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Oil reserves in the US for the week decreased by 0.6%, stronger than forecast



According to the Energy Information Administration of the Ministry of Energy, commercial oil reserves in the US (excluding strategic reserves) declined by 2.7 million barrels, or 0.6%, to 437.1 million barrels. Analysts predicted a decline in stocks of only 1.32 million barrels, to 438.38 million barrels.

Oil production in the United States increased by 200 thousand barrels up to 11.9 million barrels per day.

Oil reserves at the country's largest terminal in Cushing decreased by 0.8 million barrels to 41.5 million barrels. Gasoline stocks also showed an increase of 3% (+7.5 million barrels), to 255.6 million barrels. Distillate stocks rose by 2.1% (+3 million barrels), to 143 million barrels.

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China's growth will slow in 2019 and threatens the financial world

China's economy is expected to continue to slow down this year particularly on domestic demand and exports affected by US tariffs. Beijing will most likely have to deploy additional incentive measures.



According to forecasts, China's economic growth will slow to 6.3 percent this year and will be the weakest in 29 years. A significant slowdown in growth in China has already been observed. The resumption of negotiations between the United States and China has increased optimism that Washington may agree to suspend the planned tariff increase, which was originally scheduled to take effect this month. However, a comprehensive agreement to end the dispute seems unlikely, given the number of highly controversial and politically sensitive issues. Even if both sides can conclude a long-term trade deal, it will provide only minor relief to the Chinese economy if Beijing cannot increase domestic investment and demand.

Sources said that China plans to lower its target for economic growth between 6 to 6.5 percent this year. Weak industrial growth and lower consumer spending reduce company profits. Moreover, it also discourages new investment and increases the risk of high job losses. Since earlier growth measures had little impact, we expect Beijing to deploy more incentives in the coming months to prevent a sharp slowdown. More large-scale tax cuts are expected, along with measures to increase consumer demand for products such as household appliances and cars. Both fiscal and monetary policies eased over the past few months and this should begin to spread to the real economy by the second half of this year.



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Euro may strengthen against the dollar to $ 1.22 - CIBC

China's economy is expected to continue to slow down this year particularly on domestic demand and exports affected by US tariffs. Beijing will most likely have to deploy additional incentive measures.



Despite weak eurozone statistics, Canadian Imperial Bank of Commerce (CIBC) analysts remain bullish on the euro.

"Eurozone statistics for the third quarter turned out to be the weakest over the past four years, which apparently explains the uncertain behavior of the single European currency. It is assumed that external trade pressure, as well as political uncertainty in Italy and France, will continue, causing a further slowdown in the pace of recovery in eurozone GDP," representatives of the financial institution said.

"Meanwhile, the situation in the European labor market remains favorable, which ensures a high level of consumer spending, and hence GDP growth. In the third quarter, wages increased by a record value in almost 10 years. At the same time, the unemployment rate fell below 8% for the first time in the last decade," they added.

"Despite the fact that the balance of risks has probably shifted to the negative side, the ECB continues to consider the economic outlook for the eurozone to be rather positive, which will further allow the regulator to carry out, albeit careful, but still raising interest rates. It is possible that this will happen in the second half of the year against the backdrop of consistently high inflation expectations," the experts noted.

According to the CIBC forecast, by the end of this year, the euro against the dollar may rise to $ 1.22.

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IMF lowers global growth forecasts, what to expect financial markets



The International Monetary Fund has reduced its forecasts for global economic growth for 2019 and 2020 due to weakness in Europe and in some emerging markets, and said that trade tensions could destabilize the world economy even more. This is the second decline in three months. The lender also called a more serious than expected slowdown in the Chinese economy and the possible "problem" Brexit risks that could cause turbulence in financial markets. The IMF expects the growth of the world economy in 2019 to be 3.5 percent, and in 2020, 3.6 percent, which is lower by 0.2 and 0.1 percent, respectively, from forecasts in October last year.

