The European currency continues to develop a downtrend against the US dollar, having updated local minima of February 19. Analysts still note a decline in demand for risk amid concerns about global economic growth. Yesterday, the Chinese Prime Minister Li Keqiang, speaking at the annual parliamentary meeting, noted that for the country's economy there are serious risks. The GDP forecast for 2019 was reduced from the previous 6.6% to 6-6.5%. At the same time, the government announced a tax cut, as well as an increase in investment in infrastructure. In turn, support for the euro on Tuesday was provided by strong macroeconomic statistics from the Eurozone. Markit Services PMI in February increased from 51.2 to 52.8 points with a forecast of growth to only 52.3 points. The similar indicator for the manufacturing sector rose from 51.0 to 51.9 points, which also turned out to be better than the forecast of 51.4 points. Retail sales in January increased by 1.3% MoM and by 2.2% YoY, with analysts' forecasts of 1.2% MoM and 1.9% YoY.


The British pound showed ambiguous dynamics on Tuesday, ending the day with almost zero results but updating the local minima of February 26. Moderate support for the pound was provided by good macroeconomic statistics from the UK. In particular, the Markit Services PMI in February rose from 50.1 to 51.3 points, while the forecast was for a decline to 49.9 points. At the same time, investors were cautious about the publication of the report of the Committee on Financial Policy, which reflected the increased risks for the British economy. The report also noted that the country's financial institutions are preparing for the toughest scenario of Brexit. During the Asian session on March 6, the pound again shows a negative trend. On Wednesday, investors will be focused on presentations by representatives of the Bank of England, Jon Cunliffe and Michael Saunders.


The Australian dollar is showing a steady downward trend during the Asian session on March 6, updating local lows of January 4. The reason for the emergence of "bearish" dynamics was the publication of disappointing macroeconomic statistics from Australia. In 4Q2018, GDP grew by 0.2% QoQ and 2.3% YoY, which was worse than analysts' expectations of 0.3% QoQ and 2.5% YoY. In Q3, the Australian economy grew by 0.3% QoQ and 2.8% YoY. The speech of the RBA head Philip Lowe, which took place a little earlier than the publication on GDP, did not have a significant impact on the Australian currency since it was mostly devoted to the situation in the housing and construction markets. On Thursday, investors are awaiting the publication of Australian statistics on retail sales, as well as on the dynamics of imports and exports in January.


The US dollar showed a slight increase against the Japanese yen on Tuesday, updating local highs of December 20. The dollar was supported by good macroeconomic statistics. ISM services PMI in February rose from 56.7 to 59.7 points, while the growth forecast was only 57.3 points. The similar indicator from Markit in February rose from 54.2 to 56.0 points, slightly worse than the forecast of 56.2 points. The IBD/TIPP index of economic optimism in March rose from 50.3 to 55.7 points, against the expectations of growth to 51.2 points. Sales of new houses in the USA in December increased by 3.7% MoM after rising by 9.1% MoM last month. Experts expected to see a negative trend of -8.7% MoM.


Oil prices have changed little on March 5, as market sentiment temporarily ended up in equilibrium. Quotes are supported by OPEC efforts to limit the supply. Earlier, it became known that Russia will try to accelerate the reduction of oil production in March, as reported by Energy Minister Alexander Novak. In turn, pressure factors are growing US output and fears of a slowdown in the global economy. Published yesterday, the report of the American Petroleum Institute (API) on oil reserves also contributed to the development of negative dynamics. As of February 25, oil reserves rose by 7.29 million barrels, after a decrease of 4.20 million barrels in the previous period.

Morning Market Review

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