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The US dollar slightly strengthened its position against the European currency on Friday afternoon, which led to the exit from the narrow side channel, which we observed for almost the entire week.
According to the report, industrial production in the United States in December of this year increased mainly due to an increase in production in the processing industry.
According to the Federal Reserve, industrial production in the United States grew by 0.3% compared with the previous month, while economists had expected growth in December to be 0.2%. Compared with the same period last year, industrial production in December increased by 4%.
As I noted above, excellent manufacturing data in the manufacturing industry led to an increase in overall performance. Thus, manufacturing production grew by 1.1% in December compared with November. Production in the mining sector increased by 1.5%, despite the volatility of energy prices, while production in the utility sector decreased by 6.3% compared with November.
Weak data on the evaluation of the American economic outlook by American consumers did not allow the US dollar to continue its growth against risky assets.
According to the University of Michigan report, the preliminary consumer sentiment index in January 2019 fell to the level of 90.7 points against 98.3 points in December. The data turned out to be worse than forecasts of economists, who expected the index to be 96.4 points. A weak report indicates a high probability for consumers to reduce their expenses, which will affect the prospects for economic growth in the 1st quarter of this year.
The speech of the President of the Federal Reserve Bank of New York did not affect the US dollar.
Williams said that the focus on economic data is now more important for the Fed than ever, and a further increase in interest rates will be justified only if the state of the economy is good. In his opinion, now it is necessary to demonstrate prudence, patience and the ability to make good conclusions. Williams also believes that the Fed can at any time change its plan to reduce the balance if the situation requires it, and if the economy's prospects deteriorate, the Fed will do everything possible to resume growth.
It is expected that US GDP growth will slow to 2% -2.25% this year, while the inflation target will remain around 2%.
As for the technical picture of the EUR / USD currency pair, the pressure on risky assets may continue at the beginning of this week, but the bears will need to keep the pair below the resistance level of 1.1390. An unsuccessful attempt to return to this range could form the next wave of euro sales with the upgrade of larger lows around 1.1340 and 1.1310. If the bulls are quickly rehabilitated after Friday's fall, the level of 1.1420 will act as a large resistance, above which it was not possible to break through last week.
The Canadian dollar ignored the good inflation data and continued to trade sideways in tandem with the US dollar.
According to the report, inflation in Canada in December 2018 accelerated due to the growth of food, which offset the decline in gasoline prices. According to the National Bureau of Statistics of Canada, the total consumer price index in Canada in December 2018 increased by 2% after rising 1.7% in November. Economists had expected the index to grow by 1.7%.
As for the technical picture of USD / CAD, much will depend on how long the bears will keep the pair below the resistance level of 1.3290-1.3300. If in the near future buyers will not be able to get above this range, most likely, the pressure on the trading instrument will resume, which will lead to a new downward wave with a breakdown of 1.3180 minimum and updating levels of 1.3090 and 1.3015.
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