EURUSD is waiting for what Powell has to say. Overview for 23.08.2019

On Friday, the major currency is under pressure again; investors are focused on events in Jackson Hole.

EURUSD changed the direction once again on Friday afternoon; right now, it is moving downwards. The current quote for the instrument is 1.1069.

Today at 5 PM Moscow time, the US Fed Chairman Jerome Powell will deliver a speech in Jackson Hole. He is widely expected to make some announcements on further prospects of the US monetary policy. The regulator may say something about the QE. Or Powell may confirm that the USA is going to continue the procedure of cutting the rate and explain why. If he does speak of softening the regulator’s monetary policy, the USD will get under serious pressure.

The FOMC Meeting Minutes published earlier confirmed that the USA set a course for loosening, that’s why market players want Powell to say about this as much as possible.

The current fundamental background for the European currency is quite mixed, although yesterday’s numbers were quite good. Westpac believes that the European Central Bank is ready to cut the rate and Governor Mario Draghi did a great job to prepare market players for that. In addition to that, the QE revival is also possible.

There are some complications with Spain and Italy and their finances. Most likely, the ECB will keep this issue in sight, because uncertainty with budgets of these countries may be pretty risky for the Euro Area and the ECB’s monetary policy.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The Euro is trying to find support. Overview for 29.08.2019

The major currency pair slowed down its decline again; all eyes are on the statistics.

On Thursday morning, EURUSD is making another attempt to keep balance and avoid freefall. The current quote for the instrument is 1.1083.

Today, market players will be focused on statistics. In the morning, they should pay attention to the Unemployment Change in Germany for August: it may well be that the indicator will increase. Not to say it’s too negative for the European currency, but there is nothing good in it as well.

In the afternoon, the USA is scheduled to publish the revised GDP report for the second quarter. The indicator is expected remain the same in comparison with the preliminary reading at +2.4% q/q. Any deviations from market expectations may force investors to be more active.

It will be interesting to check the preliminary report on the Wholesale Inventories in July, which may add 0.2% m/m. If actual and expected reading s match, it will be a good signal for the USD. Apart from this, there will be another interesting report, the Pending Home Sales, which may add only 0.1% m/m in July after skyrocketing by 2.8% in June. The contracts signed in the reporting months are considered to be fulfilled in 4-8 weeks, that’s why this decline will surely influence the real estate market numbers later and that’s an unpleasant surprise. The weaker the indicator, the worse for the real estate market and the USD in the future.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The Australian Dollar continues rising. Overview for 04.09.2019

AUDUSD remains “in the black” and may continue recovering.

On Wednesday morning, the Australian Dollar is rising against the USD. The current quote for the instrument is 0.6772.

The Aussie remains positive the statistics published in the morning were rather neutral, but it was good given the current situation. The Australian GDP added 0.5% q/q in the second quarter, the same as expected. The country’s economy didn’t regress and that’s a good point.

At the same time, the GDP outlook is quite questionable. If the economy of China, which is Australia’s key trade and economic partner, continues slowing down, Australian numbers will be affected sooner or later.

There are issues with Export. Due to the decline in global demand for energy commodities, Australian coal may not be sold as well as in the past and that’s a serious impact on the budget. It’s bad news, but may be only a theory so far.

This week, Australia will report on the Trade Balance for July, which may provide answers to some of the questions.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The Aussie stopped rising. Overview for 10.09.2019

On Tuesday afternoon, AUDUSD took a short break after 6 consecutive trading sessions of stable growth.

The Australian Dollar slowed down its growth against the USD on Tuesday. The current quote for the instrument is 0.6860.

The statistics published in the morning showed that the NAB Business Confidence went from 4 points in July to 1 point in August. The indicator describes the sentiments of employees of the largest Australian companies except for the agriculture sector. Readings above and below zero imply improvement and deterioration of business sentiment respectively.

So far, the indicator is still above zero, but the decline prevents the Aussie from further growth.

In the morning, China reported on the CPI and PPI. Numbers from this country are very important for the Aussie because it’s Australia’s key trade and economic partner. So, the Chinese Consumer Price Index remained unchanged at 2.8% y/y in August, which is pretty good, although it was expected to drop to 2.6% y/y. The Producer Price Index, in its turn, plummeted by 0.8% y/y in August after losing 0.3% y/y in July and against market expectations of -0.9% y/y.

