The Euro rose on Friday morning. Overview for 28.08.2020

EURUSD is rising at the end of the trading week.

In late August, the major currency pair managed to overcome volatility and start rising. The current quote for the instrument is 1.1853.

So, yesterday the long-expected symposium in Jackson Hole, the USA, started with a speech delivered by the US Federal Reserve Chairman Jerome Powell, who was able to attract investors’ attention by some rather controversial comments.  For example, he told about the regulator’s new targeting strategy, which is focused on flexible average inflation rates. Actually, it may mean anything – from the Fed’s expectations that inflation may boost up to 0.5% every month and up to 3.4% by the end of 2020 to a possibility that it may plummet to zero. The Fed’s previous target has been 2% for a long time.

At the same time, the regulator said that it didn’t have any targets for the labor market and the unemployment rate. It is quite unusual and may indicate real problems in the employment sector: the unemployment rate reduced a little bit after the coronavirus stress but it will surely not reach pre-crisis levels unless businesses and enterprises revive and create new jobs.

Probably, from now on, the Fed’s estimation of the labor market will be based on, among other things, the real data on inflation. 

This new strategy made a lot of market players puzzled. Hopefully, the following comments the regulator and Powell himself will provide more detailed explanations but right now it looks like the Fed is really getting ready for the worst.

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

Yen In the Black Again. Overview for 01.09.2020

On Tuesday, the Japanese yen started growing in pair with the USD. The current quotation is 105.63.

The statistics published in the morning showed a slight growth of the unemployment rate in Japan. From 2.8%, it rose to 2.9%. Still, the digits are lower than the forecast 3%. The situation in the Japanese labor market cannot be called critical – companies and businesses put maximum effort in presuming workplaces. Nonetheless, they could not totally avoid the influence of the pandemics.

The final digits of the PMI in the production sector in August grew to 47.2 points – this is quite a good result, especially that it had been forecast that the result will be the same as before (46.6).

The yen is currently enjoying demand as a safe-haven asset and logically reacts to the noticeable decline of the dollar in the world financial market. The weakness of the USD stimulates the yen to grow, which is, generally speaking, not the best news for the Japanese economy.

This week, there will be no more important statistics in Japan, and the market will gradually turn back to European and US reports.

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

The euro deepening correction. Overview for 03.09.2020

On Thursday, EURUSD remains under correctional pressure. The current quotation is 1.1820.

Yesterday’s statistics demonstrates that the ADP Non-Farm Employment Change in August grew by 428 thousand workplaces after the previous growth by 212 thousand. However, forecasts had suggested growth by 1.250 million workplaces. Normally, this report precedes a whole block of US statistics on the labor market; however, there is no direct correlation between the ADP and NFP parameters. Nonetheless, the digits give a general impression of the situation in the market.

The manufacturing orders volume in July remained the same as in June - 6.4% (calculated per month).

In the Beige Book report, it is said that this summer, the US economy demonstrated obvious recuperation but the systemic problems remain in place.

Today, the macroeconomic calendar will be as full of data as yesterday. The EU will publish the retail sales data and the final PMI in servicing digits for August. The US will issue weekly initial unemployment claims data, labor productivity, and payroll costs in the second quarter of this year. Moreover, the PMI in services will be released in the USA – both official and by Markit. This is going to be interesting.

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

Euro remains depressed. Overview for 07.09.2020

EURUSD is starting the new week by a slight decline, The current quotation is 1.1828.

Today is Labor Day in the USA, which is a day-off; the statistics on the macroeconomic calendar is scarce; investors are enjoying a chance to have a rest from volatility.

The data on the labor market issued in the US on Friday turned out quite interesting. For example, the unemployment rate in August fell to 8.4% from 10.2% the month before while the forecast was 9.8%. The NFP grew by 1.371 million, almost coinciding with the expectations, after the growth by 1.734 million in July.

Average hourly wage in August grew by 0.4% (calculated per month), which is a perfect result. No change had been forecast, while the previous result was just 0.1% (per month) growth. This is a clear signal of the revival of business and the employment sector on the whole: if companies are ready to compete over labor force again, this means they have the resources for it. This is just extremely good.

The main risk is the expectation that the growth of the number of workplaces in the US economy will start slowing down because the whole capacity of the support program has been used up. This, in its turn, is a potential threat to the restoration of the US economy on the whole. It is yet unclear whether politicians will manage to agree over the new pack of financial support – the economy will need some 1 trillion of USD more, and it would be good to wait until this money comes.

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

Euro Retreating. Overview for 09.09.2020

EURUSD is retreating alongside general fleeting from risks. The current quotation is 1.1765.

