Strength is in the Euro. Overview for 23.07.2020

After updating the high of October 16th, 2018 yesterday, the major currency pair intends to keep its positive momentum.

EURUSD is as fresh as paint and might as well continue rising. The current quote for the instrument is 1.1585.

The high of October 16th, 2018, 1.1602, was updated last night. The key catalyst that helps the Euro to get so much stronger remains the same – a well-coordinated work of the European Union to agree on the stability funds to help the Area’s economy to recover. The sum of €750B is so huge, that all arguments against collapse. It’s the fundamental factor, supported by which the Euro may continue strengthening for a long time. 

In this light, market players prefer to treat escalation of the US-Chinese conflict as though it doesn’t exist but they perfectly understand that it’s temporary.

Last night, the Ministry of Foreign Affairs of the People's Republic of China announced that on July 21st, the USA issued an order to close the Chinese consular post in Houston. How can it be perceived? Like another step towards deterioration in ГЫ-Chinese relations, nothing else. The conflict escalates, and it’s not only about the spread of the COVID-19.

In the afternoon, investors should pay attention to the Consumer Confidence in the Euro Area, which may improve up to -12 points in July after being -15 points the month before. In the evening, the USA is going to report on the CB Leading Index in June but it’s unlikely to be interesting.

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

The Euro is ready to consolidate. Overview for 28.07.2020

After updating another two-year high, the major currency pair started consolidating.

EURUSD stopped skyrocketing and is trying to reach stability not far from its highs. The current quote for the instrument is 1.1726.

The USD has been once again failed by the number of new coronavirus cases in the USA. This growth is a rather alarming signal for market players. In addition to that, they are waiting for the US Federal Reserve meeting this week in order to understand how the regulator estimates the current stimulus measures or the country’s economy may require more.

The regulator is expected to keep its monetary policy parameters intact, for example, the interest rate at 0.00-0.25%, and comment on the inflation issue.

The statistics published yesterday showed that the Durable Goods Orders in the USA added 7.3% m/m in June after expanding by 15.7% m/m in May and against the expected reading of +7.0% m/m. The indicator itself is extremely volatile but any improvement should be considered as a positive factor.

The components of the report showed that the Core Durable Goods Orders added 3.3% m/m in June after being +3.6% m/m in the previous month. Also, Orders for Non-Defense Capital Goods excluding aircraft jumped by 3.3% m/m after a 1.6% m/m gain in May.

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

EURUSD is barely moving. Overview for 30.07.2020

The major currency pair is slightly correcting on Thursday morning without any particular direction.

EURUSD got everything it needed and started consolidating. The current quote for the instrument is 1.1754.

Yesterday, the US Federal Reserve finished its meeting. The interest rate remained unchanged at zero and the regulator reminded that it was ready to implement all available tools and mechanisms to continue supporting the country’s economy in its recovery.

According to Fed Chairman Jerome Powell, some of the consumer spending indicators decreased since the end of June and that’s not a good signal. Powell said that the unemployment was clearly rising among particular groups of the working-age population, such as women, Afro-Americans, Latin Americans, and employees in a low-income bracket

At the moment, according to the Fed’s estimations, investments in fixed capitals of companies and enterprises didn’t show significant improvements.

Powell said that the future monetary policy would depend on activities on all levels of the country’s government.

Investors weren’t surprised or happy with the results of the meeting because they are absolutely neutral. Over the last several months, market players got used to volatility, constant changes in directions, and verbal interventions – none of them happened this time, that’s why financial markets are consolidating, mostly from sheer boredom.

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

The Euro is taking a break. Overview for 03.08.2020

After skyrocketing in July, EURUSD is consolidating.

The major currency pair is looking stable on Monday amid neutral external background. The current quote for the instrument is 1.1730.

The first August week will bring a lot of important news and statistics but it will be a bit later. So far, EURUSD is consolidating.

The statistics published in the afternoon showed that the final report of the Eurozone Manufacturing PMI increased up to 51.8 points after the preliminary estimate of 51.1 points, although it wasn’t expected to be revised. The same indicator but for Germany went from 50 points to 51 points. It’s good news for the Euro.

Later in the evening, the USA will also report on the Manufacturing PMI, both from Markit and ISM. In both cases, the indicator is expected to improve, which is good for the USD. In addition to that, there will be reports of the Construction Spending in June and ISM Manufacturing Prices in July.

