The Aussie is falling again. Overview for 01.04.2020

AUDUSD is down again amid investors’ poor attitude to risks.

On Wednesday afternoon, the Australian Dollar is falling against the USD. The current quote for the instrument is 0.6075.

On one hand, it’s obvious that market players’ interest in global risks is decreasing again, thus putting pressure on traded currencies. On the other hand, The RBA’s expectations relating to the economic outlook are very gloomy and that’s also not too good for the Aussie. 

The statistics published in the morning showed that the AIG Manufacturing Index in Australia went from 44.3 points in February to 53.7 points in March. It’s pretty good and may be connected to the fact that the Chinese manufacturing sector is back to almost its full capacity.

The Building Approvals added 19.9% m/m in February after losing 15.3% m/m the month before and against the expected reading of +3.1% m/m. The number is quite surprising because the economic activity in the country is rather low and the future outlook is also not too optimistic. However, the growth may have been caused by low interest rates – this may really straighten things out.

Apart from this, the Reserve Bank of Australia released its previous Monetary Policy Meeting Minutes, which said that the country’s economy might significantly shrink not only in the first six months of 2020 but in the third or even fourth quarters as well. They believe that after the coronavirus pandemic starts dying down, the Australian economy will recover. However, timescales are quite vague.

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

The USD is still in demand. Overview for 03.04.2020

On Friday, EURUSD continues sliding down while investors are interested in “safe haven” assets.

The major currency pair remains under pressure at the end of the first April week. The current quote for the instrument is 1.0813.

Weak numbers from the USA published yesterday didn’t change investors’ attitude to the greenback. On the contrary, the statistics even increased their demand is “safe haven” assets.

So, the weekly report on the Unemployment Claims skyrocketed up to 6.648M after being 3.3M (revised reading) the week before and against market expectations of 3.6M. It means that the great number of unemployed people from the services industry were followed the ones who worked in the manufacturing sector. Of course, the American labor market has enough jobs to quickly recover but it won’t happen right now or any nearest future. The next couple of weeks, while quarantine restrictions remain in effect, will see a lot more people losing their jobs.

The Factory Orders showed 0.0% m/m in February after losing 0.5% m/m in January and against the expected reading of +0.2% m/m. the March report is likely to show -0.1%-0.3% m/m, which would be rather logical due to the shutdown of many enterprises.

Today is a very important day for the American currency. Later in the evening, the USA is scheduled to publish more reports on the labor market. The key ones are the     Non-Farm Employment Change, the Unemployment Rate, and the Average Hourly Earnings.

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

The Yen is rising on expectations of economic stimulus package. Overview for 07.04.2020

USDJPY is falling on Tuesday morning. Japan is preparing for a new stimulus package.

The Japanese Yen is strengthening against the USD on Tuesday. The current quote for the instrument is 108.92.

The Japanese Prime Minister Shinzo Abe announced a new economic stimulus package worth ¥108T ($989B). it’s a very positive moment for the country’s economy, which means that the government doesn’t stand aside and is ready to stay in sync with the changing market conditions.

At the same time, there isn’t too much positive for the Yen, because the rumor has it that Japan may declare a state of emergency due to the coronavirus pandemic. First of all, it’s about Tokyo but may cover other regions as well. 

In the morning, Japan reported on the Household Spending in February, which lost 0.3% y/y after showing -3.9% m/m in January. The actual reading is much better than expected, -3.3% m/m. The indicator shows that the population is ready to spend money and that’s been a problem for Japan over the last previous months.,

The Average Cash Earnings added 1.0% y/y in February after expanding by 1.2% y/y the month before. It’s not very good but still better than expected.

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

The Pound is holding onto its positions. Overview for 09.04.2020

On Thursday, GBPUSD intends to grow; the statistics don’t scare pound enthusiasts.

The British Pound is barely moving against the USD on Thursday morning. The current quote for the instrument is 1.2378.

In the morning, the United Kingdom published a lot of numbers. The first one, the country’s GDP, lost 0.1% m/m in February after adding the same in the previous month. Market expectations implied +0.1% m/m.

The Construction Output showed -1.7% m/m after being -0.2% m/m over the same period of time and against the expected reading of +0.3% m/m. The Industrial Production added 0.1% m/m, the same as expected, mostly due to the Manufacturing Production, which expanded by 0.5% m/m in February after showing +0.4% m/m the month before and against the expected reading of +0.2% m/m.

So, in February, the British manufacturing sector did fight negative news from outside the country and the coronavirus pandemic, which, by the way, wasn’t declared yet. Another negative factor, the Brexit, wasn’t a problem as the country’s economy already got used to it. 

By the way, history shows that the Brexit is not the most critical and dramatic thing that might have happened to the British economy and financial system. This is probably a reason why the Pound is looking rather neutral.

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

EURUSD is looking for drivers. Overview for 13.04.2020

The major currency pair is rather neutral at the beginning of a new April week, but the Euro is looking stronger.

