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Nov 16, 2021

Key releases

USD is strengthening against EUR and GBP but has ambiguous dynamics against JPY.

Yesterday, August data on the index of consumer confidence in the US were released: the figure rose from 95.3 points to 103.2 points, which is significantly higher than the forecasted 97.9 points, so American consumers maintain demand that provides support to the economy. In July, the number of open vacancies in the labor market reached 11.239K and exceeded the June figure of 11.040M. Today, employment data from the Automatic Data Processing (ADP) company for August were published, which are considered ahead of the federal statistics, which will be released on Friday: the value increased by 132.0K, which is less than the forecasted 288.0K but more than the July figure of 128.0K, and the state of the US labor market remains stable. Cleveland Federal Reserve Chairman Loretta Meister said interest rates would rise significantly before the regulator can ease inflation control measures and rise above 4.0% in the coming months.​

EUR strengthens against GBP but weakens against JPY and USD.

Investors are focused on the publication of preliminary August data on inflation in the EU countries: the consumer price index rose from 0.1% to 0.5% MoM instead of 0.4% and reached 9.1% instead of 9.0% YoY expected. Core inflation also increased from 0.1% to 0.5% MoM and from 4.0% to 4.3% YoY, bolstering investor confidence that the European Central Bank (ECB) will significantly raise the rate at the September meeting, perhaps immediately by 75.0 percentage points. The July import price index in Germany increased from 1.0% to 1.4% MoM and decreased from 29.9% to 28.9% YoY, and inflationary pressure in the European economy continues to grow. Additionally, the weakening of the euro's position is facilitated by the temporary suspension of Russian gas supplies via the Nord Stream 1 gas pipeline, and consumers fear a new increase in gas prices.​

GBP is weakening against its main competitors – EUR, JPY, and USD.

Today, data on August's retail price index from the British Retail Consortium (BRC) was published. The rate rose from 4.45% to 5.1% due to higher food costs, adding pressure to households struggling to cope with the prospect of even higher electricity and fuel prices expected in the fall and winter, which will put pressure on demand and will increase the risks of a recession in the national economy.​

JPY is strengthening against GBP and EUR but has ambiguous dynamics against USD.

According to preliminary data, in July, the volume of industrial production rose by 1.0% instead of the expected decline of 0.5% due to an increase in the sector of cars and trucks. Retail sales for the same period increased by 2.4% instead of an expected improvement of 1.9%. Japanese consumer demand continues to recover despite a serious increase in domestic inflation, but the outlook for the national economy remains uncertain due to the global economic crisis. Bank of Japan board member Junko Nakagawa warned that further increases in the cost of living could hurt household spending, stressing the need to maintain a super-loose monetary policy.​

AUD strengthens moderately against GBP and EUR but has ambiguous dynamics against USD and JPY.

Today, data on Q2 completed construction works were published: the indicator fell immediately by 3.8% instead of the expected growth of 0.9%, that is, the national construction market is under pressure due to a significant increase in costs and tightening of monetary policy by the Reserve Bank of Australia (RBA).​

Oil quotes continue to correct downwards.

Prices are under pressure from poor macroeconomic statistics: in August, the Manufacturing PMI of China amounted to 49.4 points and remained in the stagnation zone, while Service PMI fell from 53.8 points to 52.6 points. The Chinese economy is showing signs of a slowdown, which may cause a decrease in oil demand from the world's largest consumer. According to the American Petroleum Institute (API) report, US energy reserves rose by 0.593M barrels instead of the expected reduction of 0.633M barrels. Today, investors are waiting for the publication of a corresponding report from the Energy Information Administration of the US Department of Energy (EIA), and according to forecasts, the value will decrease by 1.483M barrels, which may support oil quotes.