However, investors’ attention is mostly focused on the increasing number of new coronavirus cases. According to the World Health Organization, the total number over the entire pandemic period exceeded 18 million people. Another thing that worries market players is pessimistic comments from the White House about plans to help the country’s economy and its immediate effect. This factor prevents the “greenback” from recovering.

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

The Euro is accompanied by small purchases. Overview for 05.08.2020

On Wednesday morning, EURUSD is still rising; investors are interested in risks.

The major currency pair remains strong in the middle of the week. The current quote for the instrument is 1.1810.

There were few numbers worth paying attention to yesterday. For example, the Euro Area reported on the PPI, which added 0.7% m/m in July after losing 0.6% m/m in the previous month.

The USA reported on the Factory Orders in June, which showed +6.2% after being +7.7% m/m the month before and against the expected reading of +5.1% m/m. The Factory Orders report may be a leading indicator to the Retail Sales and such an improvement may be pretty good for the American economy.

Later in the afternoon, the USA will start reporting on its labor market in July. As a rule, the first report is the ADP Non-Farm Employment Change, which may show 1.2M after being 2.369M in June. Any increase is a good sign for the “greenback” and the bigger the reading – the better for the USD.

All key numbers on the employment will be published on Friday, as usual.

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

The Yen stopped rising. Overview for 07.08.2020

At the end of the first August week, USDJPY slowed down its growth; at the moment, it is consolidating.

The Japanese Yen reached stability against the USD on Friday afternoon. The current quote for the instrument is 105.62.

Market players are still very careful when it comes to risks and continue buying “safe haven” assets. Stock markets are currently moving quite high and require correction but lack reasons for that. The coronavirus pandemic remains very alarming, although people got used to it.

In the morning, Japan published several interesting reports. For example, Household Spending showed -1.2% y/y in June after being -16.2% y/y in the previous month. The indicator was expected to improve and show -7.8% y/y but the reality turned out to be much better. Of course, Japanese consumers “recovered from coma” after the pandemic but they are still very cautious in their spending because no one knows what may happen to the country’s economy in the future.

The Average Cash Earnings showed -1.7% y/y in June after being -2.3% y/y in May and against the expected reading of -3.0% y/y.

The Leading Indicators improved from 78.4% in May to 85.0% in June. It’s another good signal.

In general, the economic environment in Japan is slowly getting better but it’s too early to talk about proper recovery.

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

The Australian Dollar is in the “black” again. Overview for 11.08.2020

Despite some weak statistics, AUDUSD found a reason for growth for the first time in several days.

The Australian Dollar is rising against the USD on Tuesday morning. The current quote for the instrument is 0.7180.

The key reasons why the Aussie is getting stringer are the USD behavior and market players’ attitude to risks. For Australia, the news is not so good because of the US-Chinese conflict. Earlier, China introduced sanctions against some of the American politicians. Today, US President Donald Trump said that there wouldn’t be any countermeasures because the USA had already done it.

China is the most significant trade and economic partner of Australia, that’s why it’s very important for the Aussie that the Chinese economy had as few problems as possible. 

The morning statistics from Australia showed that the NAB Business Confidence in the country dropped to -14 points in July after being 1 point in the previous month. Any reading above 0 indicates the improvement of conditions and vice versa.

At the same time, the overall situation in the Australian economy seems rather neutral. The labor market is trying to adjust to new market reality and it’s clear that it is quite flexible for succeeding in it sooner or later. It’s very important for the national currency to avoid any abrupt slumps – everything else can be dealt with.

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

The Australian Dollar managed to get a little bit stronger. Overview for 13.08.2020

AUDUSD is in a little “black” on Thursday but mostly due to the weak USD.

The Australian Dollar is rising a bit against the USD on Thursday. the current quote for the instrument is 0.7167.

This improvement is mostly caused by the weakness of the “greenback” and market sentiments than the statistics published by Australia. However, there some numbers worth paying attention to.

The Unemployment Rate in Australia was 7.5% in July after being 7.4% in the previous month and against the expected reading of 7.8%. So, it’s better than expected but still the highest reading since 1998. That’s bad news.

The Employment Change showed 114.7K in July after being 228.4K in June (revised from 210.8K) and against market expectations of 30K.

Yes, the gap in jobs in the Australian economy hasn’t been eliminated yet but the indicator is improving and that’s very positive for the Aussie. 

