The Australian Dollar got misplaced. Overview for 18.06.2020

AUDUSD is trading calmly on Thursday; investors are analyzing the statistics.

The Australian Dollar is barely moving against the USD on Thursday afternoon – market players are saving strengths for the future. The current quote for the instrument is 0.6875.

The statistics published by Australia in the morning showed that the Unemployment Rate went from 6.4% in April to 7.1% in May. Market expectations implied 6.9%.

In addition to that, the Australian economy lost 277.7K jobs in May, both part-time and full-time.

The numbers are already including the seasonal factor, that’s why they are looking quite accurate.

All this cannot but influence the country’s economy. The second quarter is highly likely to be disastrous for Australia and the GDP growth rate may completely recover in at least 12-18 months.

The Aussie is very sensitive to external news. At the moment, market players are closely monitoring reports on new cases of the coronavirus outbreak, mostly in the USA and China. If the second wave of the pandemic starts, it is expected to start in these two countries. China has always been Australia’s key trade-economic partner, so what’s bad for China’s economy is bad for Australia as well.

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

The Euro is ready to concede to correction. Overview for 22.06.2020

The major currency pair is starting another June week with a correction after a significant “drawdown” last week.

EURUSD is correcting on Monday afternoon – it’s high time for a rebound since the external background is almost empty and there is nothing interesting in the economic calendar. The current quote for the instrument is 1.1200.

At the end of last week, the US Federal Reserve Chairman Jerome Powell said that the economic recovery wouldn’t be long in coming but might be very complicated. He said that the process would take much time, money, and tension. As a matter of fact, it was not a surprise for anybody but market players became rather concerned after hearing such conservative estimates from Powell, who is usually very careful in this.

Powell said that economic outlooks were quite unclear and that was scary. However, that's the way it goes when the whole world has to fight the consequences of the stress it hasn’t experienced before.

Positive news from the labor market that was released last week doesn’t make things any better. It’s quite clear that the US stimulus measures will require more expansion despite 3 trillion USD that were already “pumped” into the country’s economy. There will be enough money, if necessary – the Fed will mint it, no problem. The most important thing is that this money should really be steered into the real sector of the economy. 

This week, there will be several reports from the USA worth paying attention to. Among them is the final report on the country’s GDP for the first quarter, which is expected to show -5.0% q/q, along with the Personal Income and Spending for May. All these numbers may put the USD under significant pressure.

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

The Yen is looking strong. Overview for 24.06.2020

In the middle of the week, USDJPY is correcting upwards but the Yen is looking quite energetic.

The Japanese Yen is slightly falling against the USD on Wednesday. The current quote for the instrument is 106.59.

The statistics published by Japan in the morning were rather minor and didn’t have any influence on the market. The SPPI remained unchanged at 0.8% y/y in May. It’s quite good for the overall inflation – at least, the indicator didn’t fall.

In addition to that, the Bank of Japan revealed its forecasts on inflation and the GDP, which said that it would require some time to collect data showing the effect of stimulus measures. The Japanese regulator was absolutely right when it had an early edge in supporting the country’s economy but it’s important to define where it helped the most. 

The entire stimulus system implemented by the BoJ consists of three key pillars: asset purchase, optimization of lending schemes, and aid to the companies that faced plunging sales due to the pandemic. Taken together, they look quite aggressive but it couldn’t be any otherwise under the circumstances.

Several members of the regulator are still afraid that deflation may overwhelm Japan and the current stimulus is not enough. To avoid this, the government must provide more support to businesses and help to escape an avalanche of corporate bankruptcies.

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

EURUSD stopped falling. Overview for 26.06.2020

The major currency pair stopped falling on Friday; marker fears are fading away.

At the end of another June week, EURUSD is trying to rebound after a couple of days of falling. The current quote for the instrument is 1.1223.

The European currency was pressured by global escape from risks recently. However, this driver is rather quiet so far but not for long.

The statistics published yesterday were pretty impressive. The final report on the US GDP in the first quarter of 2020 didn’t surprise anybody by showing -5.0% q/q, the same as expected. However, the Durable Goods Orders showed +15.8% m/m in May after being -17.7% m/m in April and against the expected reading of +10.3% m/m.

The Core Durable Goods Orders added 4.0% m/m after losing 7.7% m/m over the same period of time. and again, it was better than the market anticipated.

The report on the Durable Goods Orders, such as domestic appliances, cars, planes, and other durable products, is extremely volatile. At the time when the country’s economy is calm, it may trigger a lot of reactions and emotions on the market because investors are very sensitive to any changes in consumer sentiment. Yesterday’s reading is a very good signal for the US economy but still shouldn’t be overestimated.

Later in the afternoon, market players will focus on the Personal Income and Spending reports for May. The latter indicator is expected to recover after plunging in the previous month, while the former one may be pretty tough. The more stable the statistics, the better for the USD.

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

The Yen finally gave up. Overview for 30.06.2020

USDJPY continues rising on Tuesday; demand for the Yen dropped.

