EUR/USD, GBP/USD
On Tuesday, the euro and the British pound slightly moved downwards due to the economic indicators of Europe that turned out weaker than forecasts. The budget deficit of France for November has declined from -77.1 billion euros to -84.7 billion euros. The wholesale price index in Germany for December showed a decrease of 0.3% against the expectation of growth of 0.3%. Furthermore, the trade balance of Italy - in the November estimate, had amounted to 4.83 billion euros against expectations of 5.22 billion and 4.99 billion euros in October.
The British CPI in December fell to the expected 3.0% y/y from 3.1% y/y in November. The core CPI fell to 2.5% y/y from 2.7% y/y earlier, the forecast was 2.6% y/y. Retail prices showed growth against expectations that remained unchanged at 3.9% y/y, prices increased to 4.1% y/y. The housing price index was revised upwards in the November estimate from 4.5% y/y to 5.4% y/y and the gauge for December now stands at 5.1% y/y.
In the US, the index of business activity in the manufacturing sector of New York in the current month has dropped from 18.0 to 17.7 points, while waiting for growth towards 18.5. However, it seems that there are no forces on the market that are able to deploy or stop the stock market. The start of the monthly period of quarterly reports in the US began well - 75% of the companies that are reporting have showed profit above forecasts. Appetites for risk are growing.
Today at 14:00 London time, the Bank of Canada will announce a decision on the rate. It is expected that the base rate will be raised from 1.00% to 1.25%. Indeed, it's time to do it - unemployment fell in Canada to the lowest level since 1976 (5.7%). It will undoubtedly strengthen the Canadian dollar, and together with it the euro and the pound will turn upbeat. The December final CPI assessment in the euro area will be released. Forecasts to remain unchanged: for the basic CPI 0.9% y/y, for a total 1.4% y/y.
In the United States, the release of industrial production indicators for December will be important. The forecast for Industrial Production is 0.3% after 0.2% in November, capacity utilization is expected to increase from 77.1% to 77.3%. The NAHB index of business activity in the housing market for the current month is expected to slightly decrease from 74 to 73. At 18:00, the Beige Book, a consolidated review of the Federal Reserve System for all 12 economic regions of the United States, will be published. In it, judging by the latest indicators, there really is something to say that is optimistic for investors. We are waiting for the euro at 1.2365, pound sterling in the range of 1.3980-1.4000.
AUD/USD
The Australian dollar continues to follow the general trend of European currencies. Yesterday, good growth in sales of new cars in Australia, which showed an increase of 4.5% in December and also moderately positive data on capacity utilization in New Zealand (92.8%), served as the basis for the growth. However, Commodity futures declined: oil -1.5%, iron ore -1.1%, copper -1.8%. Eventually, it prevented the "Aussie" of its day growth.
Tomorrow, data on employment in Australia for the previous month will be released. The increase in new jobs is expected at 9 thousand, which is not much, but after the November increase of 61.6 thousand - the highest figure in more than two years, a "correction" is quite appropriate. The unemployment rate is expected to be unchanged at 5.4%. More fears are caused by tomorrow's figures for Chinese industrial production and GDP for the fourth quarter. Industrial Production in November is projected to remain unchanged in growth at 6.1% y/y, the forecast for GDP is 6.7% against 6.8% in the 3rd quarter. Retail sales are also expected to slow in November, with a forecast of 10.1% y/y against 10.2% y/y in October.
Under the pressure of commodity markets and possibly moderately negative indicators for China, we expect a decrease in the AUD/USD in the range of 0.7850/80.