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

The Yen is getting more expensive. Overview for 17.08.2020

USDJPY is falling on Monday morning; investors need “safe haven” assets.

The Yen is still rising against the USD and not responding to the weak statistics from Japan. The current quote for the instrument is 106.50.

The data published in the morning showed that the Japanese GDP lost 7.8% q/q in the second quarter of 2020 and that’s more than expected, -7.5% q/q. The country’s economy has been falling for the third consecutive quarter. For comparison, in the first quarter, the decline was -0.6% q/q.

On YoY, the GDP plummeted by 27.8%. considering that the reading was seasonally adjusted, this is way too much.

Japan continues supporting and stimulating its economy and has been keeping its interest rates negative for a long time. Amid global stimulus measures, the country is increasing its national debt but it’s not important right now as there are other crucial things.

It is not beyond the reach of reason to suggest that the third quarter of 2020 will be quite tough as well. Not as dramatic as the second one but also very painful and minor.

The Yen hardly ever responds to the statistics and prefers to move based on market demand.

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

The Australian Dollar is “gaining weight”. Overview for 18.08.2020

AUDUSD is actively strengthening; market players have been buying the pair for the second day in a row.

The Australian Dollar is feeling fine against the USD. The current quote for the instrument is 0.7237.

Everybody understands that the key reason for that is the weakness of the USD.

Earlier today, the Reserve Bank of Australia published its August Monetary Policy Meeting Minutes. Not to say that investors learned something new but the document itself was pretty interesting.

For example, members of the RBA are sure that the accommodation approach to the fiscal policy should be in effect as long as it has to. At the same time, recovery of a greater part of Australia and many sectors of its economy from the coronavirus pandemic is well underway. However, this process will take more time than expected because the recent outbreak in Victoria put additional pressure on the economy

The RBA believes it will be a quite logical and right decision for the country’s government to expand stimulus package to help businesses and the population. This is particularly topical given the uncertainty with household spending also puts pressure on the economic outlook and the country’s fight against the coronavirus. However, the amount of the stimulus package will remain intact. The same can be told about the RBA’s monetary policy, which doesn’t require any revisions yet because it works as expected.

The fact that the RBA’s targets and priorities remain unchanged is a good signal for the Aussie.

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

The Euro is slowly recovering. Overview for 21.08.2020

EURUSD continues growing slowly after a recent global correction.

The Euro is still recovering against the USD after a recent plunge. The current quote for the instrument is 1.1872.

The effect of the FOMC Meeting Minutes published a couple of days ago is still working, although investors believe that an additional stimulus package is ahead.

The statistics published yesterday showed that the Unemployment Claims in the USA was 1.106M last week against the expected reading of 930K. It was quite unexpected because the week before the indicator was 971K, the first time below 1M since March 2020, which made market players pretty happy. However, it appears that it was just a local decline. 

Expectations about the labor market stabilization prevent the USD from falling more significantly. Investors believe that the money printed by the Fed and pumped into the economy is about to produce an effect soon. Still, signals from the economy are rather mixed so far.

Later today, the Euro Area is scheduled to publish preliminary reports on the Manufacturing and Services PMIs in August. The USA is also going to report on the Manufacturing and Services PMIs, as well as the Existing Home Sales, which may provide support to the “greenback”.

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

EURUSD is stable. Overview for 25.08.2020

EURUSD is up in the air on Tuesday; market players are waiting for news.

The major currency pair is stable on Tuesday morning and has barely changed its position if compared with yesterday’s trading session. The current quote for the instrument is 1.1810.

Due to the lack of important statistics decided to take a back seat and continue analyzing the signals they received earlier. 

The topic that is definitely worth paying attention to is the US-Chinese conflict: the problem has calmed down a little bit but everyone is sure it will revive soon. For example, Anthony Rowley, a veteran journalist specializing in Asian economic and financial affairs, believes that several officials in China are “all-ready” for a global financial war. Eventually, it might lead to the complete elimination of the USA from the chain of international payment systems in the region or to the USA’s capturing some Chinese assets. Both scenarios are equally probable and that’s scary.

Not long ago, Reuters wrote that China should be always ready for a worst-case scenario of developments in their relations with Washington. It might well be that after failing to achieve good results in trade wars, the White House may opt for a financial conflict.

One way or another, Chinese giants, such as Huawei, TikTok, and others, continue working under huge American pressure, and this story won’t end so easily. It means that demand for the USD as a “safe haven” asset may go up in the mid-term.

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