The Yen is strengthening again. Overview for 12.10.2020

USDJPY is falling significantly; investors are in need of “safe haven” assets again.

The Japanese Yen is strengthening against the USD on Monday due to the increased demand for “safe haven” assets among investors. The current quote for the instrument is 105.47.

The statistics published in the morning showed that the Core Machinery Orders added 0.2% m/m in August after expanding by 6.3% m/m in the previous month and against the expected reading of -1/0% m/m.

The PPI in Japan went down by 0.8% y/y in September after losing -.6% y/y the month before and against the expected reading of -0/5% y/y.

The Yen is becoming more and more popular due to the increased demand for “safe haven” asset among market players: the coronavirus continues spreading around the globe very quickly, the presidential race in the USA is not passing off without a hitch, while the global economy is recovering after the first wave of the pandemic less actively than it was expected to.

Some of the latest news worth paying attention to is that the Bank of Japan is doing the work for the long run. It became known recently that the Japanese regulator was going to test its own digital currency the following year. Probably, it may happen not earlier than April but the existence of such plans itself is very interesting and intriguing. However, it’s a rather neutral piece of new for the fiat Yen because a lot of time will pass before digital assets are able to become part of people’s everyday life.

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

EURUSD retreated significantly. Overview for 14.10.2020

On Wednesday morning, the major currency pair got under pressure amid the US statistics and election race.

EURUSD plunged last night and remains weak on Wednesday morning. The current quote for the instrument is 1.1740.

The data published by the USA yesterday showed that the CPI was 0.2% m/m in September, the same as expected. American inflation has been rising for the fourth consecutive months. Yes, the inflation growth rate has slowed down if compared with pre-crisis numbers but the US economy is currently recovering after serious stress caused by the coronavirus pandemic and any improvements in inflation parameters may complicate this process. 

The American currency could have grown much more but market players continue watching the election race in the USA. The political stance of the opponent of the sitting president Donald Trump, Joseph Biden, remains pretty strong and the army of his fans is increasing day by day. Behind the market scenes, they say that Biden’s election victory may boost the economic recovery procedure and set the stage for a rally in both stock and currency markets due to the mending of diplomatic fences with China.

Later today, one should pay attention to the Industrial Production in the Euro Area, which may add 0.8% m/m in August after skyrocketing by 4.1% m/m in July. The stronger the reading, the better for the Euro.

In the evening, the USA is going to report on the PPI and the Core PPI for September. Also, several members of the FOMS are scheduled to speak.

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

The Euro stopped falling. Overview for 16.10.2020

At the end of another October week, EURUSD stopped falling but it looks more like a pause than a reversal.

The major currency pair stopped falling on Friday. The current quote for the instrument is 1.1706.

Market players got once again interested in “safe haven” assets and they have several reasons for that. First of all, investors are very nervous in anticipation of corporate reports because there might be more problems in banks and manufacturers – and these concerns have grounds. Secondly, everyday countries introduce more and more restrictions because of the second wave of COVID-19, which may hurt businesses way too much. If consumers stay home, global economies will suffer a lot. Taken together, these factors lead to the increased demand for the USD as a “safe haven” asset.

The statistics published yesterday showed that the US labor market has been experiencing difficulties for the second consecutive week. The Unemployment Claims last week was 898K after being 845K the week before and against the expected reading of 810K.

Conceivably, the service industry activity is going down – it would happen anyway under normal circumstances due to the seasonal factor but this year this factor is influenced by the coronavirus pandemic.

Later today, the USA is scheduled to report on the Industrial Production, which is expected to add 0.6% m/m in September after expanding by 0.4% m/m the month before. The Capacity Utilization Rate may also improve – it is expected to show 72.1% in September after being 71.4% in the previous month. The stronger 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 Pound is holding out hope for political consensus. Overview for 20.10.2020

GBPUSD rose pretty much yesterday but lost its momentum by Tuesday morning.

On Tuesday morning, the British Pound is saving strengths against the USD. The current quote for the instrument is 1.2940.

Yesterday’s trading session was quite successful for the Pound. Market players are keeping a close eye on talks between the United Kingdom and the European Union on different nuances of their trade relations and holding a hope that policymakers can save their arrangements after all. Yesterday, the UK said that there was still time for negotiating and the door was open if the EU was ready to make some concessions. However, if the alliance doesn’t move an inch toward, Brexit will still happen in 10 days, without any agreements.

Here one can easily see the policy lobbied by the cabinet of the country’s Prime Minister Boris Johnson. The United Kingdom is currently putting great pressure upon the European Union although the country itself was the party that dragged out the negotiations and got after every small detail. It has to be said that the agreement is necessary for both parties and Johnson, with his all-British confidence of being right, is marching ahead. It does not necessarily mean that his government will be satisfied with agreement-less Brexit because such an outcome may complicate things for the British business in the first place. However, in case there are no other options, Johnson will choose this one.

