On Monday, market activity declined significantly. Bidders are waiting for the release of a large amount of economic data, which will be released this week.
After the third quarter GDP figures were presented on Friday, although they were higher than the forecast, they still showed a noticeable decline compared to the previous period, the attention of market players shifted to data on employment in the United States this week, consumer inflation in the eurozone and Germany, Canada's GDP, as well as the expected outcome of the Bank of England monetary policy meeting, and so on. In general, it seems that this week can become quite "hot" and, as we see it, it is characterized by high volatility.
And there are plenty of reasons for its growth. This and the continuation of the process of actively raising interest rates and reducing the balance of the Fed, the trade war between Washington and Beijing, which turned into a geopolitical confrontation and is clearly threatening to slow down the economies of the US and China, as evidenced by the data on GDP growth in these countries. The remaining tensions between the EU and the UK over the issue of the latter's exit from the European Union, as well as the growing tensions between the United States and Europe, all indicate that the world has plunged into new realities, which are most likely the forerunner of global changes, both geopolitical purely economic.
Assessing the ongoing processes and extrapolating them to the dynamics of global economic growth, we believe that the ten-year economic cycle is coming to an end, and the slowdown of the two largest world economies clearly indicates this. The question arises only when the world economy begins to turn down and there will be signs of a new economic crisis, which can be much heavier than the previous one due to the high degree of geopolitical tension raised by Washington. Given this, we believe that the stock markets will continue to fall, oil prices, if not manipulated, what is not certain, will decline, and investors against the background of these events will be more active to buy protective assets that can stimulate the growth of the US dollar, the yen and the Swiss franc and, of course, gold.
Today, the market's attention will be drawn to the publication of the data of the basic consumer price index (CPI), as well as the values of income and expenditure of Americans. Growth is expected. If the data does not disappoint or show an increase, then this may push the dollar to a local increase.
Forecast of the day:
The EUR/USD pair is trading above 1.1380. Positive inflationary data from the United States will put pressure on the pair, and after overcoming 1.1380, it may rush to 1.1300.
The GBP/USD pair is trading above 1.2810. A similar picture is expected in this pair. After overcoming the level of 1.2810 amid rising inflation in the United States, the pair may fall to 1.2740.
