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The pound rose because of hopes for Brexit

The pound rose because of hopes for Brexit

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Erik Holm - Head of media

On Monday, the pound rose amid expectations that the conservative party would win the upcoming elections and Britain would leave the European Union, as planned. British Prime Minister Boris Johnson has promised to hold the Brexit deal in parliament before Christmas. The Conservative Party leads the polls before the December 12th election.

By 10:00 London time, the GBPUSD pair rose by 0.4% to 1.2883, while the EURGBP pair fell by 0.4% to 0.8553. The EURUSD pair remained at 1.1020 after the publication of the German Ifo index, which showed that business confidence in Germany increased this month and the Eurozone’s largest economy avoided a recession. The Ifo business sentiment index rose to 95.0 from 94.7 in October, but the Munich Institute warned that Germany’s manufacturing sector is still in recession.

Yuan Rises After China Key Rate is Reduced

Yuan Rises After China Key Rate is Reduced

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Jim Anderson - Public Relations

On Monday, the Chinese yuan rose in Asia after the country’s central bank lowered its key liquidity rate for the first time since 2015.

In the morning on Monday, the USD/CNY currency pair rose by 0.1% to 7.0112. For the first time since October 2015, the People’s Bank of China lowered the interest rate on seven-day repurchase agreements. The country aims to increase business confidence after a series of weak economic data releases last week.

The US dollar index fell by 0.1% to 97.810. on Wednesday, the Fed will release the October meeting protocol, and several regulator representatives will address the upcoming Thanksgiving holiday.

Chinese-US trade negotiations are making progress. Xinhua, China’s state-run news agency, said on Saturday in a phone conversation that Vice Premier Lui He discussed the conclusion of the first stage of the deal with US Secretary of the Treasury Stephen Mnushin and US Trade Representative Robert Lighthizer.

The parties held a “constructive discussion” of “the main subjects of concern”, the article said. The U.S. sales representative confirmed that the call had taken place.

Euro stabilizes amid weak inflation in Germany

Euro stabilizes amid weak inflation in Germany

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Erik Holm - Head of media

The EUR/USD currency pair is trading around $1.2325, almost unchanged at the moment. Data on the decline in the euro from different regions of Germany are approaching milder inflation year on year.

Currency, ranges of price fluctuations are limited, as markets are waiting for important data from US Central Bank Chairman Jerome Powell.

The pair EUR/USD is growing slowly but daily. It briefly broke the figure of 1.2300 and was trading at 1.2354 this week, but so far cannot establish a clear direction.

The head of the US Central Bank Jerome Powell will turn to the parliamentary special committee on inflation and monetary policy. Expectations before the event are high, as there will be the first steps on this issue.

In general, Powell is expected to follow Yellen's path, but there is a good chance that he will prefer to calm the stock market and, therefore, try to meet the expectations of more than three rate hikes this year, which will not benefit from a stronger dollar.

At the same time, the EU has published its numbers for January and is going to publish sentiment indicators for February inflation will be ahead of Powell’s statement, while durable goods orders in the US will be canceled in January.

Also, European indices are mixed with their initial levels, which change little daily. Note that the yield on US Treasury bonds increases their recovery, but remains below the level of Friday closing.

The ruble got the plus value against the weakening Forex dollar

The ruble got the plus value against the weakening Forex dollar

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Jim Anderson - Public Relations

The ruble got the plus value against the weakening Forex dollar in anticipation of the Fed rate cut and amid cautions demand risk due to expectations of a possible conclusion of a US-China trade deal in November. Local support for the ruble remains foreign interest in OFZs, pending another reduction on the CBR key rate this year after the Russian regulator has revised its inflation forecast towards a slowdown.

A limiting fact is uncertainty for the EM segment of the result of the presidential election in Argentina, where the representative of the opposition Peronist party won. By 11.25 Moscow time, the USD/RUB pair was near 63.79, and the ruble was gaining 6 kopecks, while in the morning it had fallen to 63.96.

Against the euro, it remains in the red, losing 4 kopeks (70.76), thereby reflecting the current strengthening of the single currency against the dollar at forex. The probability of a decrease in the Fed rate on Wednesday by 25 bp is now estimated at 90% and the probability of a decrease of the CBR key rate in December at 25 bp is 57%. EM currencies have shown, since the beginning of the day, mainly strengthening against the US dollar, but Brent oil went negative after reaching a new October high of $62.16, and now a barrel is valued at $61.78 (-0.4%).

The dollar is falling, the yuan is recovering amid news of trade negotiations

The dollar is falling, the yuan is recovering amid news of trade negotiations

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Erik Holm - Head of media

In the morning hours of the European trading session on Thursday, the US dollar depreciated amid a large number of conflicting reports about the upcoming trade talks between the US and China, which should continue in Washington today.

The final settlement of the trade conflict between the two countries seems unattainable after the introduction of mutual sanctions against specific companies this week. However, judging by the reports, both parties may accept some more abridged versions of the agreement in order to mitigate the blow to the economies of the two countries. Due to the trade conflict, the growth rates of both the Chinese and American economies have slowed sharply this year.

By 8:30 London time, the US dollar index, which shows the purchasing power of the dollar against a trade-weighted basket of six major currencies, fell 0.3% to 98.547. The US dollar also fell 0.3% against the official and offshore yuan.

For the first time, the euro exceeded $1.1. By 8:30 London time, the euro rose 0.4% to $1.1041. This happened despite the report on the volume of industrial production on France, which turned out to be worse than analyst's forecasts, as well as data on German exports for August, which also turned out to be worse than forecasts.