The Euro is holding the fort. Overview for 15.10.2021

EURUSD remains strong in anticipation of the US statistics.

The major currency pair is trying to keep its positive momentum. The current quote for the instrument is 1.1604.

The rally in the US 10-year bond yield slowed down amid growing inflation concerns and this actor counted against the “greenback”, which remains rather weak before the weekend. So far, there hasn’t been anything new that might have evened this negative factor.

The weekly Unemployment Claims report was quite good: it showed 293K after being 329K the week before and against the expected reading of 315K. A possible reason for this is that companies start hiring seasonal labour force in anticipation of holidays and sales season.

Later today, investors’ attention will switch to the US Retail Sales report for September, which is expected to show -0.2% m/m after being 0.7% m/m in August. The Core Retail Sales may add 0.5% m/m after expanding by 1.8% m/m the month before.

The stronger the readings, the more support the USD will get – it will mean that consumers continue spending money and the American economy is ready for stimulus reduction.

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

The Pound continues growing. Overview for 19.10.2021

GBPUSD is keeping its positive momentum supported by the weakness of the “greenback”.

The British Pound continues growing against the USD on Tuesday. The current quote for the instrument is 1.3794.

The short-term weakness of the American currency caused by some mixed September statistics on industrial production provides the Pound with additional support.

It seems like the United Kingdom overcame the fuel crisis that made people spend a lot of time queueing at petrol stations. At the same time, the consequences of supply problems are also fading away. this week, the British economy may really show how it is recovering after the COVID-related social restrictions were partially removed.

On Wednesday, the UK is scheduled to report on prices, including the CPI, the PPI, the RPI, and the HPI. The Consumer Price Index might as well remain rather high but the Bank of England is highly unlikely to take any measures against it.

On Friday, there will be a report on the Retail Sales for September, as well as flash releases on the Manufacturing and Services PMIs for October.

Market players are actively discussing whether the Bank of England starts tightening its monetary policy as early as November in order to raise its benchmark interest rate up to 1% in May 2022. At the same time, high inflation is still believed to be temporary. Of course, it’s possible, but the British regulator is highly unlikely to revise its policy until the end of the year. The most probable scenario implies the first steps in this direction in the first quarter of 2022 – by that time, the regulator may draw a consistent conclusion in the inflation behaviour.

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

The Pound is slowly growing. Overview for 21.10.2021

GBPUSD continues trading moving upwards notwithstanding short pauses.

The British Pound is retreating a little bit against the USD but the overall tendency remains bullish. The current quote for the instrument is 1.3802.

In some way, the Pound is capitalising on the situation rising because the “greenback” remains static. It helps the British currency to rise while domestic news tends to be rather mixed.

According to the Reuters survey, the Bank of England may become the first of all global Central Bank to raise its benchmark interest rate after the pandemic is over. Current market expectations imply that the British regulator may raise the rate by 15 basis points, up to 0.25% in the first quarter of 2022, February or March. Earlier, it was believed that the BoE wouldn’t do it until the fourth quarter of 2021.

A small part of respondents, one-fifth, believe that the Bank of England will raise the rate during its meeting on 15 November. 

Some other numbers show that in the fourth quarter of 2021 the British economy may add only 1.1% against the previous expectations of 1.5%. Overall, this year the economy is expected to expand by 6.8%, while 2022 may show 5%.

As for inflation, in the first quarter of 2022, it may reach 4%. However, after that, the indicator is expected to fall: 3.5% in the second quarter and 2.7% in the third one.

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

The Euro is looking strong. Overview for 25.10.2021

EURUSD is supported by the risk attitude.

The major currency pair is feeling the global risk attitude and trying to keep its positive momentum. The current quote for the instrument is 1.1660.

The “greenback” enthusiasts’ stake on reactions of the US Fed hasn’t worked so far – the American regulator is watching the statistics in silence and trying to avoid giving any comments on the QE programme reduction. Initially, investors believed that the Fed would announce the stimulus reduction right after the data on inflation and industrial production, but in vain.

This week, the European Central Bank is scheduled to have another meeting. According to market expectations, all monetary parameters of the regulator, such as the benchmark interest rate and the QE programme volume, should remain intact. It might be not good for the Euro.

Like the United States Secretary of the Treasury Janet Yellen said earlier, inflation would drop to acceptable readings in the second half of 2022. She thinks that monthly inflation managed to slow down if compared with spring and summer. However, as for YoY, the inflation rate remains high because of the 2020 low base. Yellen is sure that the US remains in control over inflation and doesn’t see any risks in expenditures and CPI data.

Inflation remains a controversial point for the US because there are no signs of a slowdown on a global scale.

