Traders are afraid of the Fed’s statements, but they are not ready for risk either. Industrial production in the eurozone continues to recover. Bank of France has published a non-rosy forecast



The greenback strengthened against the euro and the British pound on Wednesday morning, as investors drew attention to comments from the Federal Reserve, as well as statements from the European Central Bank about the outlook for monetary stimulus. ECB Governing Council member François Villerois de Gallo noted that the European regulator will maintain its previous stance on monetary policy for as long as necessary, which dashed some speculators’ hopes for a more active recovery of the euro after its rapid decline earlier this year.

American traders also drew attention to the statements of a number of representatives of the Federal Reserve System, who categorically rejected the likelihood of a reduction in bond purchases in the near future. St. Louis Federal Reserve Bank President James Bullard said tackling the pandemic remains a priority. Boston Fed Chairman Eric Rosengren agreed with him. This eased fears that the Fed could repeat a trick it already did in 2013, when an unexpected withdrawal of stimulus policy led to a surge in volatility in financial markets.

Also, do not forget that US President-elect Joe Biden plans to announce tomorrow his next program of financial support for the economy, which will be filled with new tax incentives, one-time payments of benefits and other conditions for helping businesses and companies worth trillions of US dollars. This factor is clearly not in favor of the US dollar. That is why it is so difficult for the EURUSD pair to break below the level of 1.2135, which is currently being accentuated.

As for the technical picture of the pair EURUSD, then a sharp decline in the trading instrument from the level of 1.2225 clearly indicates the preservation of trading in the descending channel. If the bulls give way today and the range of 1.2180, and the market closes below this level, we can count on the return of risky assets to the lows of the month in the area of ​​1.2130 and their renewal, which will open a direct opportunity for the euro to fall to the areas of 1.2080 and 1.2010. It will be possible to speak of a reversal of the downtrend only if a bad inflation report in the US leads to a strong bullish impulse and a breakout of the 1.2225 high.

As for today’s figures, in the first half of the day, the report on wholesale prices in Germany in December this year did not have a significant impact on the market, although prices were falling at the slowest pace in ten months. Wholesale prices fell 1.2% year-on-year in December 2020, according to Destatis, after falling 1.7% a month earlier. This was the slowest price drop since February. On a monthly basis, wholesale price growth accelerated by 0.6% versus 0.1% in November. As for the wholesale prices for petroleum products, they immediately fell by 13.6% in December.

More interesting from the point of view of the prospects for the euro area was the data from Eurostat on industrial production growth. And although the data was published as early as November 2020, in general, we can say for sure that the industry really suffered the least from the coronavirus pandemic, well, or I would like to believe it. Growth accelerated in November on the back of robust growth in the production of goods for business purposes. Total industrial production rose 2.5% month-on-month, after rising 2.3% in October. Economists had expected an increase of only 0.2%.

On an annualized basis, the decline in industrial production slowed to 0.6% from 3.5% in October.

The largest industrial production grew in Ireland, where the indicator jumped immediately by 52.8%, while the maximum decline occurred in Portugal, Belgium and Croatia. In Italy, industrial production also dropped 1.4%. Industrial production is expected to have stabilized by the end of last year, and such turbulent figures can hardly be expected in the first quarter of 2021.

The central Bank of France released its forecast today that the French economy contracted in the last quarter of 2020. The easing of the Covid-19 containment measures in December 2020 did not have much impact on the final figure. The bank said the economy contracted 4% in the 4th quarter, bringing the overall fall for all of 2020 to 9%. Let me remind you that back in the third quarter, after the abolition of quarantine measures, GDP grew by 18.7% at once, but this, of course, was not enough to cover the drawdowns for the 1st and 2nd quarters. The central bank also noted that construction activity was stable in December last year, and the service sector improved markedly after the stores opened. The growth was also recorded in the industry.


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The greenback strengthened against the euro and the British pound on Wednesday morning, as investors drew attention to comments from the Federal Reserve, as well as statements from the European Central Bank about the outlook for monetary stimulus. ECB Governing Council member François Villerois de Gallo noted that the European regulator will maintain its previous stance on monetary policy for as long as necessary, which dashed some speculators’ hopes for a more active recovery of the euro after its rapid decline earlier this year.

American traders also drew attention to the statements of a number of representatives of the Federal Reserve System, who categorically rejected the likelihood of a reduction in bond purchases in the near future. St. Louis Federal Reserve Bank President James Bullard said tackling the pandemic remains a priority. Boston Fed Chairman Eric Rosengren agreed with him. This eased fears that the Fed could repeat a trick it already did in 2013, when an unexpected withdrawal of stimulus policy led to a surge in volatility in financial markets.

Also, do not forget that US President-elect Joe Biden plans to announce tomorrow his next program of financial support for the economy, which will be filled with new tax incentives, one-time payments of benefits and other conditions for helping businesses and companies worth trillions of US dollars. This factor is clearly not in favor of the US dollar. That is why it is so difficult for the EURUSD pair to break below the level of 1.2135, which is currently being accentuated.

As for the technical picture of the pair EURUSD, then a sharp decline in the trading instrument from the level of 1.2225 clearly indicates the preservation of trading in the descending channel. If the bulls give way today and the range of 1.2180, and the market closes below this level, we can count on the return of risky assets to the lows of the month in the area of ​​1.2130 and their renewal, which will open a direct opportunity for the euro to fall to the areas of 1.2080 and 1.2010. It will be possible to speak of a reversal of the downtrend only if a bad inflation report in the US leads to a strong bullish impulse and a breakout of the 1.2225 high.

