The Pound revived responding to the statistics. Overview for 13.05.2020

GBPUSD stopped falling on Wednesday morning; it is trying to reach stability after the report on the British GDP.

The British Pound is quite stable against the USD on Wednesday after falling earlier this week. The current quote for the instrument is 1.2289.

The British GDP showed -2.0% q/q in the first quarter of 2020, which is better than the expected reading of -2.6% q/q. On YoY, the indicator lost 1.6% and it’s also better than market expectations. The components of the report show that the decline was mostly contributed by the service industry (-1.9% after +0.2%) and construction (-2.1% after -0.7%).

On MoM, the GDP lost 5.8% in March after showing -0.2% the month before.

Both April and May will be very stressful months for the United Kingdom. If the quarantine restrictions are removed by June, the indicator may start improving a little bit only in July, if not later.

The Industrial Production in the country lost 4.2% m/m in March after adding 0.1% m/m in February and against the expected reading of -5.5% m/m. The Manufacturing Production and the Construction Output m/m plunged by 4.6% m/m and 5.9% m/m against the expected readings of -6.0% m/m and -7.0% m/m respectively.

Everything is pretty gloomy but logical. However, since the negative statistics turned out to be more positive than expected, then the Pound has a reason to reach stability.

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

The Euro chose to stay under pressure. Overview for 15.05.2020

On Friday morning, the major currency pair is falling a little bit; the USD remains in demand.

At the end of another trading week, EURUSD remains under pressure due to some mixed market sentiment. The current quote for the instrument is 1.0804.

The USA is releasing rather mixed statistics, which might have scared investors. However, the situation in Europe also can’t be called very optimistic: most countries remain under quarantine restrictions, which hardly impress anybody.

There will be a lot of interesting numbers today. in the afternoon, the Euro Area will publish the second estimate of the region’s GDP for the first quarter, which is highly expected to show the same reading as the first one, -3.8% q/q. if the actual reading matches the expected one, the Euro may be able to remain stable.

In the evening, the USA is scheduled to report on the April Retail Sales, which may plummet by 12.0% m/m after plunging by 8.7% m/m in the previous month. The Core Retail Sales may show -8,7% m/m after losing 4.5% the month before.

The Industrial Production in the USA may drop by 11.3% m/m in April, which is quite expected, after losing 5.4% m/m in March. The numbers are pretty bad but not surprising: they might have been predicted by business sentiments and factory orders. The Capacity Utilization Rate may go from 72.7% in March to 63.9% in April, which is also quite logical.

If all numbers turn out to be very close to market expectations, the major currency pair will likely continue the current trend – falling slowly but steadily.

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

The Euro strengthened significantly. Overview for 19.05.2020

The major currency pair is regaining positions; investors are switching towards risks.

On Tuesday, EURUSD is feeling positive and trading upwards. The current quote for the instrument is 1.0942.

The American economy is supported from all angles. Last week, the Democratic Party piloted a bill in the House of Representatives to dole out an additional three trillion dollars for supporting the country’s economy and eliminate the consequences of the Covid-19 pandemic. It happened despite stubborn opposition of the Republicans. The bill includes 1 trillion USD for improving the situation in state and local authorities, while another 1.2 trillion will be intended for individuals, unemployed, and lessees.

As the House of Representatives commented on this initiative, “Not to act now is not only irresponsible in a humanitarian way, it is irresponsible because it's only going to cost more”.

Market players are quite positive about this idea despite some doubts that the bill might not pass in the Senate and get it signed by Donald Trump. The key reason for this is that the Senate is controlled by Republicans and it will surely be a hell of a verbal fight.

At the same time, it’s pretty obvious that the country’s economy really needs additional support. According to Jerome Powell’s speech for the Senate, the American regulator intends to use all possible tools to support the system at the time of crisis.

Later today, Powell and the United States Secretary of the Treasury will hold an online conference in the Senate, during which they are planning to report on how the stimulus package of 2 trillion USD was spent.

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

The Yen is conceding. Overview for 21.05.2020

On Thursday afternoon, USDJPY is moving upwards; investors receive rather mixed signals from the market.

The Japanese Yen is conceding to the USD on Thursday. the current quote for the instrument is 107.81.

The statistics published earlier today showed that the Manufacturing PMI went from 41.9 points in April to 38.2 points in May. This decline is an excellent description of what is happening in the country’s economy: based on the rather limited activity of consumers, companies and enterprises have to reduce their activities as well in order to avoid bigger losses. That makes sense, although it sounds pretty awful.

At the same time, global market players are seen to increase their interest in risks and that’s not good for the “safe haven” Yen.

Investors’ attitude to risks is improving amid activities of American policymakers to introduce another stimulus package, as well as discussions between Germany and France to create a European Union fund for supporting the region’s economies.

The fact that policymakers from all over the world are doing their best to eliminate consequences of the coronavirus pandemic allows to believe that the global economy might recover faster and more effectively than predicted earlier. This, in its turn, increases the demand for risks.

