Euro, pound, oil: pending driver

Eurozone

Exports and imports in the euro area slightly decreased in September. However, the trade balance is still confidently surplus, which indicates a sustained recovery in the economies of the euro area.

The volume of retail sales grew by 0.7% in September while year-on-year growth was 3.7%. If we compare the situation with consumer activity in the US, then the chances of the eurozone to reach the first inflation targets are at least possible.

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The ECB outlined the deadline for the curtailment of the asset repurchase program at the last meeting. However, the question on the interest rates was postponed for an indefinite period. Such an elective transition to the normalization of monetary policy is designed, apparently, to bring down the increased demand for the euro. In other words, the ECB's policy is to withdraw surplus funds from the eurozone. This has a similar effect with traditional measures which cools the business climate.

Today, the euro can experience periods of volatility, as five members of the Board of Governors - Coeure, Constancio, Mersch, Weidmann and Lautenschlager are expected to speak throughout the day. It is unlikely that they will be able to evade assessments of the current monetary policy but if we consider the prospects for the euro in the long-term projection, then there are very few reasons for returning to the growth path. A possible correction to 1.1750 will be used by players to sell.

United Kingdom

Today, the NIESR will publish another estimate of GDP growth rates. The Bank of England noted in their report on inflation for November that the prospects for economic growth is increasingly dependent on how quickly labor productivity can grow. In recent years, there has been a tendency to slow productivity and the situation is exacerbated by the uncertainty associated with Brexit. That's why expecting GDP growth under current conditions is not necessary. Nevertheless, the Bank of England raised its forecast for GDP growth to 0.4%.

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On Friday, the report on industrial production and trade balance for September will be published. The expectations are neutral and the publication is unlikely to have a significant impact on investor sentiment.

The pound is influenced by varying factors. On one hand, the rise in prices for raw materials and stock markets supports the pound. On the other hand, the rate hike may be a hasty step. This is because high inflation is largely due to the appreciation of imports caused by the weakness of the pound rather than an increase in real consumer activity. This means wage growth remains weak. Tighter financial conditions may have a negative impact on the economy and will not affect inflationary pressures in any way.

The pound looks insecure and given the driver's suitability for the rate, it can continue to decline. Support for the level of 1.3030 looks weak and can be overcome in the short term. A more important goal is the minimum of August 1.2770.

Oil and ruble

On Wednesday, OPEC raised its forecast for world oil demand to 102.3 million barrels per day by 2022. This supported the trend for the growth of oil quotations. A number of circumstances continue to play in favor of the bulls. This includes arrests of a whole group of princes and high-ranking officials in Saudi Arabia causing oil quotes to remain above the 2-year highs.

At the same time, it is becoming increasingly difficult to search for new growth drivers. The RSI weekly chart entered the oversold zone for the first time since 2011, and the probability of a minimum corrective decrease has increased noticeably.

However, to reduce it, we need reasons that the market can not yet find. The expected slowdown in China is not causing worries as the forecasts for the growth of energy consumption in China is still high. A possible correction is unlikely to be deep or protracted, bullish factors will continue to dominate, and the barrier of $ 65 / bbl. will be overcome most likely in the next couple of weeks.

The ruble tested resistance to 59.50 but there are still few fundamental reasons for the weakening of the Russian currency. The main factor of the ruble's decline is the growth of expectations for strengthening the dollar in the global trend.

On Friday, November 10, Vladimir Putin and Donald Trump will meet. The results of the meeting can affect the quotes in any direction and therefore, by the end of the week, the uncertainty factor will prevent players from withdrawing the ruble from the formed trading range.

The material has been provided by InstaForex Company - www.instaforex.com