Fundamental analytics

Statistics from Europe was ignored as non-farm data and Powell's performance eyed

Despite the fact that the first trading week of the year is accompanied by lower volumes, the FOREX currency market is trading very actively, and the volatility is much higher than on average. In this regard, today's trading day is unique, as the data on the US labor market for December 2018 will be announced, and in addition the head of the American regulator Jerome Powell is speaking. These news drivers, combined with low volumes and overall market conditions, are capable of generating even greater market volatility.

However, the attention of the markets is still upon US dollar. Over the past two trading days, the demand for the US dollar fell slightly amid fears on a slowdown in the global economy, and emanating s risks to the US economy. The driver for USD dollar sale-off served as Apple news.

Today in Europe the large block of economic statistics was presented. Germany provided data on the labor market for the last month of 2018, according to which the unemployment rate remained at the same value of 5.0%, and the number of unemployed fell by 14K, which is better than the predicted of 12K. The PMI of the German services sector came out worse than the forecast, the fact is 51.8, with the forecast and the level of last month equal to 52.5 points. The index confirmed fears of a deterioration in business sentiment in leading EU economy.

PMI of the services sector in Europe also continued the downward trend, the previous figure of 51.4 points, the fact of December was 51.2 points. Preliminary data on inflation in the EU turned out to be worse than expectations; the annual figure fell from 1.9% to 1.6%, with the forecast values of 1.8%. The base index remained at 1.0%.

Despite the publication of a large block of statistics from the EU, traders do not react to this data, as they expect more important events to be held later in the US today. First, at the start of the US trading session, a report on the labor market for December will be published, which traditionally increases market volatility. Earlier ADP displayed strong data and might serve as indicator of stronger data from the Ministry of Labor, but data on the rates of change in average wages, which are related to inflation rates, will be in market spotlight.

On the background of growing volatility and uncertainty in equities, the performance of Fed Chairman Jerome Powell will be equally important for the market. Investors want to hear an assessment of the current situation in the stock markets, as well as the possible impact of this situation on the Fed's policy in the future. Probably the chief official will try to calm the markets, but we do not rule out that he will mark the increased risks for the American economy in 2019.

New articles