FX.co ★ The final chord of the week on the notes of the Senate

EUR / USD, GBP / USD

To delight small speculators who failed to manage to escape from buying the euro, the single currency added 57 points yesterday on the news of President Trump to replace the Secretary of State Rex Tillerson with Mike Pompeo, along with positive employment data in the eurozone. The upward flow was so rapid that happened later than the replacement of the Secretary of State and investors thought this will weaken of the dollar, however, it further gained strength. Mike Pompeo, head of the CIA and protege of a financial corporation Kochs, also approached H. Kissinger to adopt from it the basis of state administration based on intelligence. During the time of Kissinger, the CIA largely developed the direction of foreign policy. Unemployment in the euro area fell from 8.9% to 8.8%, while the basic CPI for November remained at the level of 0.9%.

Looking at the euro, the British pound also grew by 118 points based on the news about the proximity issue on the border of Ireland.

In the United States, personal income of consumers increased by 0.4% in October versus the expectation of 0.3%, while expenses increased by 0.3% against expectations of 0.2%. Also, weekly applications for unemployment benefits amounted to 238 thousand against the forecast of 241 thousand. The business activity index in the manufacturing sector of the Chicago region for the month of November declined but outperformed the forecast of 63.9 against expectations of 62.2 and 66.2 a month earlier.

Today, the main event will be the adoption of the draft tax reform by the Senate with the amendments introduced. The main struggle is set for the corporate tax rate, the current range of discussions and disputes is 20% to 22%. Then the document will be sent to the president for signature. Markets consider the rate level acceptable at 22% but expect to further reduce it. If this is the condition indicated in the project, the dollar will continue to strengthen.

The business activity index in the manufacturing sector (Manufacturing PMI) of the eurozone in the final estimate for November is expected to be unchanged at 60 points. The British Manufacturing PMI is projected to grow from 56.3 to 56.6. American Manufacturing PMI from Markit in the final estimate for the same month is expected to remain unchanged by 53.8 points. The ISM Institute (ISM Manufacturing PMI) may fall from 58.7 to 58.4, but construction costs for October are projected to grow by 0.5%.

After the Senate adopts amendments to the tax reform, the euro is expected to decline to 1.1820 and further to 1.1715. The situation of the pound is uncertain. The first target of 1.3535 is reached, but the investors' decision is completely unclear whether to break the 1.3645. Accordingly, we assume two equally probable scenarios, first is the price reduction in the range of 1.3335 / 80 and an increase to 1.3645.

USD / JPY

As expected, the Japanese yen is trying to quickly escape from the bottom of the fall below 111.00, where it reached the 27th figure. Undoubtedly, it is strongly helped by the American stock market, which added 0.89% (S & P500) over the past day. After it grew on the third day and the Japanese Nikkei 225 index gains 0.24% today. Today, the Japanese data came out moderately optimistic. Household spending in October showed zero growth against the forecast of -0.2% YoY. The unemployment rate remained at the low level of 2.8%. The base CPI in the November estimate increased from 0.7% YoY to 0.8% YoY. The business activity index in the manufacturing sector for November in the final assessment came in slightly negative due to a decrease from 53.8 to 53.6. But yesterday, Japanese values were growing despite the weak data which provided a signal for more confident growth on the figures for today. Yesterday, Industrial production showed an increase of 0.5% in October against expectations of 1.9%, and the number of new houses for the same month decreased year on year from -2.9% YoY to -4.8% YoY with expectations of growth to -2.6% YoY.

Therefore, the growth targets of the yen are 113.20, 113.80, 114.70 / 90.

* The presented market analysis is informative and does not constitute a guide to the transaction.