"The trend of global growth is shifting downward. Escalating trade tensions beyond that already included in the forecast remains a key source of risk. Trade policy uncertainties and concerns about escalation and retaliation will lead to a decrease in industrial investment, disruption of supply chains and a slowdown in productivity growth. As a result, worsening corporate profitability prospects may affect financial market sentiment and further weaken economic growth," the IMF said in a statement.

The IMF said that growth in the eurozone will be moderate, falling from 1.8 percent in 2018 to 1.6 percent in 2019, which is 0.3 percentage points lower than predicted three months ago. The IMF also lowered its growth forecast in 2019 for developing countries to 4.5 percent, which is 0.2 percentage points lower than the previous forecast and 4.7 percent in 2018. But it kept its growth forecasts for the USA, 2.5 percent this year and 1.8 percent in 2020, indicating continued growth in domestic demand.


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EUR/USD pair continues to drift south in anticipation of the ECB meeting

In anticipation of the next meeting of the European Central Bank (ECB), which will be held this Thursday, the euro will remain under pressure.



Concerns about the slowdown in the global economy, expectations of the dovish sentiment of the ECB, as well as high demand for safe-haven assets, allowed the "bears" on EUR/USD to continue the attack.
For the second time in three months, the International Monetary Fund (IMF) has worsened the forecast for global GDP growth over the next two years.

In particular, the assessment of the dynamics of Germany's GDP for 2019 was reduced from 1.9% to 1.3% and Italy from 1% to 0.6%. At the same time, the forecast for the US economy remained unchanged, which, apparently, played into the hands of the greenback.

Meanwhile, the EUR/USD bulls are waiting for another test this week. On January 24, the ECB will hold its first meeting this year.

The main intrigue is how "dovish" will be the statements of its chairman, Mario Draghi, at a press conference on Thursday. This time, the ECB will most likely keep its key interest rate at the same level, whether the Finnish Institute refuses to raise the rate in 2019 or even announce the pumping of the banking system with liquidity is not yet clear.

If the comments of the ECB management on the results of the next meeting will have cautious optimism, sales of the euro in anticipation of an important event may turn into purchases based on facts.

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Bank of Japan will continue large-scale incentives

In anticipation of the next meeting of the European Central Bank (ECB), which will be held this Thursday, the euro will remain under pressure.



The Bank of Japan has reduced its inflation forecasts and retained a large-scale incentive program amid growing risks for the economy in the form of trade protectionism and weakening global demand. The trade war between the United States and China, Japan's largest trading partners, is increasing pressure on the third largest economy in the world and undermining politicians' many years of efforts to promote sustainable growth.

As expected, the Bank of Japan has cut its inflation forecasts, reinforcing the view that it will have to continue unprecedented economic support for some time. The regulator noted that despite growing risks such as trade disputes and Brexit, Japan's economy will continue to grow at a moderate pace. However, a recent survey of economists has shown that external factors have increased Japan's chances for a downturn in the fiscal year starting in April, making it harder for the Bank of Japan to achieve a 2 percent inflation target.

The Bank of Japan confirmed its intention to continue buying Japanese government bonds and left the short-term interest rate unchanged at minus 0.1 percent. Many economists believe that the next step of the Bank of Japan will be the normalization of policy. Most expect it to happen in 2020 or later.

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ECB press conference: Highlights of Draghi's comments

The ECB has left its policy unchanged. We give the main comments of the ECB President Mario Draghi at a press conference.

Evaluation but not a policy discussion

"We didn't have to discuss the consequences of the risk balance. Today's meeting was mainly devoted to an assessment: where are we and why are we here, how long will the slowdown take place, will the slowdown worsen or will a lower level wait for us These are the questions that have been asked ".



Muffled inflation:
"General inflation is likely to continue to decline in the coming months. Core inflation remains generally subdued, but pressure on labor costs continues to increase and expand amid a high level of capacity utilization and toughening labor markets."

