. So far, while the rise to 1.1870 looks too attractive for selling, the actual goal remains the decline of EURUSD to 1.16.
United Kingdom
The lack of macroeconomic news forces which can solicit a reaction on the pound makes it solely responsive the situation around Brexit. Estimates in the market are simple-if negotiations are successful and both sides see an opportunity to close a deal, then this is a bullish factor for the pound and it starts to rise. And, on the contrary, any delays or difficulties create problems for the pound, which in the period of uncertainty loses value due to increased risks.
At the moment, expectations are not in favor of the pound. European Commission President Jean-Claude Juncker said the process will take longer than originally thought, and Angela Merkel, the spokeswoman for the German Chancellor, said it was too early to discuss any conditions for Britain's withdrawal from the EU.
These comments neutralized the statement of the EU's chief negotiator for Brexit, Michel Barnier, who a day earlier announced the possibility of granting the UK a two-year transition period. Obviously, the EU leadership does not intend to give in, and the pound, thus, was under pressure both against the euro and against the dollar.
On Tuesday, an inflation report for September will be published. It is expected that inflation will continue to rise, it is a bullish factor for the pound. Also on Tuesday, three BOE members will address the parliament, the markets will carefully check whether they have changed their position before the November meeting.
Currently, the market estimates the probability of a 0.25% rate increase on November 2 at 60%; this is the main reason for the strengthening of the pound in recent weeks. However, in the long term, the dollar's drive is likely to be intercepted, the growth of GBPUSD to 1.3330 will be used for selling, and the pound has an opportunity to decline in the coming week to 1.30.
Oil
On Friday, Oil grew steadily for a number of reasons. The first of these is the growth of China's oil imports to nine million barrels per day, which significantly lowered concerns about a possible slowdown in the Chinese economy.
The second reason is the growth of geopolitical risks. US President Trump announced the possibility of "at any time terminate the deal with Iran," which threatens the stability of exports from Iran, which, as part of the "nuclear deal", increased production to 3.8 million barrels per day. The reassessment of geopolitical risks is capable of giving the oil a serious bullish momentum.