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

The Aussie is skyrocketing. Overview for 27.10.2021

AUDUSD is rising and ready to update its local highs.

The Australian Dollar is steadily growing against the USD. The current quote for the instrument is 0.7527.

The statistics published today showed that the Australian CPI was 0.8% q/q in the third quarter, the same as expected. On YoY, the indicator showed 3.1%, which is below market expectations.

It’s rather unusual: basically, the world is fighting inflation boosts and deflation can be seen only in some particular countries, where it’s some kind of chronic disease of local economies. As for Australia, a stable monetary policy and the state’s consistent work with the labour market really pay off.

At the same time, one shouldn’t disregard the possibility of the economic slump in China, which, despite all issues of the last 18 months, remains Australia’s key trade and economic partner. There are a lot of talks on the global market right now relating to a possible slowdown in the Chinese GDP and that’s may have a serious influence on the Australian economy later.

Nevertheless, right now the AUD rate is quite bullish despite the fact that the USD is also pretty strong. We can even say that the current bullish impulse in the Aussie may get stronger and the instrument is on the way to updating its highs.

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

The Euro skyrocketed. Overview for 29.10.2021

EURUSD skyrocketed after the US released its GDP statistics.

The major currency pair remains strong at the end of this trading week. The current quote for the instrument is 1.1650.

There were a lot of things to pay attention to yesterday. The European Central Bank had another session and left all key parameters of its monetary policy intact. In the comments, the ECB Governor Christine Lagarde said that rate-related market expectations were totally different from the regulator’s stance. She said that the analysis used by the ECB showed no conditions required for the rate revision by the time investors were expecting it.  At the same time, the regulator believes that the reduction of the PEPP programme is not the reduction of the stimulus.

The ECB says that the pandemic influence is getting weaker, the economy is improving but not as fast as it was expected to. According to the regulator’s estimates, the GDP must exceed pre-pandemic levels by the end of the year.

The stance on inflation is quite standard. The CPI is expected to rise until the end of 2021 but may drop in 2022. Energy prices may have a negative influence on consumer activity.

Overall, the meeting was quite calm and the ECB didn’t give any clear signals whether it was ready to tighten its monetary policy or not, quite the contrary. The Euro remained stable but only until the moment the US released its GDP report.

The American economy added 2.0% q/q in the third quarter after expanding by 6.7% q/q the quarter before and against the expected reading of 2.7% q/q. The Real Consumer Spending report showed +1.6% after being +12.0% in the second quarter. The data was disappointing because it calls into question the regulator’s intentions during its November meeting, which is scheduled for 2-3 November. in response to the weak GDP report, the “greenback” plummeted.

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

The Aussie is falling. Overview for 02.11.2021

The Australian Dollar is retreating against the USD on Tuesday. The current quote for the instrument is 0.7458.

The Reserve Bank of Australia had another meeting today. The benchmark interest rate remained unchanged at 0.1% as expected. It’s been the lowest value ever and it remains intact. It was quite unusual that the RBA scrapped the 0.1% yield target on April 2024 government bond. Earlier, it was 10 basis points.

The stimulus programme will remain in effect at A$4 billion a week until at least mid-February 2022.

Overall, the regulator is sticking to a “wait-and-see” attitude. The RBA is in no hurry, under no pressure. To act more decisively, the RBA wants to see stable growth of salaries as was said earlier. As long as inflation is outside the 2-3% range, the regulator won’t consider any rate hikes.

The RBA announced its forecasts for the key macroeconomic indicators. For example, the GDP is expected to add 3.0% in 2021, 5.5% in 2022, and 2.5% in 2023. The Unemployment rate is expected to drop, to 4.25% at the end of 2022 and 4.0% in 2023.

The key risk is the situation in the healthcare sector and the pandemic. If the anti-coronavirus vaccination campaign boosts and produces positive results, the economy may recover quite quickly.

The Aussie’s response to the meeting results was decline.

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

The Aussie just can’t rise. Overview for 04.11.2021

AUDUSD just can’t find any reasons for recovering after plunging earlier this week.

The Australian Dollar is falling against the USD on Thursday. the current quote for the instrument is 0.7423.

The Retail Sales in Australia added 1.3% m/m in September, matching the expectations. Consumers remain quite active even despite some COVID-related restrictions.

The country’s export dropped 6% m/m in September after losing 4% m/m in the previous month. The import showed -2% m/m after bein-1% m/m over the same period. The import decline as the internal demand indicator doesn’t look optimistic so far but it may improve closer to Christmas and next summer.