Mid-term inflation:
"Looking into the future, we expect core inflation to grow in the medium term, with the support of our monetary policy measures, continued economic growth, and rising wage growth."



The economic growth:
"The short-term growth momentum is likely to be weaker than previously thought. In the future, growth in the eurozone economy will continue to be supported by favorable financial conditions, further growth in employment and wages, lower energy prices and continued, albeit somewhat slower, expansion of global activity."

Stimulation:
"Significant monetary policy incentives remain necessary to support further increases in domestic price pressure and overall inflation in the medium term. The Board of Governors is ready to use all of its tools, depending on the situation, in order to ensure a constant movement of inflation towards the goal. "

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Forex Market News - Dollar Slumps as Fed Reportedly Nears End of Balance Unwind; Sterling Up

The U.S dollar suffered a weekly loss after falling snappishly against its rivals Friday in the region of expectations the Federal Reserve will incline more dovish at adjacent-door week's meeting, even though a rally in the pound moreover weighed.

The U.S. dollar index, which proceedings the greenback adjacent to a trade-weighted basket of six major currencies, fell by 0.86% to 95.47.

The dollar came out cold pressure by now a description from The Wall Street Journal that the Fed is closer than become antiquated-privileged to ending its financial credit sheet unwind.

The Fed in the in the previously has been reluctant to magnify on the order of plans, if any, to fade away its tab sheet unwinding. But the slump in global markets tardy last year subsequent to the Fed's decision to lift combination rates has seen the central bank thin more dovish.

In his press conference that followed the Feds December meeting, Fed Chairman Jay Powell said the central bank's financial credit sheet prettification was in the region of autopilot. But he walked mitigation those notes soon after, reassuring investors the Fed would be malleable after that all of its policy tools, including the checking account sheet.

The tab from the Wall Street Journal comes just days to the fore the Federal Reserve meets for the first period this year. The Fed is traditional to leave its benchmark rate unchanged, but traders will likely look into Powell's press conference for an perspicacity into the central bank's thinking something then than the subject of monetary policy.

The pound, meanwhile, continued to the union to gains taking into consideration-door to the greenback as regards the subject of expectations that UK Prime Minister Theresa May's Brexit "Plan B" will fare greater than before than her initial termination promise, which suffered a humiliating extinguish in the U.K. Parliament upon Jan. 15.

U.K. tabloid The Sun reported Friday that Northern Ireland's DUP, which props happening Theresa May's dispensation, has privately come to uphold Mays Plan B if it includes a freeing times limit to the Irish backstop.

GBP/USD rallied 1.1% to $1.3202.

The euro pared some losses from hours of daylight earlier, following European Central Bank President Mario Draghi warned that euro place exaggeration was waning.

EUR/USD rose 0.98% to $1.1415.

USD/JPY rose 0.09% to Y109.53 and USD/CAD was flat at C$1.3217 as the loonie was intensify by rising oil prices, which limited gains in the pair.

 

S & P: The US economy has lost at least $ 6 billion due to the shutter



Analysts at rating agency Standard & Poor's estimate that the US economy lost at least $ 6 billion during the suspension of government work.

S & P Global Rating experts believe that as a result of the shutdown, the US budget lost $ 1.2 billion a week since the suspension of government departments led to a decrease in productivity and a low level of business economic activity.

The shutdown was caused by the reluctance of the US Congress to allocate $ 5.7 billion for primary funding for the construction of a wall between Mexico and the US, while negative consequences, according to S & P experts, have already exceeded the amount requested by President Donald Trump.

Analysts also noted that, despite the resumption of government agencies, the negative effect of the shutdown is likely to affect financial markets and business confidence in the future of the country's economy.

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China's manufacturing sector alarms currency markets



China's manufacturing sector activity in January was likely to shrink for the second month in a row, heightening concerns about the risks associated with a slowdown in China and a threat to the global economy.

