Yesterday, US Treasury Secretary Steven Terner Mnuchin tried to reassure traders and investors by making a number of statements regarding the growth prospects of the US economy after the Federal Reserve System signaled a slowdown in its growth, which led to a rapid surge in volatility, especially the EUR / USD pair.
As we can see, the euro continued its strengthening against the US dollar and reached almost the 15th figure, after which there was a small downward correction, which was completely bought off by the end of the day.
Yesterday, US Treasury Secretary Mnuchin said that it was not appropriate to say whether the Fed made the right decision and believes that the market is disappointed with the statements made by the Fed Chairman. According to Mnuchin, it is impossible to look only at the Fed's mid-range forecasts, but rather to take into account a wide range of other forecasts, since the Fed determines its policy based only on economic data.
The Treasury Secretary firmly stated that he believes in US GDP growth this year at 3% or higher. He is also confident that he will be able to ensure GDP growth by 3% in 2019.
All these statements, of course, do not coincide with the economic realities and fundamental data that have recently entered the market. You can say anything, but in reality it is clear that the US economy is rather overheated, and raising interest rates will slow down its growth in the future.
Yesterday's fundamental data are evidence of this.
According to a report by the US Department of Labor, the number of initial claims for unemployment benefits rose by 8,000 over the week from December 9 to December 15, reaching 214,000. Economists had expected the number of applications to be 215,000. Despite this, supply in the US labor market remains extremely limited, which is reflected in the dismissal of employees. The problem remains in highly qualified personnel. Let me remind you that the unemployment rate in the United States is 3.7%.
The number of secondary applications for the week from December 2 to 8 increased by 27,000 and amounted to 1,668,000.
Data on production activity in the area of responsibility of the Federal Reserve Bank of Philadelphia is also alarming, as the activity decreased to a two-year minimum. Despite this, the growth of activity is maintained, albeit at a slower pace. As indicated in the report of the regional reserve bank, the business activity index in December 2018 dropped to 9.4 points against 12.9 points in November.
The index of leading indicators of the Conference Board increased in November of this year, which is a good sign. Leading data showed that the indicator increased by 0.2% and amounted to 111.8 points. However, it should be noted that, despite the growth, the overall growth rate of the index in the past two months has slowed.
As for the technical picture of the EUR / USD pair, much will depend on how the buyers of risky assets today cope with the resistance level of 1.1470. An unsuccessful fixation above this range may lead to the formation of a larger downward correction, with a return to the area of support levels 1.1400 and 1.1380. If demand continues and is above 1.1470 resistance, you can count on updating monthly highs of 1.1510 and 1.1550.
Oil quotes continue to update their lows, and almost reached the level of $ 46 for the brand WTI.
Immediately after this, it was reported that Saudi Arabia would reduce oil production more than initially agreed in the OPEC transaction. Saudi Arabia is expected to cut oil production by about 300,000 barrels per day versus the previously announced 250,000 barrels per day. The new plan involves a reduction in total oil production by OPEC by 3% instead of 2.5%.
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