Anna Zaitseva, analyst, FINAM Group
On Friday, December 18, the fall of the American currency stopped. The DXY is up 0.13% at 89.862, while EUR / USD is down 0.14% to 1.22480. A day earlier, the US dollar set another anti-record: the DXY index dropped 0.68% to 89.741, while EUR / USD rose 0.57% to 1.22669.
In general, positive sentiments remain on the foreign exchange markets, however, after four days of continuous strengthening in a wide range of conditionally risky currencies, their growth stopped by the end of the week, and, accordingly, the fall of the US dollar slowed down, which may be associated with partial profit taking by market participants.
The focus of investors’ attention remains the negotiations in the US Congress on a new package of fiscal stimulus for the American economy. At the moment, the final decision on the bill has not been made, but Congressmen are likely to continue working on the document over the coming weekend. It is worth noting that as quarantine measures intensify in a number of American states, the need for additional support for the population and business in the United States has noticeably increased, as can be judged by the negative dynamics of a number of macro indicators.
In addition, market expectations remain strong for Moderna’s coronavirus vaccine certification soon, fueling risk appetite and helping to weaken the dollar.
As for the macroeconomic statistics, the final November inflation data was released in the eurozone yesterday. According to the final assessment, the indicator dropped by 0.3% (y / y), as in the previous month, which indicates the persistence of strong deflationary processes in the European economy.
In the US yesterday there were data on the number of building permits issued. In November, the figure rose to 1.639 million from 1.544 million in October, exceeding the consensus forecast of 1.55 million. Also, we can note the November data on the volume of new home construction: the indicator increased by 1.1% (m / m) against the increase by 6.3% () m / m a month earlier and turned out to be better than analysts’ expectations.
At the same time, the data on the number of initial claims for unemployment benefits in the US were disappointing. The indicator came out at the level of 885 thousand against 865 thousand a week earlier, while analysts expected a decrease to 800 thousand.
On Friday, you should pay attention to the publication of data on the index of business optimism in Germany and the current account balance in the US. Also today will be speeches by a number of representatives of the Fed and the ECB.
EUR / USD is consolidating near 1.2250 after hitting a new high the day before. The next significant target is the level of 1.2500. Stochastic lines are still directed upwards, however, they are in the overbought zone, which may indicate a possible start of a correctional decline for the instrument in the short term.
This information is not investment advice.