The Yen continues strengthening. Overview for 21.05.2021

USDJPY confirms its descending tendency; the Yen remains strong.

The Japanese Yen continues strengthening against the USD despite the deflation threat. The current quote for the instrument is 108.75.

The statistics published today showed that the Core CPI in Japan was -0.1% y/y in April, the same as the month before, although it was expected to be -0.2% y/y.

However, another report is much worse – the CPI showed -0.4% y/y in April after being -0.2% y/y in March. On MoM, the situation is also rather sad: -0.4% against 0.2% over the same period of time.

The components of the report show that the key contributors to the decline were food prices, which are dragging the entire indicator down.

The preliminary report on the Manufacturing PMI showed 52.5 points in April after being 53.6 points the month before against the expected reading of 53.0 points. It’s no surprise, the indicator just confirms deflation – consumers are inactive and prevent businesses from ramping up production and spending extra. Everyone is “on standby” and it doesn’t help prices to grow.

The Yen is barely responding to the statistics and its current strengthening is mostly caused by the weak American currency.

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

The Euro is looking up. Overview for 25.05.2021

EURUSD continues trading upwards; the USD remains an “outsider”.

The major currency pair boosted its growth last night and intends to keep the pace today. The current quote for the instrument is 1.2253.

Global investors are pretty sure that the international economy will recover quite soon and this confidence makes financial markets very optimistic. In this light, the demand for “safe haven” assets, such as the USD, is reducing, thus putting a lot of pressure on the American currency. The higher the optimism based on the aggressive anti-coronavirus vaccination campaign and removal of some social restrictions, the worse for the “greenback”.

One of the things that may slow the USD on its way down is a renewed interest in American inflation. A lot of investors still believe that the US Federal Reserve System will have to respond to the inflation boost, “will it, nill it”. This response may be a revision of its monetary policy regarding the benchmark rate. If something really changes here, the USD will resume rising instantly.

As a result, market players’ attention is switching to the statistics on the Personal Income and Spending to be published on Friday. The first indicator is expected to drop: in March, it added 21.1% m/m but only because of government checks, that’s why in April it may lose 14.8% m/m. There is no reason to be afraid of these readings – it will be better to pay attention to the components of the report. The second indicator may add 0.4% m/m after expanding by 4.2% m/m the month before.

Judging by these numbers, one may draw an intermediate conclusion about the current Consumer Price Index state. In this case, the USD may become more active.

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

The USD rose but then stopped. Overview for 27.05.2021

After falling pretty much yesterday, EURUSD is consolidating on Thursday.

The major currency pair is having a really volatile time; it was plunging yesterday but managed to reach stability and is currently looking quite neutral. The current quote for the instrument is 1.2187.

There were no important statistics yesterday but the USD recovered thanks to the US 10-year bond yield and the neutral tone on financial markets.

Today, market players will focus their attention on the USA: in the evening, the country is scheduled to publish the second estimate of its GDP. Revised market expectations imply that the indicator might show 6.5% q/q against the first estimate of 6.4% q/q. the stronger the number, the better for the “greenback”.

Also, there will be April reports on the Durable Goods Orders and the Core Durable Goods Orders, which are both expected to show 0.8% m/m after being 0.8% m/m and 1.9% m/m respectively in March.

Moreover, the USA is planning to report on the Pending Home Sales in April but investors aren’t likely to pay much attention to it.

The USD remains highly volatile and extremely sensitive to external influence, that’s why these “mood swings” may continue.

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

EURUSD is consolidating. Overview for 31.05.2021

EURUSD is consolidating at the end of this extremely volatile spring; the USD lost 0.8% over three months.

The major currency pair is rather quiet and stable early in the week. The current quote for the instrument is 1.2192.

Spring of 2021 has been really volatile for EURUSD – stimulus programs continued making the “greenback” go down and market players just couldn’t find any reason for supporting the American currency. By the start of the summer, the market situation reached stability, more or less. No one is afraid of either an inflation boost in the USA or early termination of the Fed’s stimulus programs. Everything is slowly returning to normal.

The statistics published last Friday showed that the Personal Income in the USA dopped 13.1% m/m in April after adding 20.9% m/m the month before. The indicator lost less than expected, that’s why investors barely responded to the report. As everybody knows, in March the American population got checks from the government and this money quickly returned to the economy. In April, people had no such “gifts”, so the indicator corrected.

The Personal Spending, in its turn, added 0.5% m/m, the same as expected, after expanding by 4.7% m/m in the previous month.

The revised data on the UoM Consumer Sentiment showed 82.9 points in May against the preliminary and expected readings of 82.8 and 831 points respectively.

The USA is celebrating Memorial Day today, so no American statistics are planned.

