On Wednesday, US stock markets were weakly corrected after two days of a protracted fall, and there is no doubt that the annual S & P500, set in February at 2530 n, will be tested for strength in the near future.
Tramponomy does not give a noticeable result yet. Published on Wednesday, the report U.S. Census Bureau showed that in October, the volume of orders for durable goods decreased by 11.5 billion dollars, or 4.4%, the maximum rates since August 2017.
The bureau also reported that the supply of goods decreased by 0.6%, the number of unpaid orders decreased, the data for September were slightly revised downwards. The effect that the US economy has received from tax cuts has been short-lived, and the signs of an impending recession are becoming increasingly threatening.
The University of Michigan consumer confidence index fell to 97.5 n against 98.6 n a month earlier, it still remains at high levels, but a tendency to slow growth has been observed for several months. The leading indicator of the US real estate market, published by the MBA, is below zero for the fourth month in a row, which indicates that cooling is approaching in the housing market and hence in the construction sector.
The dollar looks neutral on Thursday, volatility will be low, as banks in the United States are closed on the occasion of Thanksgiving.
Eurozone
The European Commission, as expected, expressed serious concern about the draft budget of Italy, according to which the budget deficit should increase to 2.4%. The Commission considers that the budget deficit will not lead to economic growth, the project contains a particularly serious non-compliance with the recommendations of the EC.
The position of the European Commission is similar to the last warning if the Italian government does not take into account the recommendations of Brussels, the latter will have to start the procedure for calculating the fine.
The absence of important macroeconomic data this week contributes to the temporary stabilization of the euro. The publication of the minutes of the ECB meeting of October 25, which is expected today, is unlikely to lead to movement in the markets.
The currency pair EUR / USD is still trading in a range whose boundaries are 1.1355 / 1445, there are no serious reasons for leaving the range yet.
Great Britain
The pound is waiting for the EU Sunday summit, which will decide the fate of Brexit. After Theresa May managed to persuade the government to adopt a plan, the chances of a positive decision on Sunday increased significantly, but the pound is in no hurry to regain positive expectations.
The country's economy is confidently heading towards a recession, although signs of its approach are barely visible. The UK budget deficit has updated a three-year high, with public spending growing by 7.7%, and this is the fastest pace in 11 years. In other words, the government is now taking more and faster than at the peak of the 2008 crisis.
For 7 months of the current fiscal year, the government managed to reduce the budget deficit by almost 30%, but the outpacing growth in spending has every chance to cover the forecasts of the Office of Budget Responsibility.
The mild version of Brexit is extremely important for Britain since it will allow it to preserve both the inflow of investments and trade with the EU countries. However, if the Brexit project is blocked by parliament, for which there are good reasons, the budget deficit will sharply accelerate its growth, and the real income of the population will decrease, which will cast doubt on the plans of the Bank of England to continue the normalization policy and put a strong pressure on the pound.
Waiting for the summit is the only serious driver for the pound before the end of the week, so the most likely scenario for GBP / USD is trading in a narrow range, which can be exceeded in case of an unexpected insider. Supports 1.2695 and 1.2721, resistance 1.2883, slightly more likely to move to the upper boundary of the channel as the EU summit approaches.
The material has been provided by InstaForex Company - www.instaforex.com