The EUR reached its maximum of the last 12 weeks yesterday against the USD during the first hours of the Asian session, although it did not take long to fall back and close to the minimum of the currency panel of the G10. The contraction of French industrial production in November, of 1.3%, is marking the evolution of the euro this morning, although the initial reaction of the market has been calm. This is not a surprise, since the effect of the strikes and protests of the yellow vests is well known. Given that the demonstrations intensified in December, it is expected that next month’s reading will be even worse. Therefore, the chances of both the French and German manufacturing sectors falling into technical recession after their slowdown in Q3 increase. The minutes of the ECB meeting were published yesterday and revealed the institution’s concern with monetary policy in the global context, which it describes as “fragile and fluid”. These effects are already evident in the eurozone, for example, in the aforementioned German and French exporting manufacturers. Today Italian industrial production will be known at 10:00 CET and will be the main data of the day.
After a frantic week, yesterday there was no remarkable news about the Brexit despite the fact that the House of Commons continued to debate. The highlights came from the Labor leader Jeremy Corbyn who, in Wakefield, argued that Labor would support the extension of Article 50 while reiterating the threat of general elections. Sajid Javid, the interior minister, begins his third day today in the debate on the withdrawal agreement. On the other hand, an anonymous Tory deputy quoted by the BBC policy editor has stated that they will clearly lose the vote next week. As for the data, the gross domestic product of November will be known today along with the indices of industrial production and manufacturing at 10:30 CET.
Fed Chairman Jerome Powell dropped more expansive comments last night, which encouraged the dollar to rebound. The head of the US central bank UU He said that you can be patient before raising interest rates again, which is consistent with the statement of the minutes of the meeting, which were published on Wednesday and spoke of adapting to the evolution of the data. The vice president, Richard Clarida, supported Powell by stating that there are many “gusting winds” that are affecting the economy and that, if maintained, the Fed could adjust its monetary policies. The market interpreted these statements in their favor but, with the government blockade about to set a record this weekend, the possibility that the Fed cut rates has caused a small fall this morning in the dollar.
The Canadian dollar traded yesterday in a narrow range and closed with minimal losses against the USD. However, the pair was close to setting new lows throughout the day due to the bearish sentiment affecting the USD due to the expansive claims of the Federal Reserve. Despite the tone of the Bank of Canada this week, which prefers ‘wait and see what happens’, the markets offset this news with the feeling relatively worse towards the US dollar. The fragile real estate market in Canada, one of the main concerns of the central bank, experienced a 0% change in the prices of new housing in November. On the other hand, the increase in oil prices could add strength to the Canadian currency after two weeks of increases.