Morning Market Review

EUR/USD

The European currency shows ambiguous dynamics against the US dollar during today's Asian session, consolidating at local lows since December 7 updated the day before. Market activity remains subdued as traders await the publication of the minutes of the US Fed meeting on monetary policy. It is assumed that the regulator will not change the interest rate, but will announce an acceleration in the rate of reduction of the current quantitative easing program, which will allow the start of interest rate hikes by March next year. Additional interest today is caused by the American statistics on the dynamics of retail sales in November. Noteworthy statistics from Europe will appear tomorrow, as the meeting of the European Council is scheduled for that day, as well as a meeting of the European Central Bank on interest rates. Unlike the US Fed, the European regulator is unlikely to dare to tighten the parameters of monetary policy, but the comments of officials will be very important.

GBP/USD

The British pound is trading in the area of record lows, updated last week. Investors are in no hurry to open new positions ahead of meetings of the world's leading regulators. Today the US Fed will hold a meeting, and a block of statistics from the UK on the dynamics of consumer and production prices for November will be released. From the American regulator, market participants expect acceleration in the pace of reduction of the quantitative easing program, which should provide moderate support to the dollar. In turn, the European Central Bank and the Bank of England will hold their meetings tomorrow. The British regulator probably will not change the parameters of monetary policy, although not long ago analysts were confident in the growth of the interest rate. However, much will depend on inflation statistics that will appear today. The UK data released yesterday was moderately optimistic. Claimant Count Change in November showed a decrease of 49.8K after a reduction of 14.9K in October. ILO Unemployment Rate in October expectedly decreased from 4.3% to 4.2%.

AUD/USD

The Australian dollar is showing an attempt to develop weak corrective growth against the US dollar during the Asian session, again testing 0.7100, but this time for a breakout. The positive dynamics are supported by technical factors, while traders are actively discussing the US Federal Reserve meeting on interest rates, which will take place today. It is assumed that the American regulator will signal a further tightening of monetary policy and announce an increase in the rate of reduction of the current quantitative easing program. The macroeconomic statistics published in Australia today have a mixed impact on the instrument's performance. Investors were disappointed by the fall of the Consumer Confidence Index from Westpac in December by 1% after rising by 0.6% in November. In turn, the Chinese data showed an increase in Industrial Production in November from 3.5% to 3.8%, but disappointed investors with a sharp decline in retail sales from 4.9% in October to 3.9% in November.

USD/JPY

The US dollar shows multidirectional dynamics paired with the Japanese yen in trading in Asia, consolidating near the local highs from December 10. Market activity remains rather low, as traders prefer to wait for the publication of the minutes of the US Federal Reserve meeting. The market expects to see further evidence of the tightening of the rhetoric of the American regulator regarding the rapid rise in prices and a possible increase in interest rates next year. In the meantime, it is likely that the Fed will limit itself to a more rapid reduction in the quantitative easing program, which prevents the Chairman of the department, Jerome Powell, from starting the rate hike cycle. The yen is somewhat supported by the statistics from Japan published yesterday. Industrial Production rose 1.8% in October after rising 1.1% in September. In annual terms, the rate of production decline slowed down from -4.7% to -4.1%. Capacity Utilization increased by 6.2%, while analysts expected an increase of only 0.7%.

XAU/USD

Gold prices are near 1770.00 after a noticeable downward correction recorded the day before. Market activity remains subdued as traders await the publication of the minutes of the US Federal Reserve meeting, which as many hope, will indicate a further tightening of the US regulator's rhetoric. The US Federal Reserve is expected to announce an early completion of the bond purchase program, potentially bringing the next year's interest rate hikes forward. Previously, it was assumed that the regulator will fully complete the quantitative easing program by June 2022, but now it may turn out that the department will have ended it by March. However, skeptics argue that the Chairman of the US Fed, Jerome Powell, began the fight against high inflation too late, and therefore the regulator's plans will be adjusted more than once. Additional support for the dollar is provided by the statistics on manufacturing inflation released yesterday. In November, the Producer Price Index excluding Food and Energy rose 0.7%, accelerating after rising 0.4% in October.

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