Industrial leader Caterpillar has become another major international company that warned of declining demand in China, followed by chip makers and Apple. According to the average forecast of 33 economists, the official index of purchasing managers in China (PMI) in January will drop to 49.3 points from 49.4 points in December. January figures may be the weakest since February 2016. In addition, in front of the big New Year holidays and many businesses just close. Some are closing even earlier than usual, because the protracted trade war with the United States has a negative effect on orders. If Washington and Beijing do not reach a compromise that will ease the pressure on tariffs, many businesses are likely to close down forever.

In any case, weak PMI data increases the likelihood that Beijing can accelerate and intensify policy mitigation and stimulation efforts this year. Nevertheless, there remains a high probability that in the coming months business conditions in China may deteriorate, growth may fall below 6 percent in the first half of the year from 6.4 percent in the fourth quarter and stabilize only at the end of the year. This is confirmed by sources in the government, who report that the authorities are planning to reduce the growth target to 6-6.5 percent this year from 6.5 percent in 2018.

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The pound will continue to try to gain a foothold, and the dollar is waiting for the Fed report



The pound will continue to attempt to strengthen its position after fears of the "problematic" Brexit have declined, and the dollar will weaken on the eve of the Fed meeting.

Last week, the pound reached $ 1.3218, the highest since mid-October, in the hope that London will be able to make a deal with the EU. The deadline set for Brexit, March 29, is likely to be extended, and the main question for the pound is when and how the renewal decision will be made. As for the dollar, the focus is now shifting back to key events that threaten the dollar with more serious consequences, such as the FOMC (Federal Open Market Committee) meeting, US-China trade negotiations, and the US jobs report. The Fed is expected to leave interest rates unchanged.

Markets are waiting for signals about the future of the Fed's policy after recent official comments made it clear that rates of rate hikes this year will be reduced amid growing uncertainty about the state of the US economy, the global economy and fragile financial markets. Experts estimate the likelihood of a rate hike in 2019 as very low, although some still expect two approaches in the second and fourth quarters. The dollar may face pressure if the Fed decides to highlight the negative effects of the closure of the US government in its report.

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The dollar clings to any opportunity for growth, like its Australian colleague



The dollar continued to increase on the eve of the speech of US President Donald Trump, which, according to investors, may indicate progress in trade negotiations between the US and China. In general, a modest recovery in investor risk appetite led to a sharp rise in US government bond yields, but trading in foreign exchange markets was rather weak, as many Asian markets were closed for the New Year holidays. The Australian dollar gained by recovering its recent losses after the Reserve Bank of Australia (RBA) left rates at a record low.

Now all the attention is focused on the appeal of Trump, which was postponed due to the closure of the US government. Markets do not rule out more optimistic comments on US trade policy, after the closure of the Trump government is likely to seek political victories. This should be positive for the current risk-friendly environment (reliable US data, but cautious by the Fed) and can support the currencies of developing countries against the dollar.

The Aussie strengthened by 0.3 percent, to $0.7247. The currency was trading in negative territory for most of the session, after weak retail sales data in December, but it moved up after the RBA kept rates on hold. It will be difficult for the Australian dollar to overcome the dollar mark of 0.7300, given the outlook for market rates, which are still priced with a high probability of weakening this year.

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Bank of England downgraded forecasts for economic growth due to Brexit



The management of the Bank of England at a meeting on Thursday, February 7, unanimously voted to keep the key rate at 0.75. Regulatory officials said the UK economy slowed down late last year and early this year.

Representatives of the Bank of England said that the country's economy in 2019 could show the slowest GDP growth in 10 years due to the uncertainty around Brexit, as well as a slowdown in global growth.
At the same time, representatives of the regulator said that they would return to raising interest rates in the event of the implementation of a soft scenario of a country's exit from the EU.