The Euro is stable against the USD early in another week of April. The current quote for the instrument is 1.0945.

Today’s economic calendar is empty as most of the Catholic countries still have Easter holidays. It means that it’s high time to analyze what is happening right now and make predictions for the future.

For example, the CBA (Commonwealth Bank of Australia) believes that global economic and monetary measures that should be taken by the Euro Area might quickly set the region’s economy on its feet. Among other things, it includes the ESM: those European countries that suffered most from the coronavirus pandemic and its consequences will get more help with the credit line. It means that there won’t be any problems with liquidity in Europe, so the region’s economies might recover quite quickly.

At the same time, the US Federal Reserve also doesn’t sit idle. Last week, the American regulator announced a program to support small and medium enterprises in the amount of 2.3 trillion USD in addition to other programs announced earlier, such as the QE, low interest rates, and expansion of Dollar liquidity. Moreover, the White House drew attention to the fact the coronavirus outbreak might be slowing down.

In global terms, investors’ sentiment all over the world is getting better, and that’s a good signal for the Euro.

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

EURUSD is waiting for news. Overview for 15.04.2020

The major currency pair is falling a little bit in the middle of the week, but the statistics may provide the instrument with a new impulse.

EURUSD is correcting on Wednesday. Market players are pretty tired without the news, but the situation may change today. The current quote for the instrument is 1.0953.

There were no important macroeconomic reports for the major currency pair on Monday and Tuesday as the Catholic countries celebrated the Easter. Today’s calendar is looking much more interesting.

The USA is scheduled to report on the Retail Sales in March, which may show -8.0% m/m after being -0.5% m/m in February. The Core Retail Sales is expected to lose 4.9% m/m.

The American Industrial Production may decrease by 4.1% m/m in March after adding 0.6% m/m the month before. However, today’s report is highly unlikely to describe the real slump in the sector. For this, it’s better to wait for the April readings – they will provide an excellent picture of what is going on in US manufacturing.

The Capacity Utilization Rate may drop from 77.0% in February to 73.7% in March and it’s also quite normal given the current economic circumstances in the USA. Still, the lower today’s readings, the worse for the USD.

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

The Euro remains under pressure. Overview for 17.04.2020

The major currency pair has been falling for the third consecutive trading session; market players are very cautious.

They continue selling EURUSD on Friday morning. The current quote for the instrument is 1.0834.

The statistics published by the USA yesterday showed that the American labor market started recovering a little bit. The Unemployment Claims was 5.245M after begin 6.615M the week before (revised) and against the expected reading of 5.35M. The service industry remains a job killer for many people, but the tendency is slowing down and that’s a very good signal.

The Building Permits in the USA was 1.35M in March, which is worse than the February reading of 1.45M, but better than market expectations of 1.3M. Another report, the Housing Starts, showed 1.22M after being 1.56M in February. However, everything is quite logical: when the country introduced restrictions on population movement in order to control the coronavirus outbreak, a lot of business processes were also put on hold.

There won’t be many numbers from the USA in today’s economic calendar, only the CB Leading Index for March, which is not expected to be impressive. However, in the afternoon, the Euro Area is scheduled to publish the final report on the Consumer Price Index in March, which earlier was 0.7% y/y and is not expected to change. The Core CPI may also remain unchanged at 1.0% y/y. A slump in European inflation is a result of lowering prices for energy commodities and a decline in consumption – it’s rather difficult to spend money when you’re staying at home, or worse, at a hospital. These factors remain in effect, thus indicating a high pressure on the CPI. It might count against the Euro.

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

The Pound is climbing down. Overview for 21.04.2020

GBPUSD is retreating on Tuesday; the statistics from the United Kingdom were not impressive.

The British Pound remains weak against the USD. Still, market conditions aren’t getting any worse, and that’s good. The current quote for the instrument is 1.2415.

Earlier today, the United Kingdom reported on the labor market. The Unemployment Rate increased up to 4.0% in February after being 3.9% in January and against the same expected reading. The Average Earnings Index showed +2.8% 3m/y after being +3.1% 3m/y the month before.

The Claimant Count Change was 12.1K in March after showing 6K in the previous month and that’s a great signal. Despite rising, the indicator remained more or less stable – the UK labor market did not kill many jobs in the service industry.

The country continues living under quarantine restrictions, which significantly influence both economic activity and consumption. However, thanks to global support, which the United Kingdom is providing its businesses and population with, the country is doing a great job in dealing with difficulties so far.

On Wednesday, the United Kingdom will continue publishing the latest numbers, that’s why the Pound will surely have fundamental catalysts to respond to.

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

The Euro is climbing down slowly. Overview for 23.04.2020

On Thursday, the major currency pair remains weak and continues retreating.

EURUSD is slowly falling on Thursday afternoon. The current quite for the instrument is 1.0809.

Over the last couple of days, volatility in the major currency pair is extremely low. It seems like investors’ attention is focused on more active assets. There is hardly any reaction to the statistics, but frankly speaking, there aren’t a lot of statistics either.

