The Australian Dollar stopped growing. Overview for 15.04.2021

AUDUSD stopped growing on Thursday after rallying the day before.

The Australian Dollar stopped its rally against the USD. The current quote for the instrument is 0.7727.

The statistics published in the morning showed that the employment sector is slowly improving. The Unemployment Rate decreased from 5.8% in February to 5.6% in March and that’s better than expected. The Employment Change showed 70.7K in March after being 88.7K the month before and against the expected reading of 35.2K.

Actually, the current unemployment in Australia is only 0.4% higher than the pre-covid value, which is excellent.

The Participation Rate in the Australian economy is 66.3%, which is quite close to its all-time high.

The job number recovery is rather irregular due to higher activity in Queensland and lower in New South Wales and Victoria. However, it’s quite normal.

The numbers published today are pretty positive for the Aussie. Another thing that supports the Australian currency right now is a local weakness of the “greenback”.

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

The Euro intends to grow. Overview for 19.04.2021

Early in another April week, EURUSD is keeping its positive momentum.

The major currency pair intends to continue growing. The current quote for the instrument is 1.1980.

The “greenback” remains under pressure after the US bonds yield dropped. At the same time, strong numbers on the Retail Sales in the USA published last week couldn’t become a long-term support factor for the American currency.

This week of April won’t offer many statistics from the USA. However, one should pay attention to the Existing Home Sales, the New Home Sales, and the CB Leading Index for March. Also, the country is scheduled to publish preliminary reports on the Manufacturing and Services PMIs for April from Markit.

There might be some interesting news from the Euro Area. The European Central Bank is going to have a meeting and may make a rate decision. The rate isn’t expected to change but the comments from the ECB Governor Christine Lagarde might be quite interesting. She may be quite optimistic in her opinion on the anti-coronavirus vaccination campaign – it means that the region’s economy is ready for its steady recovery rate after the pandemic.

In addition to that, the Euro Area is also scheduled to report on the Manufacturing and Services PMIs for April. The same reports will be published by Germany – these numbers trigger quite sensitive reactions from market players.

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

The British Pound retreated from the high. Overview for 21.04.2021

After updating its March highs, GBPUSD is retreating and waiting for the news.

The British Pound is correcting against the USD on Wednesday. The current quote for the instrument is 1.3931.

The data published yesterday showed a significant improvement in the employment sector. for example, the Unemployment Rate went from 5.0% in January to 4.9% in February although it wasn’t expected to change. The Participation Rate decreased a little bit and was 75.1%.

The Claimant Count Change was 10.1K in March after being 67.3K the month before and against the expected reading of 24.5K.

The Average Earnings Index showed 4.5% 3m/y after being 4.8% 3m/y in the previous period and against the expected reading of 4.7% 3m/y. The indicator is still affected by low-paid job cuts for optimization in the midst of the coronavirus pandemic. The sector is supported by a state program that implies guaranteed increased unemployment payments, which is set to operate until the end of September 2021.

The statistics are quite positive given the fact that the United Kingdom is still locked down.

Later today, the United Kingdom will continue publishing macroeconomic statistics, such as the Consumer Price Index, which may show 0.8% y/y in March after being 0.4% y/y in February. In addition to that, there will be other reports on prices, for example, the PPI Input and Output, the Core CPI, the RPI, and the HPI.

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

EURUSD is back to growing. Overview for 23.04.2021

After falling for a while yesterday, EURUSD is back to growing.

The major currency pair resumed moving upwards after a short pause yesterday. The current quote for the instrument is 1.2035.

The after its April meeting that was over yesterday, the European Central Bank didn’t change any aspects of its monetary policy. In the comments that followed, Governor Christine Lagarde said that the short-term economic outlook remained rather cloudy due to uncertainty in the region, as well as the risks for more significant financing terms. According to the ECB, the inflation boost that could be seen recently happened due to some specific factors but the overall situation with the inflation pressure remained rather low.

The regulator is sure that the PEPP program will be carried out faster this quarter than before. However, the ECB is not planning to carry out the program to the full extent but it may yet happen if necessary.

The ECB believes that the European economy may shrink a bit in the first quarter but is expected to improve in the second one.

Mid-term risks are estimated by the regulator as more or less balanced, while the overall inflation pressure is expected to increase in the coming months.

At first, the Euro fell after these comments but managed to quickly recover a bit later.

Today, one should pay attention to the statistics on the Manufacturing and Services PMIs from Germany, The Euro Area, and the USA.

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

The Yen is losing to the USD. Overview for 27.04.2021

USDJPY is rising on Tuesday after the BoJ meeting.

The Japanese Yen reversed and is falling against the USD on Tuesday morning. The current quote for the instrument is 108.22.

The April meeting of the Bank of Japan was over in the morning and all key parameters of the regulator’s monetary policy remained intact. The benchmark rate has been -0.1% since January 2016. In the comments, the BoJ said that it was going to continue targeting the 10-year Japanese government bond yield at around 0%. In addition to that, policymakers will continue purchasing government bonds without any limitations.

