Daily Market Analysis from ForexMart

Brent. December 05, 2019 – Oil rose to $63.50 per barrel

Oil prices began to rise after yesterday's industry report from the US Department of Energy. The Department reported a drawdown on crude oil inventories in the United States last week for nearly 5 million barrels per week, which is the most dramatic reduction in oil reserves in the past 12 weeks. As a result, Brent rose in price to $63.50 per barrel.

Today starts a two-day meeting of the OPEC+ monitoring committee in Vienna. Analysts expect participating countries to extend the current deal until June 2020 and not to change the parameters of this deal. It also supports oil prices.

Also today attention should be paid to Saudi Arabia, where Saudi Aramco, the country's national oil company, will announce its IPO offering price. It is noted that the demand for stocks is increased, which means that the company can place actions on the upper price limit.

EUR/USD. December 06, 2019 – The dollar grows amid strong labor market data

Today the euro began to decline, failing to gain a foothold above the level of 1.11. The currency was pressured by weak data from the eurozone: retail sales in the region in November turned out to be worse than expected – annual indicator grew by only 1.4% against the forecast of 2.7%. German manufacturing orders fell 5.5%, while industrial production decreased 1.7%. Analysts expected a 0.1% increase. As a result, the pair fell to around 1.1065.

The news context on trade talks remains mixed. On the one hand, the United States notes the success of the ongoing negotiations, and on the other, the markets again received information about the disagreements of the sides regarding China's purchase of agricultural products from the United States.

Today's US labor market data supported the dollar: the number of people employed in the non-agricultural sector of the country grew by 266 thousand, while analysts predicted an increase only of 180 thousand. As a result, the EUR/USD pair will continue to decline throughout the day.

EUR/USD. December 10, 2019 – Euro started to grow after the release of data from ZEW

The euro continues to strengthen to the area of 1,11, while market participants are waiting for significant events of this week, concentrated in its second half (Fed and ECB meetings, parliamentary elections in the UK).

News from the front of trade negotiations has recently remained positive. Market players expect that amid the upcoming US elections, Donald Trump is unlikely eager to escalate the trade war and disappoint market participants. Therefore, new import duties on Chinese goods most likely will not be introduced on December 15.

Today, you should pay attention to the publication of the index of economic expectations from ZEW in Germany. Fresh statistics provided visible support to the European currency, since the indicator value has peaked since February 2018. The index of expectations of investors and analysts regarding the German economy in December jumped to 10.7 points from minus 2.1 points in November. Thus, during the day the pair will continue to grow to the area of ​​1.11.

EUR/USD. December 11, 2019 – Dollar rises in anticipation of Fed meeting

The euro failed to overcome the 1.1100 level and rolled back to 1.1075. Yesterday, the currency was strongly supported by data on economic expectations from ZEW in Germany. The index of expectations of investors and analysts regarding the German economy in December unexpectedly rose to 10.7 points from -2.1 points in November. The indicator value updated the maximum of February 2018. Experts predicted the growth rate to only 0.3 points.

Today the focus of attention of the market will tend to the meeting of the US Federal Reserve and a press conference by D. Powell. Experts expect the US regulator to leave the key rate unchanged, as well as determine the future course of monetary policy. This can provide strong support for the dollar in the evening. As a result, the pair will continue to decline throughout the day.

GBP/USD. December 12, 2019 – Sterling may rise following the parliamentary elections

Today all market participants are focused on the long-awaited elections to the British Parliament. Voting results are expected not only in the UK, but around the world, as everyone wants to finally find out how the Brexit story ends. Sociological polls have shown that most likely the Tories will win, led by British Prime Minister Boris Johnson.

If the expectations come true, and the Conservatives get the majority of votes, Johnson will be able to complete the British exit from the EU until January 31, 2020. The first results of the vote will be released tonight, and they will be crucial for the further dynamics of the pound.

Today, the British sterling remains at high levels just below 1.3200. In general, since the British decided to withdraw from the European Union, the currency has come a long way: after the Brexit vote the pound collapsed to 1.1450 from the level of 1.5. If the Conservative Party win, the sterling will continue to rise to an area above 1.32.

