The ECB and the EUR: the minutes of the European Central Bank did not affect the market, keeping the chance for the euro

The European currency fell against the US dollar in the first half of the day after yesterday's rapid growth amid comments from the Federal Reserve and the minutes of the December meeting, which pointed to a slowdown in the rate of interest rate hikes in the US in 2019 for a number of reasons.

Data on industrial production in France were much worse than economists' forecasts, which could also affect the position of the European currency.

According to the report of the statistics Agency Insee, industrial production in France in November 2018 decreased by 1.3% compared to October, while economists had forecast production growth for the same period by 0.1%. The main blow fell on the automotive and pharmaceutical industries.

The minutes of the meeting of the European Central Bank on monetary policy did not cause much harm to the European currency, as they mainly dealt with the general uncertainty, trade tensions, weakness of emerging markets and Brexit. They also pointed out that the situation in the eurozone remained unstable and new sources of uncertainty could emerge.

Today in the afternoon, US Federal Reserve Chairman Jerome Powell will speak, who will answer questions in the Washington Economic Club. Most likely it will be about the economy and raising interest rates.

Let me remind you that last Friday, Powell signaled the possibility of greater flexibility in the Fed's decision-making on interest rates, which, in fact, was confirmed yesterday by the minutes from the last meeting. Speakers from the Fed pointed to a rather limited number of future interest rate hikes this year, and expressed less confidence about the timing and scale of future rate hikes. The main factors that influence further interest rate hikes are market volatility and a slowdown in global economic growth.

As for the technical picture of the EURUSD pair, it remained unchanged. The bearish correction scenario has been completed, and the support level of 1.1520 is a problem for the further decrease of risky assets. However, the lower limit of the ascending channel is still visible in the area of the low of 1.1495, and it is best to open long positions from this level. The task of euro buyers will be a breakthrough of resistance at 1.1555, which will lead to the update of the new local highs 1.1650 and 1.1600.

The British pound remains trading in the channel in anticipation of news on Brexit. The data that retail sales have slowed did not greatly interest traders. According to the report of The British consortium of retailers, retail sales in the UK in December 2018 fell by 0.7% after an increase of 0.6% a year earlier. Total sales remained unchanged after rising 1.4% in December 2017. The decline in sales even during the Christmas holidays suggests that consumers are more cautious about the future due to the uncertainty that surrounds them because of the unclear scenario for Brexit. The main decrease was for non-food products, where the decrease was 2.8%.

While Beijing and the United States are negotiating on trade relations, disappointing data come from official sources.


According to the report, producer price growth in China slowed sharply in December due to a contraction in demand amid a slowdown in economic growth. According to the National Bureau of Statistics, the PPI producer price index in China in December 2018 increased by only 0.9% compared to last month, after an increase of 2.7% in November. Economists had expected the PPI to grow by 1.5% in December.

China's CPI consumer price index also rose less significantly in December than expected. Growth was 1.9% in December after rising 2.2% in November. Economists had forecast that CPI would grow 2.1 percent in December.

The material has been provided by InstaForex Company -