On Tuesday, the Japanese Yen continues retreating against the USD. The current quote for the instrument is 107.71.

The statistics published in the morning showed that the Unemployment Rate in Japan went up from 2.6% in April to 2.9% in May against the expected reading of 2.8%. Well, sooner or later the Japanese labor market had to reflect problems in the sector and it seems like this moment has come. The current data is an excellent description of how much the Japanese economy is affected by the pandemic. It will require time to reach stability – the Bank of Japan implemented enough measures to pump the system with money and support the economy. However, it may take several months to see the results.

The Industrial Production, according to the preliminary report, lost 8.4% m/m in May after reducing by 9.8% m/m in April and against the expected reading of -5.6% m/m, which may have indicated that the worst period of crisis was over. But it’s not. 

Market players continue monitoring the number of new COVID-19 cases and the possibility of the second wave but not so actively. In this light, demand for the Yen as a “safe haven” asset is decreasing. Along with the statistics, it makes a good reason for investors to sell the Yen and this is exactly what they are doing right now.

On top of that, the Yen has significantly strengthened recently and that’s not good for the Japanese budget and exporters, that’s why a little correction wouldn’t hurt.

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

The Euro managed to avoid collapse. Overview for 02.07.2020

EURUSD was okay with falling but everything worked out.

EURUSD climbed into positive territory and is currency correcting successfully after several days of decline. The current quote for the instrument is 1.1264.

Investors’ attitude to risks went up a little bit, both due to the statistics and lack of concerns relating to the second wave of the coronavirus pandemic.

Yesterday, the USA started reporting on its labor market. Traditionally, the first data came from the ADP and showed Non-Farm Employment Change. In June, the indicator showed 2,369K after being -3,065K in May and against the expected reading of 2,850K. there is no direct correlation between the ADP and the NFP to be published today (tomorrow the USA has a day off) but the report may still provide some insight into what is happening in the sector.

The Construction Spending lost 2.1% m/m in May after decreasing by 3.5% m/m in the previous month. The indicator was expected to recover by 1.0% m/m but it didn’t happen.

The June FOMC Meeting Minutes published yesterday said that the country’s economy would require support for quite a long time and the regulator intended to keep its monetary policy unchanged. FOMC representatives believed it would be necessary to set a straight course for the key interest rate and stick to it to prevent businesses and markets from being too volatile.

As for the labor market, the Fed clearly understands that the recovery will take much time. Uncertainty in the economy is extremely high and risks – very significant. However, it wasn’t a surprise for anybody.

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

The Pound is looking up. Overview for 06.07.2020

On Monday, GBPUSD is intent on further growth but saving strengths so far.

The British Pound is barely moving against the USD on Monday. However, it’s clearly seen that the Pound has serious intentions to continue growing as soon as the circumstances take a favorable turn. The current quote for the instrument is 1.2482.

In the afternoon, the United Kingdom reported on the Construction PMI, which skyrocketed in June up to 55.3 points after being 28.9 points in the previous month. The expected reading was 46.0 points but the reality turned out to be even better.

From the fundamental point of view, the Pound is supported by intentions of the United Kingdom to open its borders for foreign tourists from more than 50 countries. Arrivals from these countries won’t have to be under quarantine restrictions for 14 days, unlike, for example, those who come from the USA.

Recent public opinion polls in the United Kingdom revealed that the Brits were sick and tired of the quarantine introduced due to the coronavirus pandemic. This might be one of the reasons to remove the restrictions.

In addition to that, the country’s economy is slowly getting back to its routine due to removal of restrictions imposed on businesses, for example in spheres where it is impossible to avoid crowds of people, such as restaurants or other food and drink venues, sports facilities, and beauty salons. Removal of such restrictions is a huge deal for the Pound.

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

The Euro took a break. Overview for 08.07.2020

The major currency pair is barely moving on Wednesday morning; the market is dead calm.

EURUSD is standing still in the middle of the week – it seems like somebody just turned “volatility” off. The current quote for the instrument is 1.1270.

Yesterday’s statistics have already been taken into account – the German Industrial Production recovered by 7.8% m/m in May against the expected reading of +11.0% m/m. Well. it’s worse than expected but the indicator is slowly eliminating its spring declines, and that’s still good.

After quarantine restrictions were removed, German consumers started spending money. It can be clearly seen in this week’s reports, including the Retail Sales. The country was betting on domestic demand and so far, this bet “pays off”. People are buying cloth and footwear, gadgets, home appliances, fuel as the started using their cars more. In May, domestic consumption lost only 5% in comparison with May 2019, which is a pretty solid reading given the current circumstances.

The difference between dynamics in the industrial production and retails sales – a divergence basically – may be some kind of signal for mid-term forecasts, which indicates that too slow recovery in the production sector may eventually damage the labor market and, as a result, backfire to consumer spending. 

There are no numbers from Europe today. As for the American statistics, one should pay attention to the Consumer Credit in May, which is expected to significantly improved if compared with April. In general, it seems like today’s trading session is completely intended for consolidations in traded currency pairs unless something unexpected happens.

