Stay 
Trading Conditions
Products
Tools
The pound, as a decent currency, behaved very decently and did not make any extra movement. What can not be said about the single European currency, which behaved somehow reserved, although the overall result as a whole turned out to be exactly as it should have been. However, the questions are raised precisely by the fact that everything began to happen not when it should have been.
Indeed, the single European currency did not seem to notice terrifying news about the accelerating pace of decline in industrial production. They predicted a slowdown from -1.5% to -2.8%, which is already scary. However, the previous results at first were reviewed for the worse, to -1.7%. Well, then they announced that the decline was -4.1%. At the same time, industrial production has been declining for fourteen consecutive months. In general, the picture is almost destructive. Another thing is that many were ready for such a development of events, since the terrifying results of industry in Germany and France indicated this. Moreover, when the data on them was published, investors put all this into the cost of a single European currency. Thus, it is not surprising that no reaction to industry data followed.
Industrial Production (Europe):
It really becomes unclear why the single European currency began to decline immediately, as the American session opened. But then, everything declines into place if you look at not so widely discussed things. The fact is that the next placement of 10-year government bonds took place in Germany yesterday, and the auction was so successful that the yield of these securities declined from -0.25% to -0.38%. Obviously, many American traders, who collectively manage the largest capital on the market, refused such a tempting offer to invest in their overworked funds. And as soon as the Americans themselves came to work, they immediately began to reduce their investments in the single European currency, since waiting for something good in the Old World is more expensive for themselves.
Yield on 10-year bonds (Germany):
To finish it off was the placement of 12-month government bonds in Italy, the yield on which decreased from -0.242% to -0.319%. As in Germany, there is a quite sharp decline in profitability. More precisely, a sharp increase in loss ratio. So it is not surprising that at least American investors do not see any prospects from investing in a single European currency.
Yield on 12-month bonds (Italy):
However, you should not think that this is a problem only for Europe, as yesterday's auction on 10-year government bonds, but already in the United States, ended in a decrease in yield from 1.869% to 1.622%. Nevertheless, there are at least values with a positive sign, and not with a negative. Yet, the yield could go down due to excessive demand. So to say, we did not buy bonds in Europe, but come on, we'll buy at least in the States.
Yield on 10-year bonds (United States):
Nevertheless, I would pay close attention to the rates on 30-year mortgages, which increased from 3.71% to 3.72%, as this tells us about the growing probability of raising the refinancing rate of the Federal Reserve.
30-year mortgage rates (United States):
Today, the single European currency did not break traditions and ignored European macroeconomic statistics, which has already been published. Thus, France joyfully reported a decrease in unemployment from 8.5% to 8.1%, while they expected a decrease to only 8.4%. So, really, there is something to rejoice about. Although the unemployment rate itself remains extremely high.
Unemployment Rate (France):
On the other hand, there is unemployment in France. Here, you can still understand the indifference in the eyes of investors regarding the fate of simple hard workers. They would have to increase their funds. However, the complete apathy with respect to inflation in Germany, which increased from 1.5% to 1.7%, is already causing some surprise. Although the data themselves completely coincided with the forecasts, which partly explains the lack of stormy joy in this regard.
Inflation (Germany):
However, the delay is most likely connected with the fact that investors are waiting for the publication of inflation data already in the United States, which should increase from 2.3% to 2.4%. Not only is the increase in inflation itself a great reason for investors to rejoice, it is also another reason to think about raising the refinancing rate of the Federal Reserve System. However, for this, you need to remember one more factor. This is a coronavirus. The fact is that just a week ago, maybe a little less, various media outlets and misinformation began to actively spread rumors that, due to the economic damage caused by this very virus, central banks around the world can just in case lower their interest rates. So, Jerome Powell, the same one, who holds the meaningless post of head of the Federal Reserve, said a couple of days ago that coronavirus poses no threat to the sustainability of economic growth. Well, at least in the United States. AAnd he doesn't care about everyone else from the high bell tower. This means that the hype this time to force the Federal Open Market Committee to lower the refinancing rate once again, will no longer work. Now we add to this the almost three months that have been going on, and if the forecasts are confirmed today, all four of them - the growth of inflation, then we get a high probability of raising the refinancing rate before the end of this year.
Inflation (United States):
It is clear that no one will pay attention to applications for unemployment benefits against the backdrop of inflation data. Another thing is that they are expected to be multi-directional. That is, the number of initial applications for unemployment benefits should increase by 12 thousand, while the number of repeated ones may be reduced by 13 thousand. That is, the total balance should be reduced by 1 thousand. To simply put it, no changes are expected.
Number of Initial Jobless Claims (United States):
Repeated Unemployment Insurance Claims (United States):
For a long time of fluctuation, the EUR / USD currency pair managed to consolidate below the minimum of the previous year 1.0879, where the recovery process is completed. It is likely to assume that after a slight slowdown / rollback, relative to the value of 1.0880, we can see another downward turn, which will lead us to the value of 1.0850, possibly lower.
The GBP / USD currency pair continues to focus below the psychological level of 1.3000, reflecting the consolidation process. Thus, it is likely to assume that downward interest will continue, which will lead the quote over time towards a point by changing the support of 1.2885.
InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.
