Of the euro area
In the context of the political crisis provoked by Catalonia and its desire to withdraw from the Spain, the German economy continues to hit record rates of growth and to provide the euro with support against the strengthening of the dollar. The preliminary data on manufacturing orders in August showed a significant excess on the forecasts. The growth was 3.6% compared to expectations of +0.7% year-on-year growth of 7.8%. This is the best result for six months, and the second best for the last 7 years.
Monday, a report on industrial production in Germany will be published. The markets are waiting for the good data. Also, on this day, Sentix will present an indicator of investor confidence in the euro area. After 10 years in June, there was a slight decrease. However, currently, experts believe that the index update record and the growth of 28.5 percent, which could considerably support for the euro.
Despite a number of positive news, the euro is still under pressure. The probability of a move to 1.16 remains high. Some support for the euro could be an increase in the fight against the feeling of risk, but, in general, the dollar appears to be stronger for the moment.
The key day for the pound, this is the report on industrial production for the month of August, which will be published on Tuesday. The expectations are neutral. Experts don’t expect a production growth or decline. Also, on Tuesday, the NIESR will release the results of research on the rate of growth of GDP in the last 3 months. Given the weak PMI indices, it is not necessary to wait for the economic growth. For the moment, the forecast is +0.3%, which is too low to expect the pound to resume its growth.
The book continues to experience political pressure. After the failure of the June elections, the positions of the Theresa may has been somewhat shaken by the parliament. The Conservative Party of the congress, which ended on Friday, may be the last in the position of first minister of the interior, Theresa may. It is losing ground as the leader of the party. During this time, there is also a growing tension between the ambassador and the leaders of the European countries, which are already openly annoyed on May the position on the «brexit».
As everyone knows, great Britain has the intention to leave the EU in March 2019. However, the country wants to keep a two-year transition period during which it will have access to the markets of the EU on the current terms and conditions. The position of the book depends in large part on whether it May be able to insist on this point in the negotiations, given that the book can be a winner or a loser.
For the moment, the book continues to be under pressure. An attempt is likely to occur to a technical correction to 1.3250. However, the general trend is not in his favor. The growing confidence of the value of the dollar and the tightening of financial conditions will play against the pound.
Baker Hughes on Friday reported a slight reduction in the number of drilling rigs. The new could not support the drop in the oil. For the moment, there is no explicit driver for the oil, which is able to remove quotes from an unstable equilibrium. News on the growth of production in the united states is of short duration, because there is no data on the performance of the investment in the industry. This will inevitably lead to a decline in production.
Russia and Saudi Arabia are actively working to extend the agreement to limit production. Given the gravity of the political changes, we can be sure that the agreement will be held. Brent, in the short term, can adjust the support level of 53.20 / 70, but in the long term the chances of growth are higher.