Also, the Bank will purchase CP and corporate bonds with an upper limit on the amount outstanding of about 20 trillion yen in total until the end of September 2021.

Overall, the total annual volume of bonds to be bought by the regulator is about 12 trillion yen.

In other words, the regulator continues monitoring the situation and doesn’t change anything in its monetary policy, although it should admit that the time for that came a long time ago.

Among other interesting things is the BoJ’s revision of some aspects of its economic outlook. For example, the GDP growth for 2021 and 2022 went from 3.9% and 1.8% to 4.0% and 2.4% respectively. the Core CPI is expected to be 0.1% against the previous estimate of 0.5%. In 2022 and 2023, it might show 0.8% and 1.0% respectively.

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

The Euro skyrocketed. Overview for 29.04.2021

EURUSD is steadily rising after the April meeting of the US Federal Reserve System.

On Thursday afternoon, the major currency pair is keeping its positive momentum that started the day before. The current quote for the instrument is 1.2119.

During its April meeting, the US Fed unanimously decided to keep its benchmark rate intact at 0-0.25%. In addition to that, the regulator kept other aspects of its monetary policy unchanged as well: it will continue to purchase bonds at a rate of $120 billion a month.
In the comments, the Fed said that it was going to continue buying bonds until the country’s GDP and inflation reached their targets. To do this, the regulator would use all available tools. According to its estimates, economic growth and employment had generally improved, while the financial environment remained pretty “soft”. Inflation rose a bit and would continue growing but only because of temporary factors. The economic sectors that were damaged by the coronavirus pandemic are recovering but even considering this, risks for the economic outlook didn’t go anywhere.

Like the Fed Chairman Jerome Powell said in his speech, the country’s economy was still pretty far away from a complete recovery – it was still rather unstable and would improve slowly.
In Powell’s opinion, the time for spotting to purchase bonds hadn’t come yet. The coronavirus pandemic is still raising a lot of concerns but the aggressive vaccination campaign should help everyone to get back to normal lives in the nearest future.

As for inflation, Powell said that the Consumer Price Index would continue rising before slowing down a bit, and it was rather unlikely that it would improve on an ongoing basis.

As a result, the tone was rather restrained and soft, thus putting additional pressure on the “greenback”.

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

The Euro is stable after plunging. Overview for 03.05.2021

After plunging last Friday, EURUSD reached stability and is currently consolidating.

The major currency pair ended April with a plunge and started May with a consolidation. The current quote for the instrument is 1.2017.

Market activity suddenly revived last Friday when the USA reported on the Personal Income and Spending. The first indicator added 21.1% m/m in March after losing 7.0% m/m in the previous month and against the expected reading of 20.1% m/m. The second indicator, in its turn, expanded by 4.2% m/m after decreasing by 1.0% in February and against the expected reading of 4.3% m/m.

Don’t forget the reason for such a significant increase, consumer stimulus checks given by the government to the population, which went into the country’s economy right away. 

The final report on the UoM Consumer Sentiment increased to 88.3 points in April after being 86.5 points in March and against the expected reading of 87.3 points. The vaccination campaign is speeding up and the chances for most states and businesses to get back to their normal pre-COVID lives are increasing as well. The Current Conditions remained unchanged at 97.2 points, while the Economic Expectations went from 79.7 to 82.7 points, which is quite good.

The USD was very positive in its response to the numbers – the sooner the economy gets back to its normal pace, the better.

Today, one should pay attention to final reports on the Manufacturing PMI in Germany and the Euro Area. The same report will be published by the USA in the evening. The USA is also scheduled to report on the ISM Manufacturing Prices and the Construction Spending. Later, the US Fed Chairman Jerome Powell is set to deliver a speech.

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

The Pound is waiting for the news. Overview for 05.05.2021

GBPUSD is trading without any particular trend in anticipation of the BoE meeting.

The British Pound is consolidating against the USD while waiting for decisions and comments from the Bank of England. The current quote for the instrument is 1.3888.

The statistics published yesterday showed that the Mortgage Approvals in the United Kingdom was 83K March, which is worse than expected. It may well be that the reason for that was a strict lockdown and rather cold weather this spring. At the same time, the Net Lending to Individuals in March showed $11.3B against the expected reading of £5B.

Later today, the United Kingdom is scheduled to report on the Services PMI for April.

On Thursday, the Bank of England will have its May meeting and is very likely to keep the benchmark interest rate intact at 0.1%. There were a lot of rumors on financial markets that the British regulator might change its conservative rhetoric and be more aggressive this time. This might be a signal that the BoE was ready to tighten its monetary policy.

There is no guarantee that the country’s economy is ready for tightening even considering the current amount of stimulus measures. It would be reasonable to assume that the UK regulator should start with cancelling the lockdown after beating the coronavirus and monitoring the current processes in the economy and start tightening its policy only after that. One should agree that the Bank of England has never been hasty as its moves have always been pretty balanced and cautious. If the BoE provides these signals this time, it will mean that the country’s economy is definitely ready.

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

The Pound remained indifferent. Overview for 07.05.2021

GBPUSD barely responded to the results of another BoE meeting.