It is apparent that the September report on inflation may show slowdown, which is not very good for the country’s economy in current conditions. Weak inflation may indicate competitive environment slump for manufacturers and weak domestic demand.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

EURUSD will wait for decisions from the Fed. Overview for 16.09.2019

Early in another September week, EURUSD is quite stable; major news and events are ahead.

The major currency pair is barely moving at the beginning of another September week as investors are totally focused on the oil market. The current quote for the instrument is 1.1070.

Only China published several macroeconomic reports this morning; no new numbers are expected from both the USA and the Euro Area.

This week’s major focus will be on the September meeting of the American regulator, which is scheduled to start on Tuesday and last until Wednesday evening, September 18th. The FOMC is expected to cut the rate by 25 basis points. The White House’s pressure is too great for the regulator to continue resisting. Most likely, there will be one more rate cut by the Fed this year, probably in December. The country’s economy is surely in no need of such stimulus right now, but it may happen for political reasons.

After that, the Fed is highly likely to take a long pause and watch the economy both inside and outside the country.

It will be very interesting to check the comments that follow the meeting: if there must be any hints at future fiscal measures, the comments will have them. For the USD, the rate cut will be neutral, just because it is being discussed for several weeks; hence, it’s no news for investors.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The Pound intends to rise. Overview for 20.09.2019

On Friday, GBPUSD is growing towards July’s highs.

The British Pound is trading upwards against the USD on Friday afternoon. The current quote for the instrument is 1.2570.

Yesterday, the Bank of England left its interest rate unchanged at 0.75%, just as expected. The regulator’s September meeting was over and the results were rather neutral: all 9 members voted in favor of keeping the regulator’s current monetary policy intact. The BoE Quantitative Easing remained at £435B.

In the comments, the BoE said that the inflation might weaken in case of uncertainty around the Brexit deal. In the future, the regulator is planning to shape its monetary policy based on the Pound exchange rate and the Brexit influence on the country’s economy. As they say in the BoE, prospects of global economic growth deteriorated due to trade wars. The British labor market looks quite tight, but not weak, and that’s good. 

According to expectations, the third-quarter GDP may add 0.2%, while the CPI may remain slightly below 2.0%.

Market players decided that this time the BoE’s comments were too soft and, given all these Brexit influences, concluded that the regulator might consider cutting the rate in the future if necessary. The Pound’s response to that was quite positive.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The USD strengthened significantly. Overview for 26.09.2019

On Thursday, the major currency pair remains under pressure after the statistics and talks about Trump’s impeachment.

EURUSD is trying to recover on Thursday, but quite unsuccessfully so far. The current quote for the instrument is 1.0954.

Speculations of the US President Donald Trump’s impeachment ahead that appeared yesterday resulted in the drawdown of all USD-related assets. Needless to say that under such circumstances the USD was doing great.

Another stressful factor was Trump’s aggressive rhetoric against China because market players really counted on the quick resumption of trade talks between the parties, but it was in vain.

The statistics published by the USA yesterday were positive and provided additional support to the American currency. The New Home Sales went up to 713K in August after being 666K the month before and against the expected reading of 652K. Investors could have been more restrained in their response to the report, but the components showed that the sales of new single-family houses improved significantly, meaning that the real estate sector was reviving: people have no problems with creditworthiness, loans are available, and the economy is feeling fine. In this light, the USD is doing more than safely and happily.

Today, one should pay attention to the final report on the US GDP for the second quarter, which is highly expected to remain unchanged at 2%.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The Australian Dollar continues falling. Overview for 01.10.2019

On Tuesday, AUDUSD is retreating; the RBA rate decision did match expectations.

The Australian Dollar remains week against the USD on Tuesday. The current quote for the instrument is 0.6734.

This morning, the October meeting of the Reserve Bank of Australia was over, where the regulator decided to cut the rate by 25 basis points, from 0.75% to 1.00%. However, this scenario was expected by investors, because earlier the regulator said that it would be necessary to boost the country’s economy.

Probably, now the RBA may take a pause and view the happenings, but if the global market conditions don’t change for the better, the regulator might as well cut the rate one more time until the end of the year.

The statistics published in the morning showed that the AIG Manufacturing Index went from 53.1 points in August to 54.7 points in September. The fact that the indicator is still above 50 points, which separates decline from growth, is surely positive.

At the moment, the thing the Aussie is mostly responding to is the USD strength, but not external news, that’s why it retreating.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The Pound is very volatile. Overview for 03.10.2019

The British Pound has been pretty volatile recently; however, there is more to come.