The earliest important statistics for the Pound will be published on Wednesday, that’s why today the market is going to move in response to the data received earlier.

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

The Euro is looking strong. Overview for 22.10.2020

On Thursday afternoon, EURUSD remains strong; expectations of a new stimulus package in the USA put pressure on the USD.

The major currency pair remains elated not far from its monthly highs. The current quote for the instrument is 1.1860.

At the moment, there are no interesting statistics that may influence EURUSD movements, that’s why investors are focusing their attention on what is happening in the US Congress, which, a week and a half to go before the elections, is very close to arriving at a consensus with the White House in regards to a new stimulus package for the American economy. Donald Trump is doing almost the impossible: despite the split of opinions in his own party, he is making a deal on allocating an additional $2.2T to support the country’s economy. Democrats had been working on this particular sum of money in their negotiations for several months but the progress happened just recently.

It’s quite clear that no one will give such an amount of money right here and now because it is a physical impossibility. Republicans and Democrats have a lot of misunderstandings when it comes to the key aspects of the stimulus, and that’s also important. However, the money will be allocated regardless of who will take the White House in November.

Later today, one should pay attention to the Consumer Confidence report for October, which is expected to show -15 points after being -14 points in September. In the evening, the USA will report on the Existing Home Sales and the CB Leading Index for September.

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

The “greenback” is strategically weak. Overview for 26.10.2020

Early in another October week, EURUSD is falling a little bit but it doesn’t anything in the “trading picture” globally.

EURUSD is slowly correcting on Monday morning. The current quote for the instrument is 1.1835.

Investors’ attention switched from the statistics to the politics. On November 3rd, the USA will elect its next president – the debates are over and all one has to do is wait. The tension is pretty high: development path of the country and its policy might be extremely opposite depending on the election results.

The final debates between the incumbent President Donald Trump and his opponent Joseph Biden turned out to be not as “hot” as many observers expected. The primary focus was switched to a fight with the coronavirus and its consequences, and, of course, personal rivalry. However, no new details as both candidates already told to and about each other everything they wanted.

The USD remains weak so far: a new stimulus package won’t surely happen before November 3rd, but after – rather likely. This is what puts pressure on the “greenback”.

There will be no interesting statistics today, so the trading session might be pretty calm.

However, there will surely be numbers worth paying attention to this week. For example, September reports on the Durable Goods Orders, the Personal Income and the Personal Spending, and the GDP from the USA. Also, the European Central Bank is scheduled to have another meeting, decide on the interest rate, and comment on the current economic situation in the region.

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

The USD recovered. Overview for 28.10.2020

EURUSD is moving downwards amid investors’ increased demand for “safe haven” assets.

The major currency pair continues to retreat. The current quote for the instrument is 1.1782.

Investors all over the world are slowly increasing their positions in “safe haven” assets while the coronavirus situation is escalating and the election day in the USA is approaching. And if the second wave of the pandemic is quite clear – it’s getting more and more serious, then the results of the American elections are pretty far away from that. That’s what makes market players nervous.

The statistics published by the USA yesterday showed that the Durable Goods Orders added 1.9% m/m in September after expanding by 0.4% m/m the month before and against the expected reading of +0.5% m/m. The Core Durable Goods Orders was +0.8% m/m after adding 1.0% m/m over the same period. The expected reading was twice as much.

Americans continue buying despite rather gloomy economic outlooks. Probably, it’s a result of the stimulus package implemented earlier.

It turns out that the third quarter was quite successful for the USA when it comes to consumer spending. However, the impulse is fading away while another stimulus package is not only unfinalized – it’s not even close to the “completion” of policymakers’ debates. Still, it’s obvious that the faster they approve it and pump the money into the country’s economy, the sooner they will see results.

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

The Euro plummeted to this month’s lows. Overview for 30.10.2020

EURUSD continues falling in anticipation of the presidential elections in the USA.

The major currency pair is retreating and has already reached the lows of September 29th. The current quote for the instrument is 1.1678.

The European Central Bank left its monetary policy intact during the October meeting but provided signals about possible easing as early as in December. This news put additional pressure on the European currency.

The regulator kept the benchmark rate at 0%. In the comments, the regulator said that short-term outlooks relating to the region’s economy were getting worse, investments in business found themselves under the “virus” pressure, and consumers remain pretty careful and cautious. All published macroeconomic reports indicate a lower activity in the fourth quarter of 2020, while inflation is expected to remain negative. However, the ECB is sure that after the pandemic situation improves at least a little bit, the demand will recover, thus boosting inflation growth in the mid-term.

The next meeting of the ECB is scheduled for December 10th, and by that time the regulator might be ready to revise the necessity of additional support to the economy because it will have updated outlooks.

The latest statistics from the USA were a pleasant surprise. The preliminary report on the GDP Growth Rate in the third quarter of 2020 showed +33.1% q/q against the expected reading of +31.0% q/q. Of course, such a record-breaking improvement is based solely on global stimulus measures implemented in this quarter: the country’s economy got support in the amount of $3T. As a reminder: in the second quarter, the economy lost 31.4% q/q. The current growth eliminates the previous drawdown but doesn’t solve any crucial problems.