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

The Euro found itself under pressure. Overview for 25.05.2020

On Monday morning, the major currency pair is looking neutral but bears may get active at any moment.

EURUSD is looking rather weak early in another week of May. The current quote for the instrument is 1.0890.

The key factor that supports the American currency these days is its status of a “safe haven” asset. Last week, China started its National People's Congress, where policymakers started discussing a new national security law. Investors are afraid that the idea that forbids terroristic and separatistic activities may lead to non-observance of rights and freedom of the Hong Kong population. Such a thing already happened in the history of Hong Kong and nothing good came of it.

Another thing is that the White House may interfere. In this case, market players will surely try to escape risks. The new security law is believed to have a significant influence on relations between China and the USA. And a new phase of the US-China conflict is the last thing the post-COVID world needs right now.

Today is a holiday in the United States, Memorial Day, that’s why there will be no numbers from there. New reports will be published not earlier than on Tuesday, while most of them are scheduled for Thursday (Personal Spending and Income, Wholesale Inventories, and Revised UoM Consumer Sentiment). At that time, investors’ attention may switch from China to morу “earthly” things.

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

EURUSD had to retreat. Overview for 27.05.2020

On Wednesday, the major currency pair is trading lower than yesterday; it is responding to changes in the external fundamental background.

In the middle of the week, EURUSD is correcting after having a quite successful Tuesday. The current quote for the instrument is 1.0962.

Investors are closely following external market conditions, which is a new law from China, which may complicate the observance of rights and freedom in Hong Kong. The White House has already had a chance to comment, while US President Donald Trump told about possible measures to be taken against China.

The USA adores to intervene in the affairs of other states. It allows them not only to increase their role on the global stage and stand to the reputation of the world’s biggest “trouble maker” but also to print more money and write off some debts. Last time, the Hong Kong issue didn’t end in anything good: there were mass riots and violent civil disturbances and the country’s government required a lot of time and effort to lower the political intensity. The second wave may be much worse.

The statistics published yesterday surprisingly showed that the New Home Sales indicator was 623K in April after being 619K in the previous month. The expected reading was much lower.

The Conference Board Consumer Confidence increased up to 86.6 points in May after being 85.7 points the month before. It means that the country’s population is following the government’s efforts to eliminate the consequences of the COVID-19 pandemic for the economy and may restore their activity as soon as they can.

There won’t be a lot of interesting statistics for EURUSD today, except for the Beige Book. Under such circumstances, the Euro investors will mostly respond to the news rather than the statistics.

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

The Yen is strengthening. Overview for 29.05.2020

On Friday morning, USDJPY is falling; investors are buying “safe haven” assets.

The Japanese Yen is getting stronger against the USD at the end of the week. The current quote for the instrument is 107.11.

The statistics published by Japan in the morning were rather mixed. The labor market looks quite good but still shows some signs of instability. The Unemployment Rate was 2.6% in April after being 2.5% the month before and against the expected reading of 2.7%. The Consumer Confidence recovered up to 24 points in May after being 21.6 points in the previous month. It’s better than expected, and that’s a good signal.

At the same time, the April number on the Industrial Production showed -9.1% m/m in April after being  3.7% m/m in March and against market expectations of -5.5% m/m. The Retail Sales lost 13.7% y/y after decreasing by 4.7% y/y the month before and against the expected reading of -11.2% m/m.

The Housing Starts showed 12.9% y/y, which is also worse than expected.

Of course, all these declines can be easily explained by the coronavirus pandemic and the population’s cautious attitude to spending money. Japanese have been very careful with their money recently because the country’s economy has had troubles for more than a month. And now the situation is aggravating.

Growth in demand for the Yen can now be explained only by market players’ strategy to buy “safe haven” assets because it’s quite unclear how and when global economies are going to come out of a recession.

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

The Australian Dollar is unable to continue rising. Overview for 02.06.2020

AUDUSD is stuck at its four-month highs; it’s exhausted and can’t continue rising so far.

On Tuesday morning, the Australian Dollar is not very active against the USD. The current quote for the instrument is 0.6799.

The Reserve Bank of Australia had another meeting today and decided to keep the key interest rate intact at 0.25%. Frankly speaking, no changes were expected: the rate is already at its lowest point.
In general, the current parameters of the monetary policy are exactly where the RBA wants to see them. Today’s economic situation in the country is looking better than predicted but still a bit worse than the most optimistic scenario.

There are reasons to believe that the low interest rate and the current stimulus package will remain in force until the Australian economy starts emerging from an economic and financial crisis caused by the coronavirus pandemic and quarantine restrictions. In this case, September may seem as some kind of a passing point: in this month, most global economies are expected to start reviving and Australia will be one of them.

The Reserve Bank of Australia said nothing good or bad about the Aussie. Investors are confused but the bullish scenario for AUDUSD is looking quite promising.

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

The Australian Dollar was dragged into correction. Overview for 04.06.2020

After updating the highs of January 3rd, AUDUSD is correcting.

