The Pound is back to weakening. Overview for 25.06.2021

GBPUSD is falling after the BoE meeting.

The British Pound is retreating against the USD before the weekend. The current quote for the instrument is 1.3912.

The BoE meeting that was over earlier provided the Pound with absolutely no support. The regulator kept its benchmark interest rate unchanged at the all-time low of 0.1%, as well as the QE program parameters. However, no changes were expected because the British central bank always sticks to the conservative stance relative to its monetary policy and never makes any sudden moves.

In the comments, the BoE said that it still wasn’t sure of the number of people who would look for a job after the quarantine was over. This fact may be a reason for some instability of the British labor market. Another thing, the Inflation boost, is believed to be temporary but the regulator even expects it to go above 3% after all restrictions in the country’s economy are removed. However, the indicator may quickly return to 2% shortly after.

In May, the CPI in the United Kingdom was 2.1%.

According to the regulator’s forecasts, the British GDP may show 1.5% in the second quarter of 2021, which is better than the quarter before. It’s good news.

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

The Euro is slowly climbing down. Overview for 29.06.2021

EURUSD is falling a little bit; market players are saving strengths in anticipation of the statistics.

The major currency pair is trading downwards on Tuesday morning. The current quote for the instrument is 1.1910.

Investors are very cautious and don’t want to risk. Anyhow, cautiousness may become this week’s motto – there will be a lot of numbers, which may cause a lot of different reactions, and investors seem to be ready for volatility.

Reports on the USD labor market may influence the US Fed’s monetary policy. This time, the data is expected to be quite strong, both on the Non-Farm Employment Change and the Unemployment Rate. Strong reports may support the “greenback” and the Fed in its intentions to raise the benchmark interest rate twice before the end of 2023.

If the statistics are really impressive, expectations of decreasing the QE volume and tightening of the Fed’s monetary will become more obvious.

On the other hand, in order to completely revive, the labor market must create 800K or more, a million in an ideal scenario, jobs every month. If it happens, it may really shake up the employment sector and make the rate curve more dynamic.

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

The Euro is sliding down. Overview for 01.07.2021

EURUSD continues falling; the “greenback” is waiting for the news.

The major currency pair is slowly falling in anticipation of the American statistics. The current quote for the instrument is 1.1846.

The statistics from the Euro Area published yesterday showed that the CPI Flash Estimate was 1.9% y/y in June, the same as expected, after being 2.0% y/y in May. The Core CPI Flash Estimate showed 0.9% y/y and matched market expectations. The inflation target in the Euro Area is 2.0%.

The USA started publishing numbers on its labor market and the first report was the ADP Non-Farm Employment Change, which showed 692K in June after being 886K in the previous month and against the expected reading of 555K. The actual reading is quite good for the USD.

There is no direct correlation between ADP and NFP, which is scheduled for Friday. However, the ADP helps to understand the market sentiment and it’s quite positive.

Today, the Euro Area is going to report on the German Final Manufacturing PMI, which is not expected to spring any surprises. Also, there will be a report on the Unemployment Rate in the Euro Area for May, which may remain at 8.0%.

Later in the evening, the USA will publish a weekly report on the Unemployment Claims, which may show 388K after being 411K last week. It would be excellent support for the USD.

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

EURUSD is trying to grow. Overview for 05.07.2021

EURUSD stopped falling after some controversial statistics on the American labor market.

Early in the first week of July, the major currency pair is consolidating after falling earlier. The current quote for the instrument is 1.1872.

The statistics on the US labor market published last Friday turned out to be rather mixed. For example, the Non-Farm Employment Change showed 850K in June, which is much better than expected, after being 583K in May. However, this is where the good news ended. The Unemployment Rate rose from 5.8% in May to 5.9% in June, although it was expected to drop to 5.6%.

The Average Hourly Earnings showed 0.3% m/m, the same as expected, after being 0.4% m/m the month before.

After this data was released, it became quite clear that it was very unstable, which means that the American regulator wouldn’t make any moves because the foundation for drawing serious conclusions was rather weak. As a result, the Fed’s plans to continue supporting and stimulating the country’s economy won’t change – the benchmark interest rate may be raised only twice before the end of 2023.

The Factory Orders expanded by 1.7% m/m in May, the same as expected, after losing 0.1% m/m in April.

Today’s trading session is going to be very calm: the Euro Area will report on the Sentix Investor Confidence, which is expected to improve, while the USA is having a holiday and won’t publish any statistics at all.

