The data released in the first half of the day led to a slight decrease in the European currency, as they signaled a further slowdown in the eurozone's economic growth in the 4th quarter of this year.
Basic data
According to a report by the GfK research group, consumer sentiment in Germany began to deteriorate by the end of this year due to the uncertainty in the outlook for the global economy. First of all, this is due to the likelihood of worsening trade wars, which the United States is waging against several countries.
According to the data, the leading consumer confidence index GfK for December of this year fell to 10.4 points from 10.6 points in November. Economists had forecast a decline in the December index to 10.5 points. In GfK also noted that the propensity of households in Germany to accumulate funds has increased significantly, which will necessarily lead to a decrease in the growth rate of retail sales at the end of the year. At GfK, everyone is also expecting a 1.5% growth in consumer activity in German households this year compared with 2017.
The pace of lending to eurozone companies has slowed, which is a bad signal for the economy.
According to the European Central Bank, the annual growth of lending to non-financial corporations in the eurozone in October 2018 slowed to 3.9% against 4.3% in September. I recall that the majority of developed economies are very dependent on the availability of financing, and its reduction may entail a number of negative consequences. The annual growth rate of household lending in the eurozone in October remained unchanged compared with September and amounted to 3.2%.
The growth rate of the money supply in the eurozone in October M3 was 3.9% against 3.6% in September. Economists had forecast an increase in the eurozone M3 monetary aggregate by 3.6% in October.
As for the technical picture of the EURUSD pair, the pressure on the euro remains, as many market participants expect the Fed chairman to speak, which is scheduled for the afternoon. Market participants are confident that the Fed will continue to tighten monetary policy next year. The question remains open, what minimum will be laid in the number of increases in interest rates.
While the trade is conducted below the intermediate resistance of 1.1300, the pressure on the euro will continue to continue, which will lead to a decrease in the area of 1.1250 and 1.1220 minimums, which I discussed in more detail in my morning review. In case of breaking daily highs, a series of stop-orders of sellers may work, which will return EURUSD to larger resistances in the 1.1320 area.
The British pound grew slightly ahead of the Bank of England's tomorrow report, which will express its opinion on the Brexit agreement reached between the EU and the UK. If management decides that the proposed scenario is acceptable, the Bank of England may raise interest rates as early as next May.
However, the whole question remains whether the British Parliament will approve the terms of the draft agreement on British withdrawal from the EU. This will be announced on December 11.
Meanwhile, the British government went into agitation mode. British Prime Minister Theresa May is trying hard to convince the UK public that the Brexit agreement reached is the best possible option. However, as many experts note, the chances for parliament to approve the deal remain low.
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