The British Pound is very volatile against the USD on Thursday. The current quote for the instrument is 1.2293.

It’s all about the Brexit nuances, which are moving to the forefront these days. So, the EU's Chief Negotiator for the United Kingdom Exiting the European Union Michel Barnier said yesterday that there was visible progress in negotiations. The United Kingdom offered Brussels several suggestions, but they had to be fully canvassed. Barnier once again emphasized that the European Union wouldn’t accept any no-deal Brexit scenarios.

As for London, they also mentioned that there was progress in Brexit talks and the country was ready to discuss everything in detail.

The statistics published today showed that the Services PMI dropped to 49.5 points in September after being 50.6 points the month before and against the expected reading of 50.3 points. The decline below the psychologically crucial level of 50 points says that market sentiments in the sector, which is very sensitive to consumer demand, are getting more pessimistic. It’s a very bad signal for the British Pound and economy.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The Euro intends to continue rising. Overview for 07.10.2019

On Monday, EURUSD is consolidating, but may yet resume its growth.

The major currency pair is doing fine early in another October week. The current quote for the instrument is 1.0980.

Last Friday, the USA published several September reports on employment, which turned out to be quite good after all. The Unemployment Rate wasn’t expected to change, but it dropped from 3.7% to 3.5%, which is the lowest level since 1969.

The Average Hourly Earnings remained unchanged in comparison with the August reading. However, on YoY, the indicator showed +2.9% in September after being +3.2% in the previous month. It’s not good news, but there are no reasons to worry so far. The Non-Farm Employment Change was 136K in September and it’s the lowest indicator value over the last four months. However, the August reading was revised upwards, up to 168K, and that made investors happy.

Generally speaking, these numbers indicate that the labor market remains stable, thus preventing the recession and allowing market players operating actively. In addition to that, the statistics don’t increase the Fed’s chances to raise the rate until the end of this year and that provided additional support to the USD.

Today, one should pay attention to the Sentix Investor Confidence for October. The indicator may decrease from -11.1 points to -12.9 points.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The Euro is fighting for yesterday’s losses. Overview for 09.10.2019

In the middle of the week, the major currency pair is recovering after yesterday’s losses; investors are analyzing the Fed’s intentions.

EURUSD is growing on Wednesday afternoon, but investors are very cautious. The current quote for the instrument is 1.0987.

Demand for the USD is not as active as before, because investors’ hopes for successful trade negotiations between the USA and China are fading: there was no new information relating to the trade talks. As a result, market players switched to other assets, thus helping the major currency pair to recover.

While delivering the speech yesterday, the US Federal Reserve Chairman Jerome Powell told about the regulator’s intentions to expand its portfolio of government-backed securities. It is about Treasury Bills, but investors are sure to take it as some kind of “compact” QE. Powell himself explained several times that this procedure was necessary for recovering the regulator’s balance, not for supporting the financial system. Nothing was said about the program volume, but Powell mentioned that it wouldn’t be too big.

As a result, the Fed’s “printing press” is on again. The cash liquidity will increase a bit (investors would like to know by how much and that might be announced later). In this light, the USD may fundamentally weaken a little.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The Pound rose thanks to progress in Brexit talks. Overview for 11.10.2019

On Friday morning, GBPUSD remains energetic and is ready to rise thanks to progress in Brexit talks.

The British Pound intends to keep growing against the USD on Friday. The current quote for the instrument is 1.2450.

The Pound skyrocketed yesterday after investors found out that the United Kingdom was ready to make significant concessions in the Brexit talks. Pat Leahy, the Irish Times editor, twitted that “there had been very significant movement from the British side on the customs issue in the Johnson-Varadkar talks”.

Yesterday, the British Prime Minister Boris Johnson and the Irish Taoiseach Leo Varadkar “held make-or-break Brexit talks”, after which market players started active debates on a possible deal soon. The “hardcore” Brexit is not a good thing for Ireland and here’s the reason why: according to the current calculations, this scenario might result in the hasty growth of unemployment, up to 7% on average. Later, it might get much worse.

Deteriorations on the Irish labor market will be clearly seen right after implementation of the no-deal Brexit scenario and may continue for the next two years, and the Irish party would like to avoid it. That’s why any progress relating to the Brexit deal, including the Irish border, is absolutely positive for the British Pound.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.