EUR/USD, GBP/USD.

On Monday the euro added 34 points, the British pound grew 1 point. On the whole data on the Eurozone was negative for the single currency, indices PMI in France and Germany were lower than forecasts, and on the contrary figures of the Manufacturing PMI in the Eurozone surpassed the expectations (52.7 against forecast for 51.9 and 51.6 in November). However, Services PMI was lower, 51.0 vs. 51.2 in November. Trade Balance in the Eurozone in October was worse than estimated, 14.5 billion euros vs. 15.2 billion euros, though it was better than reading in September when it was 12.4 billion euros, however it was not reported initially, initial reading was revised downwardly from 14.3 billion euros. Mario Draghi announced that during forthcoming bank stress tests special attention would be paid to investment of the banks into government stocks, which the investors regarded as an attempt of power game (probably in regard with sells of securities before stress tests) and started to sell the euro. The US Industrial Production data restrained the growth of the euro. In November a 1.1% rise was registered vs. forecast for 0.6%; figures in October was revised from -0.1% to 0.1%.

Today at 13:30 UTC+4 data on Inflation in the UK in November is published. Major indicator – Consumer Price Index – is expected to rise from 0.1% to 0.2%; Core CPI (y-o-y) is estimated to be 1.8% vs. 1.7%. Retail Price Index is forecast to grow from 0.0% up to 0.1% (2.7% vs. 2.6% annually). PPI Output is estimated to decline, -1.2% against -0.3%. At 15:00 UTC+4 CBI Industrial Orders Expectations in December is revealed, forecast 12 against 11 in November. It looks like tomorrow data on Unemployment Rate and Claimant Count Change will be better, it may be the reason for the last speculative spike upwards. Thought, it may not occur, but the situation for the British pound is rather positive until the FOMC decision is announced.

In the Eurozone the situation is weaker, primary, in terms of inflation. ZEW Survey (Economic Sentiment) in December is estimated to be 60.9 vs. 60.2. Consumer Price Index in November is expected to be -0.1%, in October it dropped 0.1% as well.

Recently in the US everything is ok. Consumer Price Index is estimated to rise 0.1% vs. decline for 0.1% in October. Probably the growth of the Core CPI will be preserved at the previous level, 0.1%. NAHB Housing Market Index in December is estimated to rise from 54 to 55. Tomorrow strong data on Building Permits and Housing Starts is expected.

In this regard we expect sideways movement for the euro and the British pound with some advantage for the pound. However, positions are determined by actual information.  

AUD/USD.

Recently the Australian dollar took a horizontal local trend, preparing for the FOMC meeting. The Aussie neither regarded the rise of oil prices, nor industrial metal prices, nor even pressure expressed by Glenn Stevens, head of the Reserve Bank of Australia, about the expensive Australian dollar and his wish to see the price at the level of 0.85.

This morning positive data on New Motor Vehicle Sales in Australia in November was revealed (1.8% vs. -0.9%) and Conference Board Leading Index (0.5% vs. 0.3%), which did not influence the price. Reserve bank of Australia Meeting Minutes did not give any reasons for the rate to be slashed. Australian Treasurer Joe Hockey said Australia’s budget deficit will balloon to A$47 billion ($42 billion) this fiscal year.

Thus, the Australian dollar will be in weak position regarding the other majors, which may be used in long-term strategies for the crosses with the Australian dollar. We expect a decline for the AUD/USD pair to the first target area 0.8840/70 and then to 0.8750.