As for today’s figures, in the first half of the day, the report on wholesale prices in Germany in December this year did not have a significant impact on the market, although prices were falling at the slowest pace in ten months. Wholesale prices fell 1.2% year-on-year in December 2020, according to Destatis, after falling 1.7% a month earlier. This was the slowest price drop since February. On a monthly basis, wholesale price growth accelerated by 0.6% versus 0.1% in November. As for the wholesale prices for petroleum products, they immediately fell by 13.6% in December.

More interesting from the point of view of the prospects for the euro area was the data from Eurostat on industrial production growth. And although the data was published as early as November 2020, in general, we can say for sure that the industry really suffered the least from the coronavirus pandemic, well, or I would like to believe it. Growth accelerated in November on the back of robust growth in the production of goods for business purposes. Total industrial production rose 2.5% month-on-month, after rising 2.3% in October. Economists had expected an increase of only 0.2%.

On an annualized basis, the decline in industrial production slowed to 0.6% from 3.5% in October.

The largest industrial production grew in Ireland, where the indicator jumped immediately by 52.8%, while the maximum decline occurred in Portugal, Belgium and Croatia. In Italy, industrial production also dropped 1.4%. Industrial production is expected to have stabilized by the end of last year, and such turbulent figures can hardly be expected in the first quarter of 2021.

The central Bank of France released its forecast today that the French economy contracted in the last quarter of 2020. The easing of the Covid-19 containment measures in December 2020 did not have much impact on the final figure. The bank said the economy contracted 4% in the 4th quarter, bringing the overall fall for all of 2020 to 9%. Let me remind you that back in the third quarter, after the abolition of quarantine measures, GDP grew by 18.7% at once, but this, of course, was not enough to cover the drawdowns for the 1st and 2nd quarters. The central bank also noted that construction activity was stable in December last year, and the service sector improved markedly after the stores opened. The growth was also recorded in the industry.


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The greenback strengthened against the euro and the British pound on Wednesday morning, as investors drew attention to comments from the Federal Reserve, as well as statements from the European Central Bank about the outlook for monetary stimulus. ECB Governing Council member François Villerois de Gallo noted that the European regulator will maintain its previous stance on monetary policy for as long as necessary, which dashed some speculators’ hopes for a more active recovery of the euro after its rapid decline earlier this year.

American traders also drew attention to the statements of a number of representatives of the Federal Reserve System, who categorically rejected the likelihood of a reduction in bond purchases in the near future. St. Louis Federal Reserve Bank President James Bullard said tackling the pandemic remains a priority. Boston Fed Chairman Eric Rosengren agreed with him. This eased fears that the Fed could repeat a trick it already did in 2013, when an unexpected withdrawal of stimulus policy led to a surge in volatility in financial markets.

Also, do not forget that US President-elect Joe Biden plans to announce tomorrow his next program of financial support for the economy, which will be filled with new tax incentives, one-time payments of benefits and other conditions for helping businesses and companies worth trillions of US dollars. This factor is clearly not in favor of the US dollar. That is why it is so difficult for the EURUSD pair to break below the level of 1.2135, which is currently being accentuated.

As for the technical picture of the pair EURUSD, then a sharp decline in the trading instrument from the level of 1.2225 clearly indicates the preservation of trading in the descending channel. If the bulls give way today and the range of 1.2180, and the market closes below this level, we can count on the return of risky assets to the lows of the month in the area of ​​1.2130 and their renewal, which will open a direct opportunity for the euro to fall to the areas of 1.2080 and 1.2010. It will be possible to speak of a reversal of the downtrend only if a bad inflation report in the US leads to a strong bullish impulse and a breakout of the 1.2225 high.

As for today’s figures, in the first half of the day, the report on wholesale prices in Germany in December this year did not have a significant impact on the market, although prices were falling at the slowest pace in ten months. Wholesale prices fell 1.2% year-on-year in December 2020, according to Destatis, after falling 1.7% a month earlier. This was the slowest price drop since February. On a monthly basis, wholesale price growth accelerated by 0.6% versus 0.1% in November. As for the wholesale prices for petroleum products, they immediately fell by 13.6% in December.

More interesting from the point of view of the prospects for the euro area was the data from Eurostat on industrial production growth. And although the data was published as early as November 2020, in general, we can say for sure that the industry really suffered the least from the coronavirus pandemic, well, or I would like to believe it. Growth accelerated in November on the back of robust growth in the production of goods for business purposes. Total industrial production rose 2.5% month-on-month, after rising 2.3% in October. Economists had expected an increase of only 0.2%.

On an annualized basis, the decline in industrial production slowed to 0.6% from 3.5% in October.

The largest industrial production grew in Ireland, where the indicator jumped immediately by 52.8%, while the maximum decline occurred in Portugal, Belgium and Croatia. In Italy, industrial production also dropped 1.4%. Industrial production is expected to have stabilized by the end of last year, and such turbulent figures can hardly be expected in the first quarter of 2021.

The central Bank of France released its forecast today that the French economy contracted in the last quarter of 2020. The easing of the Covid-19 containment measures in December 2020 did not have much impact on the final figure. The bank said the economy contracted 4% in the 4th quarter, bringing the overall fall for all of 2020 to 9%. Let me remind you that back in the third quarter, after the abolition of quarantine measures, GDP grew by 18.7% at once, but this, of course, was not enough to cover the drawdowns for the 1st and 2nd quarters. The central bank also noted that construction activity was stable in December last year, and the service sector improved markedly after the stores opened. The growth was also recorded in the industry.





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