The weak economic statistics from Germany, the eurozone and the US, as well as the IMF's pessimistic outlook for the growth prospects of the global economy, "did" their job, forcing investors to switch from the expected positive from the US-China talks at the end of this month that the slowdown in global economic growth could turn into a recession.
According to the data presented on Tuesday, the index of current economic conditions from ZEW in January in Germany fell to 27.6 points against 45.3 points in December, while the forecast was to fall to 43.5 points. In the eurozone, the index of economic sentiment from ZEW fell to -20.9 points, while it was expected that it would remain at -21.0 points. Despite the fact that the indicator value has somewhat improved, it still remains in negative territory.
Also negative was the values of sales in the secondary US housing market. Sales plummeted from 5.33 million to 4.99 million, although it was assumed that they could fall to 5.25 million. In December, they declined by 6.4% as a percentage against a growth of 2.1% over the previous period and a forecast of 1.0%.
In the wake of such economic statistics, as well as statements by the IMF earlier this week in the person of leader C. Lagarde that the fund expects a slowdown in the global economy, world stock markets fell markedly on Tuesday. The markets began to confusion and vacillation. If earlier the strongest rally at the end of last year and in the early days of the new event increased the optimism of investors, who considered that the conclusion of a new trade deal between Washington and Beijing, as well as a probable pause in raising the Fed interest rates, will support the growth of the global economy, data from the eurozone, China and the States, which showed clear signals of a slowing down of the three largest world economies and Lagarde's statements, returned pessimism and threatened with the fact that it can continue to render a negative influence.
At the same time, there is a suspicious calm in the foreign exchange market, which we can explain by the wait-and-see attitude of investors who are not showing noticeable activity because of the presence of contradictory signals, which, on the one hand, support the weakening of the dollar, on the other hand, they have a negative impact on the main currencies traded against it. As we indicated earlier, we expect that this situation is likely to continue until the end of the month.
Forecast of the day:
The currency pair EUR / USD is consolidating, remaining in the range in anticipation of the outcome of the ECB meeting, which will be held on Thursday. We believe that it will be negative for the euro, which means that the pair should be sold on growth in the range of 1.1335-1.1400.
The currency pair USD / CAD is trading above the level of 1.3315. If the oil price gets support, we can expect a local decline in the pair to 1.3280 after overcoming the level of 1.3315.