Yesterday's speech by European Central Bank President Mario Draghi was calm enough and did not lead to serious changes in the market, as the ECB President mostly repeated his statements made last Thursday.
Draghi noted that incoming economic data is still weaker than expected, reflecting lower external demand. In his opinion, the uncertainty associated with geopolitics and protectionism will continue to put pressure on consumer sentiment, on which future economic growth largely depends. The European Central Bank is ready to adjust all its instruments if necessary. This again proves that it is not necessary to expect a quick rise in interest rates in the eurozone, and this is the summer of this year. Apparently, only a good second quarter will be a prerequisite for serious consideration of the question of tightening monetary policy.
Yesterday's data on lending in the euro area had slight pressure on the euro, although overall the report was rather stable.
Thus, the annual growth of lending to non-financial companies in December amounted to 4%, as in November, while lending to households in the eurozone rose by 3.3% in December, while economists had expected growth of 3.4%. Let me remind you that the eurozone economy is highly dependent on the availability of funding.
The key indicator of money supply M3 was higher than expected. Annual growth in December accelerated to 4.1% from 3.7% in November.
As for the technical picture of the EUR / USD currency pair, further growth of the euro will be possible only after breaking through the next resistance around 1.1455, which will open the way for risky assets in the 1.1490 and 1.1530 areas. In the case of a downward correction, which can be observed before the two-day meeting of the Federal Reserve System, the levels of 1.1390 and 1.1340 will provide support.
The data released yesterday on the American economy did not strongly support the US dollar.
According to a report from the Federal Reserve Bank of Dallas, the manufacturing index in January 2019 rose to 14.5 points versus 7.3 points in December, while economists expected the index to be 4 points. Good growth in activity will support the economy. Growth was observed in the production sub-index, but the employment sub-index declined slightly.
The activity in the services sector in the area of responsibility of the Federal Reserve Bank of Kansas City in January remained at a high level, although it slightly decreased. According to the Fed-Kansas City report, the index fell in January of this year to 17 points from 25 points in December.
An interesting report from the Congressional Budget Office was also published yesterday. As far as you know, the work of the US government, although resumed, is only temporary.
The report states that the suspension of the work of the US government, which began at the end of last year, is likely to take 0.4 pp. from GDP growth in the 1st quarter of this year. It is expected that the suspension will cost $ 3 billion, or 0.02% of the projected GDP growth in 2019. Despite this, the management expects that the weakening of economic growth as a result of the suspension of the work of the US government will be leveled over time.
Brexit
Today, all attention in the second half of the day will be riveted to a vote in the British Parliament on the Brexit plan proposed by Prime Minister Theresa May. It will depend on him further direction of the pound. The pressure on the GBPUSD pair could significantly increase if there are real prerequisites for a British exit from the EU without a deal. This was announced yesterday by the deputy chief negotiator for Brexit by the EU, Sabine Weyand.
If an agreement is reached on extending the exit from the EU, the pound may strengthen its position.
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