The British Pound continues trading within a narrow consolidation range against the USD on Friday morning. The current quote for the instrument is 1.3908.

Everything went as expected: the benchmark rate remained at its low of 0.1%, while the Quantitative Easing program was left intact at £895B.

However, the word that was on the market lately was finally confirmed. At the end of its May meeting, the Bank of England announced a slowdown in the pace of purchases of British government bonds to £3.4B per week instead of £4.4B previously. At the same time, the date when the program is set to be over remained unchanged. The regulator also emphasized that this decision was not a signal to change its monetary policy.

The British Central Bank raised its GDP forecast for 2021 sharply to 7.25% from its previous estimate of 5% growth made in February. For 2022, however, the economy is seen expanding 5.75%, less than February's projections of 7.25%. According to the regulator’s expectations, the British economy should get back to its pre-covid growth rates in the last quarter of 2021.

In the comments that followed, the Bank of England specifically emphasized that inflation risks were generally balanced and there was some uncertainty about the size of the economic slump but it’s okay.

Overall, the decision made by the Bank of England may be considered as a support factor for the Pound and it will show up later.

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

The Pound skyrocketed to its local high. Overview for 11.05.2021

GBPUSD has reached the highest level since February 25th and is looking quite confident.

The British Pound remains strong against the USD on Tuesday. The current quote for the instrument is 1.4127.

The Pound owes this growth to the USD slump because investors are pretty sure that the American regulator will continue its stimulus programs, thus pushing inflation upwards.

At the same time, the Pound enthusiasts don’t seem to be afraid of new discussions about whether Brexit was a good idea. Scottish leaders said yesterday that a new referendum was inevitable. However, all these referendums and voting must be approved by London in the first place and nothing has changed in this respect: the country’s Prime Minister Boris Johnson ruled out a possibility of the new referendum. The official stance is that the United Kingdom has enough major and topical issues to get back to the things that already happened a long time ago. Johnson believes it’s high time to focus on issues related to the coronavirus pandemic response and the recovery of the British economy.

Later today, the Bank of England Governor Andrew Bailey is scheduled to speak. By the way, he will be in the news a lot of times until the end of this week. On Wednesday, the United Kingdom will report on the GDP for the first quarter of 2021, as well as the Goods Trade Balance and the Construction Output in March.

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

The “greenback” recovered losses. Overview for 13.05.2021

EURUSD plunged on Thursday; the “greenback” managed to recover some of its losses.

The major currency pair plummeted after the USA reported on inflation. The current quote for the instrument is 1.2068.

Just as expected, the American statistics on inflation were extremely important. The Consumer Price Index showed 0.8% m/m in April against the expected reading of 0.2% m/m. On YoY, the indicator skyrocketed up to 4.2% and that’s the highest reading since 2008. The Core CPI showed 0.9% m/m against the expected reading of 0.3% m/m.

This price surge has a quite logical reason: as the American economy is re-opening after the coronavirus pandemic and global social restrictions, consumers face limited supply, which pushes prices upwards.

At the same time, the United States Department of Labor believes that the price surge is temporary and one report shouldn’t be considered as a tendency. Of course, it’s true but market players got exactly what they wanted.

The drama happened just the way it was expected to: now the pressure on the US Federal Reserve System to revise its monetary policy ahead of the schedule will surely increase. It might be interesting to hear any response from the regulator, which keeps talking about patience.

Now investors are switching their focus on the Retail Sales and Industrial Production reports for April from the USA to be published on Friday. The indicators are expected to add 1.0% m/m and 1.2% m/m after expanding by 9.8% m/m and 1.4% m/m in March respectively.

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

The USD fell victim to the statistics. Overview for 17.05.2021

EURUSD rose pretty much and is currently consolidating in anticipation of the news.

The major currency pair was actively growing earlier and is currently consolidating not far from its reached targets. The current quote for the instrument is 1.2129.

So, the statistics on the American retail sales weren’t in favor of the “greenback” and helped other traded currencies to strengthen. In April, the indicator showed no changes if compared with the March reading. At the same time, the revised March data says that the indicator added 10.7% m/m. The expected reading for April was 1.0% m/m and could indicate some kind of a balance but the reality turned out to be worse.

It’s quite clear that the March reading was caused by consumer stimulus checks from the government to support the country’s economy. Still, the April decline turned out to be much worse than expected but May and June may show another surge in consumer interest after the opening of borders and many sectors of the country’s economy. As soon as the economic system starts actively getting back to its pre-covid state, consumers will start spending more.

The Industrial Production in the USA added 0.7% m/m in April after skyrocketing by 2.4% m/m the month before. Another report, the Capacity Utilization Rate, showed 74.9% after being 74.4% in the previous month.

However, there was one more unpleasant surprise for the USD on Friday. A preliminary report on the Consumer Sentiment from the University of Michigan showed 82.8 points in May after being 88.3 points in April and against the expected reading of 90.2 points. It means that the population is really worried about increases in prices for goods and services because inflation expectations significantly boosted. This bothers Americans despite deferred demand and quite high levels of personal savings.

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