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

EURUSD dropped pretty much. Overview for 07.07.2021

EURUSD fell after the weak German statistics.

The major currency pair was thrown off balance by the middle of the week. The current quote for the instrument is 1.1830.

Yesterday, the Euro Area and Germany reported on the ZEW Economic Sentiment, which turned out to rather weak and drew attention to the fact that the region’s economic recovery was so good. The indicator showed 63.3 and 61.2 points in July after being 79.8 and 81.3 points for Germany and the Euro Area respectively.

It’s difficult to say what was worse, data from Germany or the Euro Area but there is no escaping the fact that businesses remain very cautious and careful.

After this, there appeared some rumours on the market that the European Central Bank was way behind other global regulators in tightening its monetary policy. However, the statistics do prove that any tightening may be untimely if the economic recovery isn’t systematic.

In this light, no one paid much attention to the Retail Sales report, which showed 4.6% m/m in May, which is better than expected, after being -3.9% m/m in April. The reason for that is a gradual removal of quarantine restrictions in Europe.

Later today, investors will switch their attention to the FOMC Meeting Minutes. The document is highly unlikely to offer anything dramatically new but the “greenback” enthusiasts may like an already known piece of news about two rate hikes before the end of 2023.

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

The Euro’s weakness doesn’t scare anymore. Overview for 09.07.2021

EURUSD moved upwards a little bit but the demand for the “greenback” may return at any moment.

The major currency pair has reached stability and is ready to move on. The current quote for the instrument is 1.1830.

Yesterday, the European currency did manage to find some support after all, which came from the ECB in the form of a new inflation target. The ECB Governor Christine Lagarde said yesterday that a 2% inflation was not the ceiling. A new monetary strategy implies that in the mid-term inflation in the region would form around 2%. This target is symmetric, meaning negative and positive deviations of inflation from the target are equally undesirable.

It isn't that these changes are significant and they will change the entire monetary policy of the regulator. However, this move will allow the ECB to raise the inflation target in the future without interfering with what will happen to the financial markets.

The weekly report on the Unemployment Claims showed 373K after being 371K the week before. The difference is rather small but it wasn’t in favour of the USD – investors decided that the labor market recovery after the pandemic was non-systemic and inconsistent.

Later today, the European regulator will publish its ECB Monetary Policy Meeting Accounts and the American one – the Fed Monetary Policy Report. It’s difficult to imagine whether these documents will anything that market players may find interesting.

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

The Aussie is growing despite the statistics. Overview for 13.07.2021

AUDUSD is rising on Tuesday afternoon despite weak data from Australia.

The Australian Dollar managed to grow against the USD after falling for a couple of days. The current quote for the instrument is 0.7477.

The statistics published by Australia in the morning were disappointing. The NAB Business Confidence showed 11 points in June after being 20 points in the previous month.

The components of the report show that business conditions saw a sharp fall (24 vs 36 points), as well as trading (35 vs 45 points), profitability (25 vs 39 points), and employment (17 vs 25 points).

Such a drawdown in the data occurred mostly due to aggravation of the epidemiologic situation in New South Wales.

However, the negative impression from the Australian statistics was slightly eliminated by strong numbers from China, where both import and export improved in June.

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

The Pound had to retreat. Overview for 15.07.2021

GBPUSD reversed once again and is currently retreating.

The British Pound reversed to the downside against the USD. The current quote for the instrument is 1.3825.

Today’s statistics showed that the Unemployment Rate in the United Kingdom went from 4.7% in April to 4.8% in May despite quite positive signals in the components of the report. The Average Earnings Index added 7.3% 3m/y after being expanding by 5.7% 3m/y earlier and against the expected reading of 7.1% 3m/y.

In June, the Claimant Count Change surprised everyone and showed -114.8K after being -151.4K the month before and against the expected reading of -32.5K.  It seems like the British labor market is quickly reviving after many social restrictions were removed. It means that the June reports on employment might be much more positive than the May ones.

However, the Pound was pressured by a revived demand for the “greenback” as a “safe haven” asset due to the increased number of new coronavirus cases all over the world.

Another topical issue that puts pressure on the British currency remains open – the trade agreement between the United Kingdom and the European Union.

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

The USD is in demand. Overview for 19.07.2021

EURUSD fell a little bit; the “greenback” is in demand again.

The major currency pair is changing its direction again. The current quote for the instrument is 1.1800.