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

The “greenback” remains weak. Overview for 02.06.2021

EURUSD was falling and rising again but the “greenback” remains fundamentally weak.

The major currency pair is consolidating on Wednesday morning after slight fluctuations last night. The current quote for the instrument is 1.2220.

The statistics from the Euro area were mostly positive. The German Final Manufacturing PMI showed 64.4 points in May after being 64.0 points before. The same indicator for the Euro Area improved up to 63.1 points against 62.8% points earlier.

The CPI Flash Estimate in the Euro Area showed 2.0% y/y in May, the highest over the last two years, after being 1.6% y/y in the previous month and against the expected reading of 1.9% y/y. The Core CPI Flash Estimate was 0.9% y/y after being 0.7% y/y the month before. 

Inflation in the Euro Area boosted thanks to partial removal of social restrictions, which lead to a demand recovery. A decline in the number of new coronavirus cases allows countries to re-open shops, cafes, and restaurants, thus increasing consumer activismю Another thing is travelling. Of course, there are still some issues, such as delivery interruptions, which limit production and slows down the demand.

Also, the labor market parameters in the region went up a bit – the Unemployment Rate dropped to 8.0% in April after being 8.1% in March.

As for the statistics from the USA, the Markit Manufacturing PMI showed 62.1 points in May after being 61.5 points earlier. The ISM Manufacturing PMI also improved, up to 61.2 points against 60.7 points over the same period of time. The components of the report demonstrate significant improvement of the industrial sector thanks to an increasing number of new orders.

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

The USD strengthened pretty much. Overview for 04.06.2021

EURUSD got under significant pressure and remains weak on Friday.

The major current pair plunged yesterday and remains under pressure today. the current quote for the instrument is 1.2110.

The statistics published by the USA were extremely positive and provided excellent support to the “greenback”.

For example, the ADP Non-Farm Employment Change showed 978K in May after being 654K in the previous month and against the expected reading of 645K. It’s a very good piece of news, and although there is no direct correlation between ADP and NFP, it may still provide insight into what is happening in the sector.

The Marking Services PMI showed 70.4 points in May after being 70.1 points the month before. The ISM Services PMI improved up to 64.0 points after being 62.7 points over the same period of time. That’s also excellent news.

Another thing that raised the demand for the USD was the decision of US President Joe Biden to forbid American investors to acquire stocks of some Chinese companies, mostly military.

Today is another important day for the “greenback” – more reports on the labor market, including the Unemployment Rate, the Non-Farm Employment Change, and the Average Hourly Earnings. The better the readings, the more support for the USD.

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

The USD switched to consolidating. Overview for 09.06.2021

EURUSD has fixed within a narrow range; investors are saving strengths before the ECB and FRS meetings.

The major currency pair continues consolidating on Wednesday. The current quote for the instrument is 1.2179.

The statistics published yesterday were quite interesting. For example, the revised GDP report for the first quarter of 2021 in the Euro Area showed -0.3% q/q against the expected reading of -0.6% q/q. that’s good news.

At the same time, businesses remain rather stressed. The ZEW Economic Sentiment dropped to 81.3 points after being 84.0 points before. The same indicator for Germany went from 84.4 points to 79.8 points.

The USA reported on the NFIB Small Business Index, which showed 99.6 points in May after being 99.8 points the month before.

Today’s economic calendar won’t offer many statistics important for EURUSD, so investors will continue saving strengths in anticipation of the upcoming ECB meeting scheduled for tomorrow. The regulator is highly unlikely to say something radically new about its monetary policy and economic outlook but investors prefer to wait and see.

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

EURUSD remains active. Overview for 11.06.2021

EURUSD continues consolidating as there aren’t enough drivers for more active movements.

The major currency pair is slowly rising on Friday but the sideways channel keeps prevailing. The current quote for the instrument is 1.2188.

During its June meeting, the European Central Bank kept its monetary policy completely intact. The benchmark interest rate remained unchanged and the tone of the ECB Governor Christine Lagarde was rather neutral. She said that inflation in the region remained quite moderate but the regulator’s new forecasts indicated that the core inflation was slowly increasing. According to the ECB, the core inflation must be below its targets throughout the entire forecast period. 

In the last several months, inflation in the Euro Area boosted due to several factors, such as the price surge for energies. In the second half of 2021, inflation is expected to continue growing but may later drop after temporary factors disappear.

The ECB believes that friendly financing terms are very important during the period of recovery from the coronavirus pandemic. Such terms are necessary for supporting economic activity and maintaining mid-term price stability.

According to the regulator, early tightening of financial terms will lead to the same in morу global lending terms and threaten both inflation prospects and the entire economic recovery, that’s why interest rates will remain at their current levels or lower until the ECB sees that inflation gets close to 2%.