By the way, it’s quite interesting that such strong numbers were published just days before the presidential elections in the USA.

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

The Aussie retreated. Overview for 03.11.2020

AUDUSD fell after the RBA’s decision to cut the rate.

The Australian Dollar retreated against the USD on Tuesday morning. The current quote for the instrument is 0.7043.

During its November meeting, the Reserve Bank of Australia decided to cut its benchmark rate to an all-time low of 0.1% from 0.25%. Investors were expecting it but this fact is still negative for the Aussie.

Apart from cutting the rate, the regulator introduced several stimulus measures. One of them is that the RBA would buy 100B AUD of government bonds with maturities of around five to 10 years over the next six months, with the first auction slated for Thursday. It’s a pretty big expansion of the stimulus program: starting March 2020, the regulator has bought bonds worth approximately 60B AUD.

In addition to that, the RBA will be guided by the bond profitability rate, as it may help be more objective when buying bonds.

As for Its top priority, the regulator named the reduction of unemployment, and the above-mentioned stimulus measures are intended to help in solving this problem.

The RBA’s interest rate is not expected to be increased in the coming years. The last time when the rate went up was 2010.

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

The Euro started growing. Overview for 05.11.2020

EURUSD reversed to the upside; the “greenback” may be stressed because of the advantage in favor of Biden.

The major currency pair reversed and right now is slowly rising after several trading sessions of decline. The current quote for the instrument is 1.1737.

Results of the presidential elections in the USA haven’t been officially announced as the votes are still being counted. In several states, candidates are winning with a very close vote and that’s a great risk for the final result. In this case, the losing candidate may sue its opponent and the entire country will have to watch a new episode of the comedy-drama.

So far, one can be sure that there will be a split in the Congress no matter who wins the elections. Initially, the Republicans were supposed to keep the majority in the Senate, thus being able to stand against any increases in the amount of money to be spent on economic support. The country’s economy does need this money – without them, the recovery will be non-systemic and much slower.

Because of all this election hype, the labor market news went to the back burner. As usual, the first week of the month was full of it. Yesterday, the ADP Non-Farm Employment Change report for October was published and it was rather alarming.

The indicator showed 365K, which is much less than the expected reading of 600K. The components of the report show that almost all jobs (348K) that were created were in the service-providing sector. It means that the economy may lose them by January due to seasonal factors, and that’s a serious problem.

There is no correlation between the ADP and NFP reports but the former one still can provide a good insight into what is going on in the sector.

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

The USD found itself among underdogs. Overview for 09.11.2020

EURUSD continues rising after Joe Biden’s election victory in the USA.

The major currency pair remains “in the black” and tries to keep its positive momentum. The current quote for the instrument is 1.1890.

The key trigger that is currently against the American Dollar is the expectations of a new stimulus package to support the country’s economy after Joe Biden’s election victory. Of course, it won’t happen today or tomorrow as there are a lot of contradictions and misunderstandings between the Democrats and the Republicans in congress. However, Biden’s office, after it is appointed, of course, will have to consider this issue pretty quickly.

The statistics published last Friday by the USA were interestingб although it was moved to the back burner by presidential elections.

For example, the Unemployment Rate in the USA dropped to 6.9% in October against the expected reading of 7.7%. It’s a good result, given that the indicator was widely expected to lose its positive momentum. The Non-Farm Employment Change showed 638K against market expectations of 600K. It could have been better but the actual reading is still fine.

The only thing that let the “greenback” down was Average Hourly Earnings, which added only 0.1% m/m in October against the expected reading of +0.2% m/m.

In general, one may well say that the labor market in the USA is still able to keep its positive momentum and trying to recover contrary to all predictions.

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

The New Zealand Dollar continues rising. Overview for 11.11.2020

NZDUSD is rising on Wednesday and updating the highs of March 2019.

The Kiwi responded positively to the RBNZ’s decisions and intends to keep its positive momentum against the USD. The current quote for the instrument is 0.6880.

The Reserve Bank of New Zealand decided to keep its benchmark rate intact at the all-time low 0.25%, just as expected. At the same time, the regulator introduced a new monetary mechanism intended to reduce loan interests without revising the rate itself.

Moreover, the RBNZ hinted at its readiness to cut the rate and even make it negative if the country’s economy required.

The country’s central bank is still focused on improving inflation and the unemployment rate. These are exactly the areas where new stimulus will be applied to. The regulator’s program called FLP is supposed to start in December and believed to help reduce financing costs for banks and interest rates in the real sector of the economy.

There were some doubts that the New Zealand regulator would keep the rate unchanged after the RBA had decreased it. However, the RBNZ decided to try all possible monetary tools and turn to the rate in the latter time, in case they didn’t work.

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