Orders for durable goods in the US rose by 1.2% in December, it is slightly worse than expected, but better than the growth of 1.0% a month earlier, the data generally supported a positive view of the growth of the real sector. A deeper look at the report shows the situation from a slightly different angle - it is noted that the demand for goods for industrial purposes is slowing down, that is, business is investing less and less in the expansion or modernization of production, despite tax cuts.

The index of business activity in the manufacturing sector in Philadelphia has dropped sharply from +17 p to -4.1 p, dropping below zero for the first time in May 2016, the slowdown is observed in all components of the index – new orders and shipments to manufacturing prices.

Nevertheless, surprisingly, companies, firstly, are quite optimistic about growth prospects in the next 6 months, and secondly, an increase in payroll. Companies also expect their own sales to grow faster than inflation. This gap between reality and hopes for a bright future is a characteristic feature of many assessments of the current state of the US economy.

The head of the Federal Reserve Bank of St. Louis James Bullard said on Thursday that, despite the slowdown in the economy, he does not feel any concern about this and does not see any signs of approaching recession. In general, the Fed is dominated by a moderate position, according to which the current rate level is close to neutral and does not have any stimulating or cooling effect on the US economy. Be that as it may, the dollar at the current stage has no substantial domestic support, which has been observed over the past three years, as the cycle of growth rates has clearly exhausted itself, the economic growth in 4Q is expected at the level of 1.4%, which is obviously not enough for optimism, and the rejuvenating injection from China is delayed – China is not ready to sacrifice national interests to support the aging American economy.

EURUSD

Business activity in the eurozone is trying to regain its position, but so far without much success. The PMI Markit index in the service sector rises from 51.2 p to 52.3 p in February, the composite index from 51 p to 51.4 p, while in the manufacturing sector the index fell below 50 p, showing 49.2 p, indicating a decrease in production.

The situation in Germany is even more significant. If the composite index and the service sector index increased, setting 4 and 5-month highs, production fell from 49.7p to 47.6p, this is the 74-month low.

Export orders declined to the greatest extent, reaching a low of 6.5 years, and manufacturers are pessimistic about possible improvements in the 12-month term. We should also note a weak increase in production prices, which showed more than a two-year low.

German companies have pointed to a decline in orders in the automotive sector, a drop in demand in Asia, especially in China, due to ongoing trading tensions. The prospect of drawing Europe into a trade war through car tariffs shows that the problems facing the German economy will not be limited to the automotive sector.

The size of the fall in the manufacturing sector of the eurozone may lead to the fact that economic growth will not go beyond 1% in 2019, and the ECB at the March meeting will have to start discussing new incentives. For several months, market participants have been waiting for information about the start of new liquidity transactions, but until recently the ECB has been able to evade the announcement of new incentives.

Today, the CESifo Institute will present its assessment of business activity in the eurozone, and data on consumer inflation in January will be published. In the late afternoon, Mario Draghi is expected to give a speech.

Today, the euro is trading neutral, a move beyond the 1.1320/70 range is unlikely.

GBPUSD

The pound, in the absence of macroeconomic guidance, has lost direction and is trading in a narrow range. Yesterday, European Commission President Jean-Claude Juncker said that he "aims to avoid the worst scenario," but looks at the course of negotiations with London without optimism.

The pound is locked in the range of 1.3010/3110, there is no direction, a bit more likely to drift to the lower limit of the range.