The Australian Dollar is correcting against the USD on Thursday afternoon. The current quote for the instrument is 0.6910.

The statistics published in the morning showed that the Retail Sales in Australia lost 17.7% m/m in May after decreasing by 17.9% m/m the month before and against the same expected reading. It’s quite logical: as long as the country is fighting the coronavirus pandemic along with the others, retail sales in the non-food sector (for example, clothing, footwear, and personal accessory retailing) will go down.

But not everything is that simple. The food retailing also lost about 17%, while cafes, restaurants and takeaway food services showed -35.4%. It means that the consumption in the country is very much limited, both due to the isolation and business downtime.

The components of the report show that clothing, footwear, and personal accessory retailing lost 53.6%, household goods retailing decreased by 0.1%, other retailing – by 14.4%.

Earlier, Australia reported on the GDP in the first quarter of 2020. The country’s economy lost 0.3% q/q, the same as expected, after adding 0.5% q/q in the previous quarter. On YoY, the indicator added 1.4%. The GDP Capital Expenditure lost 0.8% q/q.     

The Aussie is correcting and this correction would have started no matter what the statistics show – the country’s national currency is too expensive and may add problems for the RBA and the government in their measures to recover the economy.

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

EURUSD took a break. Overview for 08.06.2020

On Monday, the major currency pair is slightly correcting after an avalanche of news and reactions.

After a very volatile week, EURUSD is barely moving this Monday. The current quote for the instrument is 1.1283.

The US Labor market statistics supported the USD and acted as an obstacle that prevented the major currency pair from further growth. So, for example, the Unemployment Rate went from 14.7% in April to 13.3% in May. The forecast was much worse – 19.8%.

The Non-Farm Employment Change showed 2.5M in May although it was expected to be -8M. At the same time, the April reading was revised from -20.537M to -20.687M but market players didn’t pay any attention to it because they were completely focused on the positive actual reading. 

The components of the report showed that large employment increases occurred in leisure and hospitality, construction, education and health services, and retail trade.

The Average Hourly Earnings lost 1.0% m/m in May, which is worse than the expected reading of +1.0% m/m. The Average Weekly Hours increased a little bit and was 34.7.

No important statistics from the USA are scheduled for today but in the evening one should pay attention to the ECB Governor speech.

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

The Euro is in the “black” again. Overview for 10.06.2020

EURUSD continues trading upwards and forming the rising impulse in anticipation of the US Federal Reserve meeting.

The major currency keeps the positive momentum and remains in the “black” on Wednesday afternoon. The current quote for the instrument is 1.1350.

The two-day meeting of the US Federal Reserve is scheduled to be over today. The key interest rate is highly likely to remain unchanged at 0-0.25%. The meeting might as well be rather unremarkable and mean almost nothing – the American regulator took a lot of stimulus measures in good time. now it’s time to wait and see the effect.

It will be very interesting to hear what the Fed Chairman Jerome Powell has to say. Most likely, he will tell the media and investors that the American labor market has reached stability (the statistics confirm it) and announce that the country’s economy is not as stressful as it was not long ago.

The statistics published yesterday showed that the NFIB Small Business Index in the USA was 94.4 points in May after showing 90.9 points in April. It’s an extremely good signal – the economy will recover much faster based on small business.

Apart from the FRS, later in the evening, investors may pay attention to the data on inflation in May. The CPI is expected to show 0.0% m/m in May after being -0.8% m/m the month before. The Core CPI may also remain at zero. No declines – it’s another positive factor.

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

EURUSD stopped falling. Overview for 12.06.2020

EURUSD is not plunging on Friday morning; investors are waiting for news.

The major currency pair slowed down its decline at the end of the week; right now, it is consolidating. The current quote for the instrument is 1.1295.

The statistics published by the USA yesterday showed that the Producer Price Index added 0.4% m/m in May after losing 1.3% m/m in April. The actual reading turned out to be better than expected (+0.1% m/m). The Core PPI, in its turn, lost 0.1% m/m after reducing by 0.3% the month before. 

The weekly report on the Unemployment Claims showed 1.542M, which is better than expected (1.55M) and then previous reading (1.877M). The labor market is slowly recovering, which means that the acute phase of the crisis is really behind.

After a long pause, US President Donald Trump ranted and raged against the Federal Reserve System and its Chairman Jerome Powell. Trump twitted that the Fed made too many mistakes but the President saw the numbers and believed that the third quarter would be good, while the fourth one – great.

It looks like it was Trump’s optimism, which is usually considered inappropriate, that prevented the USD from being sold. Investors were quite nervous after rumors about the second wave of the coronavirus in July. However, Trump assured everybody that the vaccine against the COVID-19 would be ready soon, as well as the therapy for treating the disease.

Powell’s very cautious and it’s quite clear why: the labor market suffered awful stress and the damage to the country’s economy is rather murky so far. This is the reason why the regulator has to be very careful with its comments.

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