Today, at the beginning of a new week, markets analyze data on US consumer spending. According to published statistics in December last year, consumer spending in the US increased significantly, amid a sharp increase in demand for goods and services. However, there is alarming fact that according to the reports, the growth of expenses occurred amid decreasing level of savings, the level of which fell to a 10-year low.
The US Department of Commerce released data on consumer spending. Consumer spending, accounting for more than two-thirds of US economic activity, rose 0.4 percent last month, up from a 0.8 percent increase in November.
In this way, households continued to cut back on their savings in order to maintain spending in the context of slow incomes growth. Savings are now at the levels of December 2007, when the US economy entered a recession. Analysts say that reducing the level of low savings can be temporarily offset by a decrese in income tax, which came into effect in January.
In the FOREX currency market, the new week begins for the dollar with growth and attempts to win back some of the previous losses. Correction is generally expected, as USD dollar is oversold, and FX instruments are at levels where any further upward movement are difficult. The new week will be held under the sign of correction.
The dollar index gained to the 89.22 point area. Correction of the European currency is gaining momentum, as the pair EUR / USD is declining to the area of 1.2357. In addition, the correction of the overbought British pound continues. GBP / USD pair retains positive picture on the daily chart, but at the same time there are signals of a possible reversal. We observe an impressive price pullback from the local maximum of 1.4343 down to support area at 1.4100.
In the UK, we expect data on business activity indexes from different sectors of the economy, and no more important data is expected this week. While in the US we are waiting for the publication of important statistics at the end of the week, Fed meeting which will have a very limited impact on markets and finally Trump's first appeal on the results of the work for the year.