Eurozone
The statistical data published at the beginning of the week for the euro area supported the rapid growth of the euro. The German ZEW indices continued to show signs of continued recovery in Europe's largest economy while industrial production fell slightly in September. However, there was an impressive 3.3% year-on-year growth. The euro zone's trade surplus continues to increase and it reached EUR 25.0 billion in September from 21.6 billion a month earlier.
Preliminary data on the GDP in Q3 came at the level of expectations with an annual growth of 2.5% which is stable. Included with it are the monthly fluctuations which are significantly less than in the US. This positively affects the investment climate.
On Wednesday, the euro could continue the rally if the data on inflation in the US came out worse than expected. However, in October, core inflation finally showed an increase of 0.2%. On the whole, inflation data came out in favor of the dollar and further euro growth was stopped.
Today, Eurostat will publish a report on consumer inflation for the euro area and further euro dynamics will depend on the correspondence of real figures to expectations. The dollar continues to be a favorite in the main currency pair and the euro will be used by players for sales. The medium-term target of 1.1420 remains relevant.
United Kingdom
The decision of the Bank of England to raise the rate may be hasty. Weak macroeconomic data does not give any confidence that price increases are systemic. Producer prices in October grew weaker than expectations and weaker than in September. Consumer inflation rose by just 0.1% against 0.3% a month earlier and although the annual growth rate remained unchanged at 3%, there is doubt about further positive dynamics.
First of all, it concerns the labor market. Despite the fact that the unemployment rate in September remained at the level of 4.3%, which fully corresponds to the level of full employment, the number of other indicators still looks weak. The average duration of the working week continues to be well below pre-crisis levels and the growth of the average wage does not inspire any optimism and is not able to provide an increase in demand in the consumer market.
Today, a report on retail sales for October will be published. The forecasts are extremely weak. Instead of the necessary growth, sales are forecast to decline. Weak data will put pressure on the pound which may resume decline by the end of the week which will probably be a re-testing of the psychologically important level of 1.30.
Oil
Despite the fears of a deep correction, oil prices stayed above $ 61 / bbl, remaining within the rising channel. Record growth in US inventories did not have a noticeable effect on players and respite was used to fix profits.
So far there is no evidence that investments have started to return to the industry in the US. Slate producers do not increase production volumes, as this will require significant drilling, given the rapid depletion of wells drilled in the last 2-3 years. The countries of OPEC + demonstrate calmness. It is already clear that the situation with the prolongation of the announcement will not get out of control because of possible disagreements.
The material has been provided by InstaForex Company - www.instaforex.com