The USA published inflation reports, which gave pause for thought. For example, the CPI showed 0.6% m/m in May after being 0.8% m/m in the previous month. On YoY, the indicator showed 5%, which is the highest reading since August 2008. The indicator might have increased so much due to wage indexationб as well as the growth of unstable index components, such as food, energies, etc.

The inflation issue might well be the reason that will force the US Fed to change its rhetoric on interest rates and monetary policy during the next meeting.

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

EURUSD continues recovering. Overview for 15.06.2021

EURUSD is slowly regaining positions; market players are inactive in anticipation of the Fed meeting.

The major currency pair continues growing slowly. The current quote for the instrument is 1.2140.

There were no American statistics yesterday but the Euro Area reported on the Industrial Production, which added 0.8% m/m in April after expanding by 0.4% m/m in the previous month.

Investors’ undivided attention is now switching to the June meeting of the US Federal Reserve, which is scheduled to start today and last the next couple of days. The regulator’s ultra-soft monetary policy is very likely to remain unchanged. The USD may find some support in any slight hint at the Fed’s intentions to close the stimulus program ahead of the schedule. At the same time, it’s quite clear that the regulator is not going to rush such a decision, even considering the inflating boost that happened recently.

It will be very interesting to hear comments on the current economic state and the outlook for the key macroeconomic parameters. Everything that may prove to be optimistic will provide support to the “greenback”.

In addition to that, today the USA is going to publish some data that market players may find interesting to analyze. For example, the Retail Sales, the PPI and the Core PPI, as well as the Capacity Utilization Rate for May. Taken together, these reports may provide insight into the retail sales dynamics and the ability of businesses to expand.

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

The Euro plunged to its May lows. Overview for 17.06.2021

EURUSD plummeted to its local lows after the June meeting of The US Fed was over.

The major currency pair plunged to its May lows after comments from the Fed. The current quote for the instrument is 1.1939.

After its June meeting, the American regulator kept the benchmark interest rate unchanged at 0-0.25%. The bond purchases will also remain at a rate of $120 billion a month. As it turned out, the intrigue was in the comments and forecasts that followed. 

For example, the regulator’s rhetoric changed in the matter of revising its monetary policy in the future. Now, it is expected that there might be two rate hikes before the end of 2023, this is the opinion of 11 out of 18 FOMC members. 7 out of 18 believe that the rate might go up as early as in 2022, while during the March meeting this number was 4.

Also, the Fed revised its GDP growth forecasts for 2021. Now, the indicator is expected to add 7%. In 2022, the growth might reach 3.3%, the same as mentioned before.

In the comments, the regulator said that the key thing that inspired optimism was the aggressive anti-coronavirus vaccination campaign, which significantly reduced the rate of spread of disease. At the same time, there is strong monetary support, which helps the labor market and other economic indicators to recover.

The Fed Chairman Jerome Powell said that the labor market conditions improved rather unevenly but the household spending and business investments were increasing quite fast. At the same time, inflation boosted and remained pretty high but it happened due to the recovery of expenses. Powell believes that in the possibility that high inflation may remain for quite a long time, which is unusual because earlier the regulator told several times that a surge in inflation was temporary. Also, Powell said that if the Fed saw inflation going higher its target levels, the regulator would be ready to revise its monetary policy.

The major result of the meeting is in favor of the “greenback” – no one is going to continue stimulating the economy if there are signs that the economy may recover by itself. This is the reason why the USD has been skyrocketing for the second consecutive day.

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

The Euro is trying to reach stability. Overview for 21.06.2021

EURUSD is making a feeble attempt to reach stability after plummeting.

The major currency pair is in the black, just a little bit. The current quote for the instrument is 1.1870.

So, the “greenback” remains strong despite investors’ attempts to balance the situation. The reason for this is the message received by financial markets after the Fed’s June meeting: the regulator may be planning two rate hikes earlier than expected.

Last Friday, this optimism was boosted by St. Louis Federal Reserve Bank President James Bullard, who told the media that the changes in the regulator’s tone in assessing its monetary policy was quite a natural response to the economic growth and inflation boost in the country. These factors. In their turn, are directly connected to the fact that the country has been recovering after the coronavirus pandemic and slowly removing different social restrictions.

Some experts even started comparing this situation with 2013, when the Fed announced a decline in the QE program. However, it’s not the same as the current global situation is completely different.

This week, the USA is going to report on the GDP for the first quarter of 2021, as well as the Personal Spending/Income. Another interesting thing to be published is the Durable Goods Orders.

However, the primary focus remains on the Fed with its stance on the rates, that’s why the USD is currently doing pretty fine.

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