In addition, the Bank of England downgraded the growth forecast for the country's economy in 2019 from 1.7% to 1.2%. The growth forecast for 2020 was also lowered - from 1.7% to 1.5%.

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Oil trades in different directions on conflicting factors



The price of Brent crude is showing mixed trends at the beginning of a new trading week. Quotes of the asset vary over a wide range of $61.30-62.30 per barrel. Market participants regain data on the growth in the number of drilling rigs in the United States and follow the news on trade negotiations between the United States and China.

Markets are awaiting the outcome of trade negotiations between Washington and Beijing, the next round of which is scheduled for February 14-15. Doubts that trade disputes will finally be resolved put pressure on the course of oil. An additional negative came from the report of oil and gas service company Baker Hughes, which reflected an increase in the number of active drilling rigs by 7– to 854 units.
At the same time, oil received some support following the words of OPEC President and the Minister of Energy of the United Arab Emirates (UAE) Suhail Al-Mazrui that the oil market will be balanced in the first quarter of this year.

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New Zealand Holds Official Cash Rate Steady At 1.75%



The Reserve Bank of New Zealand on Wednesday kept its Official Cash Rate at the record low of 1.75 percent for the 15th straight meeting.

The decision was in line with expectations following a 0.25 percent rate cut in November 2016.
The central bank has pared a collective 0.50 percent from its benchmark in the last 25 months, lowering the rate in six of the last 22 meetings after six straight sessions with no change.

GDP growth is expected to pick up through 2019 and the OCR is expected to be unchanged through this year and into 2020, RBNZ Governor Adrian Orr noted.

"Trading-partner growth is expected to further moderate in 2019 and global commodity prices have already softened, reducing the tailwind that New Zealand economic activity has benefited from," Orr said. "The risk of a sharper downturn in trading-partner growth has also heightened over recent months."

Core consumer prices are expected to gradually rise to the mid-point of the central bank's target range at 2 percent - although inflation could rise faster if cost increases are passed on.

"There are upside and downside risks to this outlook," Orr said. "A more pronounced global downturn could weigh on domestic demand, but inflation could rise faster if firms pass on cost increases to prices to a greater extent."

He added that the direction of the next move could be up or down.

"We will keep the OCR at an expansionary level for a considerable period to contribute to maximizing sustainable employment and maintaining low and stable inflation," Orr said.

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Euro Rises Following German GDP Data



Destatis has published German preliminary GDP data for the fourth quarter and wholesale price index for January at 2:00 am ET Thursday.

After these data, the euro rose against its major rivals.

The euro was trading at 125.39 against the yen, 1.1381 against the franc, 1.1294 against the greenback and 0.8768 against the pound around 2:01 am ET.

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China CPI Slows To 1.7% On Year In January



Consumer prices in China were up 1.7 percent on year in January, the National Bureau of Statistics said on Friday.

That was shy of expectations for an increase of 1.9 percent, which would have been unchanged from the December reading.

On a monthly basis, consumer prices were up 0.5 percent following the flat reading in December.

Producer prices were up 0.1 percent on year, shy of expectations for an increase of 0.5 percent and down from 0.9 percent in the previous month.

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U.S. Dollar Falls On Trade Talk Hopes



The U.S. dollar depreciated against its most major counterparts in the Asian session on Monday, as investors awaited trade talks between the U.S. and China beginning this week, after making some progress in talks held last week.

A statement from the White House said high level U.S.-China trade talks this week led to "progress between the two parties", but noted "much work remains."

Trump said that the meetings were very productive and he is ready to extend the March 1 deadline and hold off a planned tariff hike on Chinese goods.

Minutes from the Federal Reserve's last policy meeting are due on Wednesday, with investors awaiting more clues on its rate hike path for this year.

The greenback declined to a 5-day low of 1.2920 against the pound, down from a 5-day high of 1.2899 hit at 5:45 pm ET. The greenback is seen finding support around the 1.32 level.

