Eurozone
The indicator of economic sentiment in the eurozone ZEW fell in February to 29.3p against 31.8p a month earlier, however, the results of the month it was still higher than the forecasts maintaining the long-term highs. A similar index for Germany was also slightly better than expected.
Given some decline in ZEW, it is expected that the indices on Thursday will come down, but it will continue to show a confident expansion of the economy. The euro does not experience any pressure from this side, as a number of important parameters, such as GDP growth and the trade balance, indicate a steady growth.
Even inflation, which is the last stronghold of the ECB, unwilling to succumb to market pressures and announce the need to raise rates, may continue to accelerate. Production prices in Germany rose by 0.5% in January and an annual growth rate of 2.1%, which significantly exceeded forecasts.
On Friday, the inflation data for January will come out. This can have a significant impact on the mood of players if they show a deviation from the forecasts. Meanwhile, the inflation forecast will remain at 1.3%, like a month earlier. It is rather a bearish level, as it gives the ECB a variety of decision-making.
From a technical point of view, the bears have more chances for the next two days. One should expect an attempt to test the recent low at 1.2206.
United Kingdom
The published report on the UK labor market on Wednesday has sparked serious interest as it came out with positive results. Chances for an increase in the rate of the Central Bank of England could increase, which could eventually give the pound an additional driver for growth. .
In general, the report came out quite good with the average wage growth rates at the same level of 2.5%, which coincided with the forecasts. The number of applications for unemployment decreased. At the same time, the unemployment rate has risen from 4.3% to 4.4% and the average working week has decreased.
The report was mixed and the pound reacted with the decline, which turned out to be shallow.
Perhaps, the pound will have the opportunity to experience increased volatility today. The Bank of England's head Mark Carney and chief economist Eric Haldane will address the Parliament with annual reports today. Most likely, details of the preparations for the exit from the soft monetary policy will be disclosed and inflation expectations will be commented upon, which may ultimately have a significant impact on investor sentiment.
While the pound remains in the side range, the nearest support is at the level of 1.3929 and the resistance is at 1.4145. By the end of the week, the decline is likely to be lower than the level of 1.3929 and move to the local minimum of 1.3763.
Oil
After a short drop in oil prices, it returned to the middle of the range of 60-70 dollars per barrel, which is recognized as fair by most manufacturers. The reasons for the collapse of quotations of a fundamental nature was not found, and therefore after the panic, the rollback was the most logical.
OPEC Secretary General Mohammed Barkindo said on Tuesday that OPEC + and other countries reached the agreement in January at 133 percent. No one has any intention to complete the agreement ahead of schedule. The agreement of OPEC is maturing in the path of the balance of supply and demand in two to three quarters instead of the end of the year. However, even after achieving the balance and completion of the agreement, OPEC + will retain mechanisms for coordinated actions in the oil market.
This is certainly a bullish news, which can support the growth of quotations. Today, a report on the API reserves is expected, if it is not negative, oil growth may continue.
The material has been provided by InstaForex Company - www.instaforex.com