The Euro remains under pressure. Overview for 28.11.2019

On Thursday morning, EURUSD is consolidating; however, it remains under pressure, mostly because of external background. 

EURUSD stopped falling and started consolidating, but the market sentiment is still bearish. The current quote for the instrument is 1.1006. 

External background keeps investors in suspense. Yesterday, the US President Donald Trump signed two Hong Kong laws and Beijing vowed retaliation, thus leading market players to the conclusion that the trade talks may reach a deadlock again. According to Reuters, “The “Hong Kong Human Rights and Democracy Act,” which the Senate and House passed last week, puts the special treatment Hong Kong enjoys under U.S. law under tighter scrutiny linked to the extent of the territory’s autonomy from Beijing.” Of course, in American reality, this law may be stretched as the USA chooses. China said on several occasions in the past that it would brook no interference with the country’s internal affairs. So now, after the laws are signed, Beijing is ready to cut the talk and walk the walk.

The statistics published by the USA yesterday were rather mixed. The GDP report showed that the second estimation was 2.1% q/q against the first one of 1.9% q/q, and that’s good. However, the Personal Income was disappointing with 0.0% m/m in October after adding 0.3% m/m in the previous month and against the expected reading of +0.3% m/m. At the same time, Personal Spending expanded by 0.3% m/m, the same as expected, which is more than in September.

An increase in spending combined with a lack of dynamics in incomes is not a good signal really. End-of-season sales haven’t started yet, so consumers have no reason to spend more than they can afford. Consequently, November readings may show a sharp decline in spending and that will surely have a significant influence on industrial production and the GDP later.