Capital markets are again turning towards the coronavirus epidemics though they seemed to have got used to it. However, the number of newly diseased worries investors, and they have to account for the risks.

Th European statistics published yesterday turned out to be not very exciting. Another GDP calculation for the II quarter of 2020 reflected a 11.8% q/q decline against the expected -12.1% q/q. As for the y/y decline during the same period, it amounts to 14.7%.

Sure, compared to the preliminary assessments, the revised data turned out to be better. However, the slump still looks the deepest of all times as consumer spending dropped so noticeably.

Just recall that in the Ist quarter, the EU economy dropped by 3.7% q/q (-3.2% y/y).

The employment data of the II quarter revealed a decline by 2.9%, which was a bit worse than expected. In the Ist quarter, the employment rate fell by 0.3%. The current situation has become the worst since 1995 when such data started being collected.

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

The Euro is trying to grow. Overview for 21.09.2020

Early in another September week, EURUSD is back to growing.

On Monday, the major currency pair is in the “black” after pretty volatile trading sessions last Thursday and Friday. The current quote for the instrument is 1.1862.

Last week, market players were quite nervous as they had to focus on the news that came from global Central Banks. On Friday, the USA reported on the UoM Consumer Sentiment, which showed 78.9 points in September after being 74.1 points the month before and against the expected reading of 75.0 points.

A little bit earlier, the USA published the Unemployment Claims, which showed 860K after being 893K the week before. The labor market is slowly improving although the expected reading was better.

This week, there won’t be many numbers from the USA but the ones that are to be published will be connected with real estate.  However, investors are most likely to focus on several speeches to be delivered by the US Federal Reserve Chairman Jerome Powell. Powell is expected to talk about the current economic situation in the country and future fiscal measures.

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

The Australian Dollar is in thrall to bears. Overview for 23.09.2020

AUDUSD is quickly retreating and getting close to its 45-day lows.

The Australian Dollar continues quickly retreating against the USD on Wednesday. The current quote for the instrument is 0.7124.

In the morning, Australia published several interesting macroeconomic reports. For example, the preliminary data on the Manufacturing PMI showed 55.5 points in September after being 53.6 points the month before. The Services PMI increased up to 50.0 points after being 49.0 points over the same period of time. Any improvements in these indices are always a good sign.

The Reserve Bank of Australia decided to keep the key interest rate unchanged at 0.25% during its September meeting, just as expected. Stability in the neighboring countries should have been positively appreciated by Australian investors.

However, a rather confident and positive data couldn’t prevent investors from panic and reduce their demand for “safe haven” assets. Amid quickly increasing numbers of the coronavirus cases around the world, more and more market players are turning to the safe “greenback”, thus making other traded currencies “SPAM” fast.

Compared to how other countries deal with the pandemic, Australia is looking quite well thanks to quick response and total blocking of problem areas, for example in Victoria. However, risks will remain risks. 

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

The USD is updating its two-month highs. Overview for 25.09.2020

EURUSD remains weak and may fall even lower.

The major currency is falling on Friday and may update its two-month lows once again. The current quote for the instrument is 1.1670.

As the world is getting more and more concerned about the second wave of the pandemic, the demand of global investors for “safe haven” assets is increasing and helping the USD to get stronger. After all, there aren’t too many assets of a similar nature on the market and the USD is one of the most important ones. In this light, the “greenback” might as well continue strengthening, particularly as the external background is getting worse.

However, the US statistics that are being published are not attracting market players' attention. Yesterday’s data on the Unemployment Claims showed 870K after being 866K last week and against the expected reading of 845K.

Can this indicate a significant deterioration in the US labor market? Hardly, because the actual reading is not very different from the previous one. On the other hand, yesterday’s data is looking pretty good if compared with spring or summer.

At the same time, one should admit that there isn’t much potential for improvement in US employment. Businesses and the real sector already require new financial injections but the country’s government hasn’t arrived at a consensus about them yet.

Today, one should pay attention to the Durable Goods Orders from the USA, which is expected to add 1.1% m/m in August after expanding by 11.4% m/m in July. The indicator is extremely volatile, that’s why one shouldn’t to any significant deviations. However, it will be very interesting to view the components – the details might be really demonstrative.

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

The Pound believed in Brexit. Overview for 29.09.2020

GBPUSD is reaching stability on Tuesday after rising the day before.

The British Pound significantly improved earlier this week amidst optimism relating to the Brexit deal. The current quote for the instrument is 1.2856.

