Daily Market Analysis from ForexMart

USD/CAD. November 21, 2019 – Canadian dollar weakened to 5-week lows

The Canadian dollar fell to a 5-week low at mark 1.3330, despite rising inflationary pressure in Canada and the strengthening of Brent position in the oil market to $62.70 per barrel. The current quotation of the USD/CAD pair is 1.3300. Pessimism over US-China trade relations is forcing investors to give up risky assets and raises demand for safe assets and the dollar. Moreover it is putting pressure on commodity goods prices and commodity currencies, such as CAD.

According to current data, consumer prices in October rose 0.3% after falling 0.4% in September. Inflation remained at 1.9% year on year. Today, attention should be paid to the speech by the Governor of the Bank of Canada Stephen Poloz, who may touch on the theme of deterioration of the global economy, which increases the risks of lower interest rates in Canada.

The decision on monetary policy will be made by the Bank of Canada at the next meeting of the regulator, scheduled for December 4. Up to this point, the Canadian dollar may be under pressure in the area of ​​1.3300. Tomorrow you should pay attention to the release of data on retail sales.

22.11. European markets lost growth after weak PMI

On Friday, European stock markets slowed earlier growth. It was caused by the publication of the weak preliminary business activity index (PMI) in the Eurozone, which didn’t show the visible improvement in the economy of the region, still weighed down by the trade conflict between the US and China.

According to IHS Markit, in October, the composite business activity index in the European Union fell from 50.6 to 50.3, fell short of the expectations for an improvement to 50.9. Data from France and Germany showed that manufacturing PMIs were stronger than expected, but service sector activity slowed sharply.

Christina Lagarde, the new president of the European Central Bank noted, that she was not intended to sharply change the monetary policies of her predecessor, Mario Draghi. And judging by the shares, banks are confident that in the near future easing of monetary policy will not happen.

EUR/USD. November 25, 2019 – The euro has weakened to the level of 1.10

Last Friday the US dollar got strong support amid published macroeconomic data. This allowed the quotes of the EUR/USD pair to reach closely to the level of 1.1000. According to the data, the index of business activity in industry and in the service sector grew from 51.3 and 50.6 points to 52.2 and 51.6 points, respectively. At the same time, statistics from the EU put pressure on the euro: the PMI composite business activity index in the region fell moderately and remained close to 50.

Additional pressure on the euro was provided by gold sales amid growing interest in risky assets. The reason for improving risk appetite was the information that China plans to increase fines for violations of intellectual property rights, trying to eliminate one of the key topics of the trade conflict between the United States and China. Moreover, the bill in support of protesters in Hong Kong was never signed by US President D. Trump, which significantly reduced the degree of tension between the countries.

So, in the prevailing conditions, the pair will move in a narrow range near the level of 1.10.

EUR/USD. November 26, 2019 – Euro in a narrow range just above 1.10

Sentiment on global markets remains positive amid further optimistic statements on trade negotiations. It became known that the United States and China continue to take active measures to sign the first part of the deal as soon as possible. In particular, the parties held telephone talks: Deputy Prime Minister He, the US Minister of Finance S. Mnuchin and the sales representative R. Lighthizer reached an agreement on many issues, including the cancellation of part of the tariffs.

Moreover, D. Trump did not sign the bill on the situation in Hong Kong, earlier being approved by both houses of Congress, that confirms the US’s reluctance to escalate the conflict with China.

As a result, the EUR/USD pair strengthened slightly to 1.1015 mark. Nevertheless, the euro is still under pressure – the Ifo data on the business climate in Germany released yesterday confirmed that a quick recovery in the German economy is currently unlikely. During the day, the pair will fluctuate slightly above 1.10.

EUR/USD. November 27, 2019 – Euro continues to weaken

In the absence of significant macroeconomic data, the EUR/USD pair continues to decline slightly to the level of 1.10. The focus of the markets is still the news on the course of trade talks between the US and China. The day before, US President D. Trump reiterated that the sides are very close to signing the first phase of a comprehensive agreement, which had supported the full range of risky assets.

Today, you should pay attention to the release of data on the US economy: the Index of manufacturing activity from the Federal Reserve Bank of Chicago, statistics on orders for durable goods, as well as an updated estimate of GDP for the III quarter.

Recall that Thanksgiving day is celebrated in the USA tomorrow, in connection with which the American sites will be closed, and trading activity at the end of the week may significantly decrease. Today, the EUR/USD pair will be trading nearby the level of 1.10.