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

The Euro is “at gunpoint” again. Overview for 10.07.2020

EURUSD remains under pressure at the end of the second week of July. The current quote for the instrument is 1.1271.

Yesterday, it became known that the US Supreme Court ruled the Manhattan district attorney could obtain President Donald Trump's tax records. In the past, the House couldn’t do it even with such a decision but this time it might have a different outcome. Such news creates a particular risk for Trump, which may expand in case some negative facts are revealed to the public.

Apart from that, investors paid attention to the report with the number of new cases of COVID-19 in the USA. On Wednesday, the USA reported more than 60 thousand, which is the highest number for the country over 24 hour period ever. Over the previous two weeks, 42 out of 50 states reported a skyrocketing number of new cases, and California and Texas introduced new restrictions. 

The statistics published yesterday showed some improvement in the US employment sector. The Unemployment Claims showed 1,314K, which is 99K less than the week before.

As a result, the indicator has been decreasing for 14 weeks in a row after reaching the highest reading on April 9th, and that’s good. The USD is getting more and more attention, from different areas, and significantly improving.

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

The Euro requires more support. Overview for 14.07.2020

EURUSD remains “in the black” on Tuesday but lacks reasons for keeping its positive momentum.

The major currency pair is barely moving but intends to keep momentum. The current quote for the instrument is 1.1340.

There were no significant statistics from the USA, that’s why market players are mostly focusing on news and external market conditions. There will be enough numbers this week but a bit later.

Still, today’s economic calendar offers an interesting report, the Industrial Production in the Euro Area, which is expected to increase by 14.9% m/m in May after losing 17.1% m/m in the previous month. It’s rather doubtful that the indicator may correct by so much but about +12.0% m/m will be more realistic. After the correction, there will be a recovery process, which will be long and complicated.

Investors are keeping an eye on the scheduled EU summit that is set to take place this weekend. The key things to be discussed are already known – recovery of the Euro Area economy, which was severely damaged by the COVID-19 pandemic.  This time, policymakers are believed to have a detailed discussion about creating a special fund to help European economies recover, and that might have a vital importance for re-evaluating prospects and reducing risks in the Euro.

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

The Euro is slowly growing after the ECB rate decision. Overview for 16.07.2020

Before the ECB meeting on Wednesday, EURUSD managed to break its multi-month high but later started a correction. Such dynamics are quite logical amid uncertainty in decisions of the major European regulator.

During the meeting, the European regulator kept all of its rates intact: the interest rate at the all-time low value of 0%, the deposit facility rate at -0.5%, and the marginal lending rate at 0.25%. Judging by moderate growth in EURUSD, market players are not yet ready for risks in trading.

Most likely, the ECB won’t revise its monetary policy because it is currently working to support risky European assets. However, a high level of uncertainty in the economy isn’t going anywhere. A signal to close the stimulus program may result in sovereign debt and have a negative influence on the European economy and currency.

In today’s world filled with the coronavirus pandemic, as well as the global economic slump, a decision to end the stimulus measures may be an ill-advised act.

The current critical issue is creating a recovery fund to help the economy to rise. Talks and discussions about this fund are planned for the EU summit on July 17th and 18th.

In addition to that, it should be noted that the ECB doesn’t have much room for maneuver and measures to loosen its monetary policy if compared with the US Federal Reserve, and that also may provide EURUSD with significant support.

One may reach the conclusion that the key role to define the dynamics in EURUSD in the nearest future will the American regulator and its aggressive policy because the COVID-19 pandemic did serious damage to the country’s economy and its economic outlook looks pretty vague.

In case the uncertainty and slowdown in the global economy continue, demand for risky assets will go down, while that for “safe haven” ones, such as the USD, – increase.

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

The Euro wants to keep going. Overview for 20.07.2020

On Monday, EURUSD is staying positive and wants to keep going.

The major currency pair is rising amid investors’ improved attitude to risks and not afraid of the EU summit decisions. The current quote for the instrument is 1.1443.

So far, there is no ultimate conception of what the European leaders came to during the summit. The summit was extended through Monday because policymakers didn’t come to any decisions relating to the stability funds, which should be a basis for the EU economy’s recovery.

In addition to that, there is no final decision on the EU budget, which should reveal budgetary expenditures in 2021. 

Even with all things considered, market players are staying positive and obviously expecting policymakers to reach an agreement. Everyone understands that without special tools and mechanisms the European economy recovery may linger on. 

As for the statistics, this week is promising to be rather calm. Interesting numbers from Europe will not come earlier than Thursday when the region is going to report on the Consumer Confidence, which is expected to improve up to -12 points in July after being -15 points the month before. On Friday, there will be several July PMI reports from some European countries and the entire region. All indicators are expected to improve and it’s not too surprising because consumers are slowly getting back after the quarantine to their everyday life. However, August readings may show some slowdown: the proper recovery requires a lot of time, resources, and efforts.

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