GBP/USD. December 16, 2019 – Sterling still strong nearby 1.34

The British sterling continues to demonstrate «bullish» sentiment on Monday, trading at 1.3365. At the end of last week, the pound updated its maximum since April 2018, reaching the mark 1.35. The currency got strong support after the announcement of the results of the parliamentary elections in the UK. As it was expected, the Conservative Party, led by Boris Johnson, won by gaining 368 seats in the Parliament of 650. This result was the best since Margaret Thatcher’s elections.

The growth of the British currency, observed after Tories’ victory, was the result of the completion of a three-year period of political uncertainty in the country. In the near future, the European Commission plans to receive details from the UK under the terms of Brexit.

Today the sterling shows some correctional decline, responding to weak data on business activity for December. PMI manufacturing activity index fell to 47.4 from 48.9 points. However, under the above circumstances, the British currency will continue to remain strong at 1.3400.

GBP/USD. December 17, 2019 – Sterling continues to keep downside

The British currency continues to decline on Tuesday, reaching a support level of 1.3200. Earlier, after the victory of the conservatives in the parliamentary elections in the UK, the sterling managed to update the maximum of May 2018 at the mark 1.35, but quickly lost all positions.

Pressure on the British currency is exerted by weak macroeconomic data. In particular, yesterday's data on business activity showed the sharpest decline since July 2016. The Purchasing Managers Index (PMI) fell from the November level of 49.3 to 48.5 points in December, which became a minimum of 41 months. The service sector PMI in December fell from 49.3 to 49 points, having reached its lowest level in nine months. UK manufacturing PMI fell from 48.9 to 47.4 points, which also became the lowest indicator in four months.

Today you should pay attention to the release of data on the British labor market and the speech of the Bank of England head Mark Carney. The weakness of statistical reports may push the regulator to soften monetary policy, that will put further pressure on the sterling.

EUR/USD. December 18, 2019 – Euro shows weakness

Today the euro keeps showing decrease paired with the dollar, having reached the mark 1.1125. The currency is under pressure of investors' concerns about the situation with Brexit. Earlier British Prime Minister Boris Johnson said, that he intended to introduce the law about country's obligation to leave the European Union in 2020 without the possibility of extending the transition period. This fact again cast doubt on the likelihood of leaving the EU with a deal.

Along with it the US dollar is supported by optimism around trade negotiations between the US and China and by strong macroeconomic data from the United States. Industrial production in November increased by 1.1% against forecasts of an increase of 0.8% and after a decline of 0.9% a month earlier. The number of building permits in November also exceeded forecasts.

Today you should pay attention to Ifo business optimism index for December and Eurozone inflation data for November.

Brent/USD. December 19, 2019 – Oil stabilized above $66 after data from the US Department of Energy

Oil continues to hold in the area of ​​local highs above the level of $66 per barrel. Brent was supported by yesterday's report from the US Department of Energy. The statistics reflected a decrease in oil reserves by 1 million barrels, while similar data from API a day earlier showed an increase in stocks by 5 million barrels.

The appetite for risky assets remains moderate, as no news has been received from the front of the trade war last days. So, during the day we expect calm trading in the area above $62 per barrel.

GBP/USD. December 20, 2019 – Sterling plummeted to 1.3000

The sterling continues to decline, reaching the level of 1.3000 on Friday. The pound became the main outsider of the week, collapsing from the level of 1.35. The driver of the fall became the statements by British Prime Minister Boris Johnson, revived fears of a tough and disorganized Brexit.

Additional pressure on the pound was provided by weak data on retail sales in the UK, which showed an unexpected decline in November at the fastest pace for the year (-0.6%). On an annualized basis, retail sales growth slowed to the level of April 2018 (1%).

As a result of weak data reflecting the detrimental influence of Brexit on the British economy, the Bank of England left rates unchanged at 0.75%. Moreover, market participants expect the regulator to begin a cycle of easing monetary policy at the beginning of next year.