GBP/USD. November 28, 2019 – Pound rises on Brexit positive news

Yesterday, the pound got support and managed to rise to the level of 1.2950. The growth driver was the result of a public opinion poll according to which the Conservative Party, which includes the current British Prime Minister Boris Johnson, can count for a majority of votes in parliament on December elections. As a result, this may increase the likelihood of «soft» Brexit (with a deal) before the deadline set for January 31.

On the other hand, in the debt market we see a decrease in the yield spread of 10-year UK/US government bonds, which signals a possible fall of the British currency.

Today the United States celebrate Thanksgiving day, so the market activity will not be high. During the day, the pair will fluctuate in the range of 1.2900-12950.

EUR/USD. November 29, 2019 – The pair stabilized at 1.10

The appetite for risky assets remains moderate amid another complication in relations between the US and China. On the eve it became known that D. Trump nethertheless signed a bill supporting protesters in Hong Kong.

Important macroeconomic news is not expected today, so the pair EUR/USD will continue to fluctuate in the area of ​​1.1000. Yesterday's inflation data in Germany did not have a visible impact on the euro, despite the fact that the consumer price index was slightly better than expected (1.2% y/y against the expected 1.1% y/y). In the daytime you should pay attention to the release of data on inflation in the European Union.

Yesterday American exchanges were closed due to Thanksgiving celebration, and today the US sites will close earlier than usual, so trading activity in the evening hours is likely to remain low.

EUR/USD. December 02, 2019 – Euro continues to drift in the area of ​​lows

At the end of last week the euro soared to 1.1025 after Friday falling to 1.0975. The growth was contributed by data on manufacturing activity in China, which turned out to be better than the expectations of market participants. In particular, the Purchasing Managers Index (PMI) in China's manufacturing sector rose from 51.7 in October to 51.8 in November. Analysts had expected a decline to 51.4 points.

At the same time, the growth of risk appetite is limited by reports that China imposed a number of sanctions against some US non-governmental organizations in response to the adoption of a law supporting protesters in Hong Kong. These measures suggest that the controversy between the US and China are not limited only to trade, and it will not be easy to reach a final agreement.

Today you should pay attention to the release of data on the Index of business activity in the States from ISM (18:00 Moscow time). Actual statistics may support the dollar. In anticipation of the data, the EUR/USD pair will continue to fluctuate slightly above the level of 1.10.

EUR/USD. December 03, 2019 – Euro approached 1.11

Yesterday the EUR/USD pair unexpectedly increased in price, almost touched the level of 1.1100. Such alignment of forces in the pair was facilitated by the US President’s tweet, in which he charged Brazil and Argentina with weakness of their currencies, and introduced tariffs against export from these two countries. In addition, Trump demanded that the Fed must lower the interest rate at the next meeting.

Additional pressure on the dollar was provided by weak macroeconomic data from the United States: the ISM index of economic conditions in the manufacturing sector in November amounted to 48.1%, while analysts had forecast a figure of 49.2%. In addition, construction costs unexpectedly fell by 0.8%, although analysts had expected an increase of 0.4%.

As a result, the US dollar collapsed across the full spectrum of the Forex market, even in relation to risky assets. The additional negative was caused by the US and Chinese altercations around the human rights situation in Hong Kong.

However, it should be noted, that macroeconomic data from Germany and the eurozone gave support to the euro. Indices of business activity in industry in November showed growth: in Germany - from 43.8 to 44.1 points, in the eurozone - from 46.6 to 46.9 points. Thus, the euro feels quite confident in the current conditions. During the day the pair will continue to attempt to reach the level of 1.11.

GBP/USD. December 04, 2019 – British pound updated 7-month high

The British sterling is currently the strongest currency on the market. Paired with the US dollar, the pound managed to rise to the area of ​​1.3060 (which became a 7-month high), although a week ago, it was trading near the area of ​​1.28. The current quotation of the pair GBP/USD is 1.3045.

The currency is getting support provided by several factors. The first is optimism around Brexit. On December 12 in the UK there will be held early parliamentary elections, which will most likely be won by the ruling party led by Prime Minister Boris Johnson. Johnson promises to withdraw Britain from the European Union by January 31, 2020, and the market believes him.

Secondly, the general weakness of the US dollar on world markets allowed the pound to strengthen in the GBP/USD pair and update the high of early May.

Under current conditions, British sterling will feel confident and further, until December 12th.