According to the Fitch Ratings expectations, the Reserve Bank of Australia will raise the interest rate in 2023, although the regulator itself was talking about 2024. During its latest meeting, the regulator said that the rate wouldn’t be revised until inflation got back in the range of 2-3%. There is a more optimistic scenario, which implies a rate hike may happen at the end of 2022 if inflation reaches stability and salary growth exceeds expectations.

The forecast from ANZ is also quite optimistic – it implies a rate hike in the mid-2023 and the closure of the QE programme in six months.

The Aussie is pretty calm when it comes to the rate discussions.

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

EURUSD suffers from pressure. Overview for 08.11.2021

The major currency pair is slightly declining. The current quotation is 1.1560.

Friday statistics from the USA supported the dollar, but it had had no problems anyway. After the Fed made some decisions in accordance with the market expectations of a cut-down on stimulation, the dollar looks quite confident.

The unemployment rate in October in the USA dropped to 4.6% from 4.8% previously, while the forecast expected a result of 4.7%. Average hourly wage grew by 0.4% m/m, along with the forecast. The NFP in October increased by 531 thousand against the forecast 455 thousand. According to the revised statistics, last month the growth was 312 thousand.

So, Q4 started quite positively for the employment sector. This is mostly thanks to the spreading of the coronavirus slow down in September and October. This makes us think that Q4 for the US economy will be more efficient than Q3. The demand for workforce remains high, the number of vacancies is larger than the number of the unemployed.

The Fed suggests that by the mid of 2022, the States will have reached full employment, yet this seems fantastic.

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

US dollar looks interesting again. Overview for 10.11.2021

The major currency pair has declined slightly but looks rather stable before new macroeconomic reports. The current quotation is 1.1580.

Yesterday the trading day brought good news from the Euro zone. ZEW business sentiment index in November grew to 25.9 against 21 previously and the forecast 20.6. The same indicator in Germany reached 31.7 from 22.3 points previously.

Business sentiment must have improved thanks to almost complete abolishment of coronavirus restrictions inside European economies. The freer the conditions – the better for business and customers.

The US PPI in October also improved to 0.6% m/m, as expected, after previous growth by 0.5%. This means that prices grow gradually along the whole chain from the crude material supplier to the final customer.

Today is going to be an interesting day in terms of statistics. All eyes are on the US report on the CPI in October. The forecast inflation is at once 0.6% m/m higher than last month, after previous growth by 0.4% m/m. Base inflation could have extended by 0.4% m/m against previous growth by 0.2% m/m. However, current high inflation (its y/y values are renewing the highs) cannot make the Fed cancel it decision to reduce stimulation. Probably, a month or two later the Fed might speed up the process to increase the interest rate faster and hold back the growth of prices. Hence, depending on the data from today, volatility of the dollar might grow significantly, if real values turn out higher than forecast.

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

Pound renews the lows. Overview for 12.11.2021

The British pound against the US dollar renews the lows of the last 11 months. Current quotations are 1.3389.

The pound these days is definitely not an object for envy: statistics are awfully ambiguous, and the USD is pushing too hard to be opposed.

According to the prelim report, the British GDP in Q3 grew by just 1.3% q/q against the forecast 1.5% and growth by 5.5% in Q2. A decline in the British economy must be directly connected to issues with supply chains and the pandemic.

Industrial production in Britain in September dropped by 0.4% m/m, which is an unpleasant yet expected signal. The forecast was 0.2%, and a month before, this index grew by 1.0%. Manufacturing in September dropped by 0.1% m/m against the expected growth by 0.2% m/m. In construction, growth was abrupt, by 1.3% m/m against the forecast growth by 0.2% m/m. This must be a partial compensation for the decline by 0.7% in August.

Production suffers due to some issues with supply as well. This is a problem of all large economies these days, but for Britain, it is even worse after Brexit.

For Q4, there is little optimism: supply issues will be still there and might be even worse in the cold season. For the pound, this is a bad signal.

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

The Aussie is falling. Overview for 16.11.2021

AUDUSD is retreating; the Chinese aggression shouldn’t be underestimated.

The Australian Dollar is falling against the USD on Tuesday afternoon. The current quote for the instrument is 0.7339.

While there are no important statistics from Australia, the centre stage is taken by geopolitics, which is not quite calm right now.

Yesterday, the Chinese media called on Australia not to pry into other country’s affairs, meaning the conflict between China and Taiwan. Chinese authorities say that in the Australian army takes part in military operations across the Taiwan Strait, China will have to respond.

It seems like the relations between China and Australia are at a low ebb, and that’s not good news: China remains Australia’s key trade and economic partner and geopolitical problems may have an extremely negative influence on their cooperation. At the same time, many Australian politicians don’t think that the relations between Taiwan and Australia are vitally important.

The Aussie rate will negatively respond to any minor aspects in the Chinese-Australian relations.

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