The American currency has a lot of market sympathies after the statistics confirmed that the national economy was recovering. For example, the Retail Sales report published last week showed that the population’s demand for goods remains quite high despite a slight advantage in favour of services. In June, the indicator added 0.6% m/m after plunging by 1.7% m/m in May and against the expected decline by 0.4% m/m.

At the same time, the Core Retail Sales added 1.3% m/m against the expected growth by 0.4% m/m.

The components of the report show that sales increased at electronics & appliance stores, gasoline stations, clothing & clothing accessories stores, general merchandise stores, miscellaneous store retailers, and restaurants and bars. On the other hand, motor vehicles' sales dropped 2.0%, as a global semiconductor supply squeeze hit production.

The preliminary report on the Consumer Sentiment from the University of Michigan turned out to be weak. The indicator dropped to 80.8 points in July after being 85.5 points the month before, although it was expected to improve up to 86.5 points. The actual reading is the lowest over the last five months and raises concerns about the inflation boost.

The Current Conditions dropped to 84.5 points, the lowest reading over 11 months. The Consumer Expectations went from 83.5 points in June to 78.4 points this month.

The US Federal Reserve said that there were no reasons to be afraid of high inflation because it was temporary. However, the market response suggests otherwise.

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

The USD remains a favourite. Overview for 21.07.2021

EURUSD is falling while financial markets are escaping the risks.

The major currency pair continues falling as long as investors are interested in escaping the risks. The current quote for the instrument is 1.1760.

Market players like the “greenback” and it’s pretty clear why – the epidemiological situation is getting worse, the number of new cases is quickly increasing, and the Indian strain tends to be very aggressive. All these factors, in their turn, may force global authorities to get back to social restrictions coming from the pandemic. Such measures would slow down the global economic recovery.

On top of that, the US 10-year bond yield is growing again, thus providing the USD with significant support.

The Euro is falling before tomorrow’s meeting of the European Central Bank. The benchmark interest rate is not expected to change but investors are counting on hearing some comments about the future monetary moves. Judging by the statistics published recently, the chances for early termination of the stimulus program are rather low.

There won’t be any important reports from both the USA and Europe today. In this light, market players prefer to focus on the available factsб which means that the USD may continue strengthening.

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

The Euro fell a little bit. Overview for 23.07.2021

EURUSD continues analysing the ECB meeting results and the demand for “safe haven” assets.

The major currency pair is falling at the end of another trading week. The current quote for the instrument is 1.1777.

During its July meeting that was over yesterday, the European Central Bank left the benchmark interest rate unchanged at zero and confirmed its intentions to pursue the ultra-soft monetary policy for a long period of time. the ECB Governor Christine Lagarde said that a new coronavirus wave might threaten the economic recovery procedure in Europe despite the regulator’s balanced approach to building economic outlooks.

Many global Central Banks are considering a possibility to scale down their stimulus programs but the ECB is not one of them. In the long-term, this factor may pressure the European currency pretty much.

In the comments after the meeting, the regulator said that the Euro Area economy recovered in the second quarter of 2021 and was feeling quite well after social restrictions were removed. The ECB’s expectations about industrial production are positive despite some issues with the delivery of parts and components. The delta strain of the COVIDS-19 may slow down the services industry recovery, it’s still a huge risk.

According to the ECB, the economic activity will return to its pre-crisis levels in the first quarter of 2022. However, it will require a lot of time and effort to eliminate the effects of the pandemic.

In June, inflation was 1.9% and the ECB is expecting it to continue growing in the coming months. The indicator may drop in 2022, after local factors, such as an upsurge in energy prices, disappear.

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

Australian dollar is growing successfully. Overview for 03.08.2021

The Australian dollar is restoring vividly in pair with the US dollar. The current quotation of AUDUSD is 0.7401.

Today, another meeting of the Reserve Bank of Australia happened. As expected, the interest rate remained at 0.10% annual, which is its all-time low. The commentaries of the regulator were absolutely neutral, confirming that the RBA was not going to wind up the stimulation preliminary.

This means, the RBA is still interested in further employment market stabilization and inflation.

Quite curiously, Aussie did not react at all at the weak Chinese statistics published earlier. Economic activity their had slowed down, and this might mean that the GDP is also decreasing the speed of growth. China has always been the main trade and economic partner of Australia, and this news is not the best for the country.

Interest towards risk in the global market remains balanced, which additionally supports the AUD.

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