The euro strengthened its position against the US dollar at the close of trading on Friday, as weak fundamental data indicated the possibility of a likely slowdown in interest rate growth next year in the United States. Such concerns were expressed by representatives of the Federal Reserve System, who spoke at the end of last week.
Despite the fact that the Deputy Chairman of the Federal Reserve System, Richard Clarida, spoke mainly about the positive aspects of the economy, it was clear that the Fed could reconsider its predictions of rising interest rates, based on newly received fundamental data.
Clarida said federal funds rates are slightly higher than inflation for the first time in a decade, but there is no negative impact on the US economy.
In his opinion, the Fed needs to be especially guided by economic data at present, even though the US economy is in good condition. Clarida reiterated the words of the Fed head that the interest rate is now below the neutral level, but it is gradually approaching it, in connection with which, it is very important to focus on the data.
As for inflation, the representative of the Fed does not expect its strong growth next year, and if that happens, he will correct his forecasts.
As for the fundamental data, they hurt the US dollar at the end of last week, which led to its decline against risky assets.
According to the Federal Reserve, industrial production in the United States in October of this year, although it showed growth, worse than economists' forecasts, which casts doubt on the likelihood of the rates of previous economic growth by the end of this year. As can be seen from the report, manufacturing production was offset by a drop in production in the mining sector.
Thus, industrial production in October 2018 increased by 0.1% compared with the previous month, while economists had expected growth of 0.2%. Compared with the same period of the previous year, industrial production in October increased by 4.1%.
Manufacturing production increased by 0.3% in October compared with the previous month, while production in the mining industry fell by 0.3%.According to the Federal Reserve Bank of Kansas City, the manufacturing index in November of this year increased compared with the previous month. According to the report, the production index in November was 15 points against 8 points in October. But the annual growth, on the contrary, has slowed. The index was 40 points against 45 points in October.Americans continue to live in debt, increasing their debts more and more. According to the data, the debt of American households in the 3rd quarter of this year increased due to an increase in all types of borrowing.As indicated in the report of the Federal Reserve Bank of New York, the total debt of households in the 3rd quarter rose to 13.51 trillion dollars. Total mortgage debt amounted to 9.14 trillion dollars, while debt on auto loans rose to 1.27 trillion dollars.As for the technical picture of the EUR / USD currency pair, the upward trend will be limited at the beginning of the week, since investor risk appetite may decrease due to the failed APEC summit, where the leaders of the countries did not sign a joint statement after the meeting. Disagreements between the US and China have only increased, which further alienates the prospect of the possibility of signing a trade agreement.The growth of the euro is limited by the resistance of 1.1440, from where large sellers can come back to the market, putting on the further medium-term strengthening of the US dollar. Good support levels for the pair, from which new long positions can be viewed, can be traced around 1.1370 and 1.1330.
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