In the USA, PMI Markit's business activity index in January grows relative to December, the manufacturing sector grew from 53.8p to 54.9p, the composite from 54.4p to 54.5p, the service sector looks slightly worse, in general, the business activity in the US is slightly higher than in most developed economies.
The dollar, however, responds poorly to economic indicators, focusing on the impact on the market of shutdown and trade negotiations with China. Domestic political differences block the work of government agencies for 5 weeks in a row, there are no signs of compromise yet, which may soon lead to a lowering of the US rating and the exit of investors from bonds.
In recognition of US Secretary of Commerce Wilbur Ross, the United States and China are "very far" from concluding a trade deal. The development of the situation will stimulate the growth of demand for gold and defensive assets and increases the pressure on oil quotes.
Eurozone
The euro responded with a decline to the outcome of the ECB's monetary policy meeting on Thursday. Despite the fact that there were no changes in policy, and this was known in advance, the general tone of the accompanying documents turned out to be pigeon. The ECB finally had to admit that the risks around growth prospects had shifted down. At the December meeting, risks were considered in a generally balanced manner.
As Mario Draghi specifically explained, the purpose of the January meeting was only to assess the economic situation. Well, the assessment had no chance of remaining positive. The PMI indices published on the eve of the meeting signaled a further slowdown in growth, the largest drop was observed in the manufacturing PMI, which fell from 51.4p to 50.5p, the sub-index of new orders continued to decline to 47.9p, which indicates not only a slowdown but a reduction in production.
Components for core inflation have softened, business activity indices indicate that the slowdown is likely to continue in the first half of 2019.
Nevertheless, apart from the clearly negative effect of the reassessment of risks, the ECB sweetened the pill with two positive conclusions. In his opinion, the benefits of negative rates still outweigh the negative side effects, while TLTRO still remains in the realm of reasoning, not practical action.
At the press conference, the position of the EB regarding TLTRO was touched several times, however, Draghi responded very evasively, informing the well-known facts that these operations were very effective by the recent past, but did not give any hints about the possibility of resuming the incentive program in the near future.
Despite weaker growth prospects and heightened downside risks, the ECB continues to expect inflationary pressures in the euro area to continue to accumulate. A strong recovery in the labor market and a rise in wages, along with still positive economic growth, should start pushing prices up. Draghi mentioned that the reason for which wage growth has a weak effect on prices was the compression of corporate profits, which is expected to end.
In general, the outcome of the ECB meeting did not lead to a significant increase in volatility, the euro paired with the dollar currently looks weaker. During the day, EUR / USD may rise to the trend line punched on the eve, which runs in the 1.1335 / 40 zone, but only to turn south again. A more likely look is a decline during the day and an attempt to update yesterday's low of 1.1288 with an eye to 1.1269.
Great Britain
The British pound rose after reports that the Democratic Unionist Party is ready to support Theresa May's new Brexit plan with some reservations about the future border with Ireland. The probability of a hard exit from the EU declined, which allowed the pound to update the next maximum.
Today, the probability of growth of GBP / USD remains high, an attempt to update the November maximum of 1.3174 is likely.
The material has been provided by InstaForex Company - www.instaforex.com