There was information on the market yesterday that the United Kingdom achieved meaningful progress in talks with the European Union in their Brexit trade agreement and may conclude it this October. It would really be great and surely helped to avoid chaos when the current transition period was over.

The final decision of the trade agreement between parties has to be concluded by the end of December. However, October was marked as a preliminary date from the very beginning because everybody understood there must be some cushion of time knowing how much the Brits like stalling for time in order to bargain for better conditions for themselves.

This week, the parties will discuss aspects of fishing.

Market players highly appreciated the information about talks and progress. It became really important after the media reported last week that Boris Johnson and his government were lobbying for a bill, which would allow the United Kingdom to unilaterally abandon the performance of some articles of the agreement in winter. The problem here is the Northern Ireland border and that’s much more complicated than the fishing industry.

It would be great for the Pound if the talks were a bit faster: there are too many new cases of the coronavirus, that’s why the country’s government is considering a tougher stance on social restrictions in order to fight the second wave of the COVID-19 pandemic.

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

The Euro remains optimistic. Overview for 01.10.2020

On Thursday, EURUSD is looking upwards after a pretty volatile trading session the day before.

After some significant fluctuations earlier, the major currency pair is back to growing on Thursday afternoon. The current quote for the instrument is 1.1750.

The statistics published yesterday showed that the ADP Non-Farm Employment Change was 749K in September after being 481K (revised) the month before and against the expected reading of 650K.

The labor market in the USA is still recovering after an extremely hard spring when employers had to make a lot of their staff work remotely, place them on unpaid leave, or fire some of them due to the coronavirus crisis. Nowadays, many companies are returning to a more or less operational comfort and may in some way assess industrial activity and consumer demand. In this light, some of the employees fired earlier are getting back to work and this can be clearly seen in employment reports.

At the same, it’s quite obvious that this positive impulse is rather limited in time and degree of impact. Another stimulus package is required from the government and that’s a huge problem.

The final report on the US GDP in the second quarter of 2020 showed -31.4% q/q against the previous estimate of -31.7% q/q, which was not expected to be revised, by the way, that’s why a slight improvement may be quite positive.

Today, market players’ attention will be focused on such reports as the Unemployment Claims, as well as the Personal Spending and Personal Income. The latter report might show some decline and that would be a stress for the economy.

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

[center][size=5]The Euro continues reaching stability. Overview for 05.10.2020[/size][/center]

Early in another autumn week, EURUSD is reaching stability amid declining external risks.

The major currency pair is looking good on the first October Monday. The current quote for the instrument is 1.1735.

External risks are reducing and not as scary as they were earlier. The fact that US President Donald Trump and his family have the coronavirus scared market players pretty much and made them switch to “safe haven” assets. However, now it’s clear that the illness is following without any complications and posing no hazard to the president’s life – it’s not critical for Trump’s policy and election campaign. 

The statistics published last Friday were rather mixed but still were good enough to decrease risks.

The Unemployment Rate in the USA dropped to 7.9% in September after being 8.4% in August and against the expected reading of 8.2%. The indicator may yet continue to reduce but not too much. The Average Hourly Earnings expanded only by 0.1% m/m after adding 0.3% m/m the month before and against market expectations of 0.5% m/m.  The Non-Farm Payroll showed 661K after being 1.489M in August and against the expected number of 900K. However, it’s quite clear that the sector can’t skyrocket on a regular basis – here is either quantity or quality.

The statistics say that the US economy might as well handle the situation for some more time without an additional stimulus package but it doesn’t mean that the package won’t be needed at all. Additional money and economic support would do a great job for the labor market and, as result, consumer activism.

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

The Yen is in standby mode. Overview for 07.10.2020

On Wednesday, USDJPY is slightly rising; market players are monitoring the news but not switching to “safe haven” assets yet.

The Japanese Yen is ready to offer itself to investors as a “safe haven” asset but the demand is rather moderate so far. The current quote for the instrument is 105.72.

The statistics published in the morning showed that the Leading Indicators in Japan went up from 86.7 points in July to 88.8 points in August. It’s not bad but it could have been better.

It became known yesterday that Japan was planning a series of stress tests for the country’s banking system to see how COVID-19 influenced financial processes. At least 5 strategic and core banks will undergo these tests, and researchers will eventually assess banking revenues very carefully.

Earlier, each of the Japanese banks performed such tests on their own but last December the BoJ along with the FSA decided to test five major banks simultaneously. It’s necessary for putting in the perspective of liquidity operations diversification. This time, the testing scheme will be pretty much the same and the BoJ will continue using international experience.

It’s very important to understand how stable the country’s largest banks are amid the global pandemic of the coronavirus.

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