EUR / USD: Inflation in the US is declining. OPEC expects further growth in oil production
Data released in the euro area in the first half of the day, slightly hurt the risky assets, as all the attention of traders and investors was focused on the report on producer prices in the US. The most attention is drawn to tomorrow’s results of the meetings of the central banks of England and the euro area. By the way, inflation in the US declined despite the forecasts of economists.
As I noted above, the data that the volume of industrial production in the euro area in July this year continued to decline did not lead to a sharp drop in the European currency.
It should be noted that the reduction is observed in countries such as Germany and Italy, which is an alarming call for the economies. In the future, the current downward trend in production will necessarily affect the overall growth rate for the third quarter of this year.
Weak industrial production data may also force the European Central Bank to maintain its wait-and-see attitude towards interest rates and asset buy-back programs. This will be known tomorrow.
According to the report, industrial production of the eurozone in July 2018 decreased by 0.8% compared with June, while economists predicted a reduction of only 0.4%. As for the same period in 2017, production fell by 0.1%, while economists forecast growth of 1.2%.
The US dollar only subsided a little after the release of the report on the producer price index in the US.
According to the data, the index of final demand for PPI in the US fell by 0.1% in August, while economists had expected growth of 0.2%. Surprisingly, without taking into account food and energy in the US, producer price inflation also fell 0.1%, against the forecast of economists, who expected growth of 0.2%.
The index of personal consumption of PPI in the US in August remained unchanged from June, as well as the index of final demand.
As for the technical picture of the EUR / USD currency pair, the growth of the European currency remains questionable. Bears will continue to exert pressure on the euro, which will lead to the renewal of the intermediate level of support for 1.1550, and then to the test of the week’s lows around 1.1530. As I noted above, a more powerful downward impulse, capable of a breakdown of 1.1530 support, can be formed only following the results of tomorrow’s press conference from the ECB.
Quotes of oil continued to strengthen their positions amid concerns about oil production in Libya after the attack on the national oil company. Today’s OPEC report, before publishing important data from the US Department of Energy, did not put pressure on black gold.
I recall that the media reported that armed people tried to storm the headquarters of the Libyan oil company NOC. During the assault, two people were killed. Against this background, the demand for oil rose sharply, as traders were concerned about the risks of interruptions in Libyan oil production.
As I noted above, according to the report, OPEC’s total oil production in August this year increased. The production increased by 278,000 barrels per day compared to July, which was directly related to the increase in production in Libya, Iraq, and Nigeria.
As for Saudi Arabia, its production in August increased by 38,000 barrels a day. With regard to oil production outside the OPEC countries, it is projected to grow by 2.02 million barrels per day in 2018, which is lower by 64,000 barrels than last month.
As for the technical picture on oil, it is very difficult to expect a strong growth above the level of 70.70 US dollars by the WTI brand. Only a serious drop in stocks in the US storage facilities, which could be indicated in today’s report from the US Department of Energy, could lead to a breakthrough in the resistance of 70.70 and a larger wave of growth in quotations to areas 71.70 and 72.80 dollars per barrel.