The greenback slipped to a weekly low of 1.0029 against the franc, following a high of 1.0055 seen at 5:15 pm ET. The next likely support for the greenback is seen around the 0.99 level.

Pulling away from an early high of 1.1289 against the euro, the greenback fell to a 5-day low of 1.1325. On the downside, 1.15 is possibly seen as the next support level for the greenback.

The greenback dropped to a 5-day low of 1.3225 against the loonie, near 2-week lows of 0.6893 against the kiwi and 0.7159 against the aussie, from its early highs of 1.3255, 0.6855 and 0.7133, respectively. The greenback is poised to challenge support around 1.29 against the loonie, 0.70 against the kiwi and 0.74 against the aussie.

On the flip side, the greenback held steady against the yen, after having advanced to 110.58 at 6:55 pm ET. The pair was valued at 110.46 at Friday's close.

Data from the Cabinet Office showed that Japan core machine orders fell 0.1 percent on month in December - beating expectations for a decline of 1.0 percent following the flat reading in November.
On a yearly basis, core machine orders were up 0.9 percent - shy of forecasts for an increase of 3.4 percent following the 0.8 percent increase in the previous month.

The U.S. markets remain closed for Presidents Day holiday.

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EUR/USD: real weakness of the greenback or vain hopes for progress in the negotiations?



In recent weeks, the greenback has shown quite an impressive rally. However, an ambiguous statistical data from the United States, and then positive news about the trade negotiations between Washington and Beijing, then forced it to switch to defense mode against most of the currencies from the G10.

Against the background of improving global risk appetite, the EUR/USD pair fell to the bottom of the level of 1.1250, recovered above the level of 1.1300 and today is trying to gain a foothold above this mark.
Last week, the dollar received the main blow from the internal statistics, which turned out to be significantly worse than the forecast values. In particular, in December, retail sales in the United States declined at the fastest rate in almost a decade, which has led to renewed talk about preparing for a slowdown in the US economy and the best times for the greenback are over.

It is assumed that this week a weak report on retail sales will continue to put pressure on the dollar, especially since the minutes of the Fed's January meeting, which will be published this Wednesday, are likely to confirm the regulator's intention to maintain a wait-and-see position in March.

At the same time, the main negative factor for the single European currency is the fact that the ECB and the European Commission have recently revised downward forecasts for GDP growth and inflation in the region, which in turn postpones the ECB interest rate hike to a later date. In addition, there is still tension on the political scene: the UK's uncontrolled exit from the EU is still on the agenda. Investors are not optimistic about the possibility of introducing trade duties on European cars from the United States.
Currently, positive market expectations regarding the course of trade negotiations between the US and China are the main factor supporting the euro.

Last Saturday, US President Donald Trump announced significant progress in this direction.
It should be noted that previously something similar could already be observed. One can only hope that the White House's comments on the "good pace" of the talks (which, by the way, only two weeks are left) are a sign of a real breakthrough, not false promises.

Thus, to some extent, the further growth of the EUR/USD pair will depend on whether the parties enter into a trade agreement or the United States will extend the deadline for signing it.

However, according to experts, the "bulls" on the euro are not particularly counting on anything, since only a breakthrough above the mark of 1.15 will be a sign of upward dynamics.

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Australia Wage Prices Gain 0.5% On Quarter In Q4



Wage prices in Australia were up a seasonally adjusted 0.5 percent on quarter in the fourth quarter of 2018, the Australian Bureau of Statistics said on Wednesday.

That was shy of expectations for an increase of 0.6 percent, which would have been unchanged.

On a yearly basis, wage prices advanced 2.3 percent - unchanged and matching forecasts.

Private sector wages were up 0.6 percent on quarter and 2.3 percent on year, while public sector wages rose 0.6 percent on quarter and 2.5 percent on year.

The highest index rise at an industry level was in financial and insurance services (0.9 percent) and the lowest in accommodation and food services (0.1 percent).

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