Dollar has taken heart

A positive macroeconomic data was published on Friday and returned to the market the idea that the Fed could raise rates twice this year.

The report on the labor market came out unexpectedly strong with the data of 340 thousand number new jobs in January, which turned out to be much better than the average market forecast of 164 thousand. The growth of average wages remained high, which gives chances to see the growth of inflation.

The final index of consumer sentiment from the University of Michigan turned out to be slightly higher than the preliminary one. Similarly, the ISM index in the manufacturing sector rose to 56.6p in January against the forecast of 54.2 p., indicating the economy is still expanding despite the slowdown in growth is still expanding.

Also on Friday, two Fed members commented on the current economic situation and both were brightly dovish. Head of the Federal Reserve Bank of St. Louis, James Bullard, rated the report on the labor market as "very strong" but at the same time urged to pay attention to other data. His colleague from Dallas, Robert Kaplan, has once again insisted on a pause in the rate increase cycle, explaining that nonfarm is not an indicator due to shut down.

In general, market expectations are changing to more positive. The gold growth was replaced by a fall and oil rose again above $ 63 per barrel, which indicates a decrease in risks.

Eurozone

The EUR/USD pair is trading in a narrow range, which is no reason to leave. Borders range from 1.1403 to 1.1515 and the euro will wait for new data.

Great Britain

The development of the situation on Brexit remains the main driver for the pound in the coming weeks. Plan B, proposed by May, does not find support anywhere except in her own party. The question of the border with Ireland remains open; it requires finding a compromise among the main political movements.

In the coming days, Britain will be visited by Tusk and Juncker, and the search for a compromise will continue. If he is not found, then the prospects for voting in parliament on February 13 will remain bad, which would lead to the removal of May in the process and the question passed to parliament. In this case, the pound is likely to be able to resume growth.

As for macroeconomic data, they continue to remain moderately negative. The PMI in the industrial sector fell to a 3-month low and amounted to 52.8 p. Moreover, the slowdown in 2018 is not in doubt.

In the construction sector, the PMI from 52.8p to 50.6p. The result is noticeably worse than forecast, despite the fact that the market does not expect any active actions from the Bank of England at least until the end of the year.

On Monday, the GBP/USD looks neutral but until the situation with the Brexit is cleared, you should not wait for movements. Probably, the recent low of 1.3040 is updated and an attempt to go below 1.30, the support can be found at 1.2960 / 70 in case of success.

Oil

Oil grows significantly after Friday's data provoked sales of defensive assets, but then additional reasons for growth emerged. According to Baker Hughes, the number of active oil installations has decreased by 15 in the last week as it dropped to a total of 847 units, which is a minimum of 8 months. In turn, OPEC set a two-year record, reducing production in January by 80% of the agreements reached under the OPEC + transaction.

In the absence of system data on futures due to the shutdown, the holistic picture is not yet visible but one thing is clear - there is no threat of the collapse of the oil market. The breakdown of resistance at 63.63 will open the way to the 65/70 zone, which coincides with the consolidated market estimate for Brent in the second quarter.