Yesterday, the Euro Area reported on the Consumer Confidence, which plummeted to -23 points in April after being -12 points in March and against the expected reading of -20 points. However, everything is quite logical: no one should expect any consumer activism or confidence about the future as long as Europe is under quarantine restrictions.

Also, the ECB Governor Christine Lagarde spoke yesterday: she drew the line in the regulator’s capabilities for further stimulus and support of the region’s economy. For example, this year the ECB is planning to buy sovereign bonds worth 1.1 trillion EUR to provide governments and financial institutions with cheap financing facilities. The regulator is ready to do more, but everything should be well-thought-out and calculated. However, there won’t be any “helicopter money” for households: first of all, it might ruin financial discipline, and secondly, it will create tons of accounting and legal complexities.

By saying this, Lagarde answered investors’ expectations relating to a deeper and more global asset acquisition on the principle ща the Bank of England. It can’t be called an evident negative for the Euro – there are a lot of stimulus programs. Still, another one wouldn’t hurt.

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

The Yen’s recovery is quite logical. Overview for 27.04.2020

USDJPY is falling on Monday; the Bank of Japan is trying to keep ahead of the game.

On Monday afternoon, the Japanese Yen is strengthening against the USD. The current quote for the instrument is 107.23.

Since the coronavirus “drama” didn’t have any new twists so far, the Japanese Yen is in demand as a “safe haven” asset. However, it’s not the only reason: The Bank of Japan announced new tools for supporting the country’s economy and they might work.

For example, during its April meeting, the Japanese regulator removed a limitation on buying government bonds and ramped up its purchases of corporate debt. In addition to that, the BoJ is planning to buy ETFs and J-REITs.

At the same time, it’s quite clearly seen that buying bonds may require the BoJ to keep their yields at 0%. All other tools are expected to work perfectly, on paper of course. For example, purchases of corporate debt may be up to $186 million (¥20 trillion) until September 2020 and that’s a great number.

It should be more convenient for commercial banks to resort to financing – financial flows are not expected to “stuck” anywhere. Moreover, the list of acceptable securities for loans from the Central Bank should increase. For example, private and household debts.

Why is it good for the Yen? The faster the Japanese economy recovers, the easier it will be for the Japanese regulator to form and control the national currency rate. The sooner the export recovers, the more money the country’s budget will receive and the influence of the national currency rate on the country’s economy will reduce.

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

The Euro is ready to grow. Overview for 29.04.2020

On Wednesday, the major currency pair is slowly rising; investors’ attitude to risks is returning.

EURUSD is growing a little bit in the middle of the week. The current quote for the instrument is 1.0843.

The two-day meeting of the US Federal Reserve is set to be over today and market players are very curious about any comments from the regulator. So far, the external background allows increasing attitude to risks. 

The statistics published yesterday showed that the CB Consumer Confidence in the USA dropped to 86.9 points in April after being 118.8 points the month before. The indicator was expected to show 88.3 points but the reality turned out to be worse. Most likely, the indicator already reached the bottom, because for further decline, quarantine restrictions in the USA should continue, but the US government is ready to cancel them slowly.

The preliminary report on the Wholesale Inventories showed -1.0% m/m in March after being -0.7% m/m in February and against market expectations of -0.4% m/m. It’s also okay: companies and enterprises could easily predict slumping demand, hence reducing the stock in order to avoid losses and overloaded warehouses.

Among the reports scheduled for today, one should pay attention to the first estimate of the US GDP for the first quarter of 2020. The indicator is expected to show -4.0% q/q but the actual reading may be much worse.

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

The Euro retreated to its two-week low. Overview for 07.05.2020

The major currency pair stopped falling on Thursday afternoon but is still looking pretty weak.

EURUSD stopped weakening but is still looking rather shaky. The current quote for the instrument is 1.0800.

The statistics published in the afternoon showed that the German Industrial Production lost 9.2% m/m in March after adding 0.3% m/m in February and against the expected reading of -7.3% m/m. It’s not the worst number but, first of all, it’s a March reading and it will surely be much worse in April, and, secondly, this collapse won’t recover very soon. 

According to IFo, market expectations regarding German industrial production are the lowest since 1990 and only the pharmaceutical industry is looking a bit optimistic. All other areas have rather gloomy prospects.

Later today, the USA is scheduled to report on the Unemployment Claims over the previous week, which is expected to reach some stability. This time, the indicator may show 3M against 3.839M last week, and that’s quite good.

Also, on Thursday the USA is going to publish a preliminary report on the Nonfarm Productivity and Unit Labor Costs in the first quarter of 2020. The first indicator is expected to plunge by 5.4% q/q, while the second one may add 4.3% q/q. These reports are obviously rather mixed and it’s better to wait for the components. However, the key data on the labor market is scheduled for release on Friday and it may trigger some activity in EURUSD.

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