GBP is saving strengths. Overview for 05.07.2022

GBPUSD has fixed inside the range but any risk will make it retreat.

The Pound sterling is looking rather neutral against the USD on Tuesday. The current quote for the instrument is 1.2110.

There are still a lot of risks for the British currency. One of the latest is the decline in consumer confidence, which dropped to its all-time low. Retail sales also plummeted in April and May, while the GDP lost 0.3% m/m in April. According to the Organisation for Economic Co-operation and Development, OECD), the British economy will demonstrate zero growth in 2023 and it’s rather negative information.

Politics is another thing to pay attention to. The House of Commons is currently discussing the voting bill, which, among other things, will allow the government to unilaterally alter the Northern Ireland Protocol. The bill might be very handy considering all the complications with an approximation of legislation nuances on different levels. However, the имшдд is also very likely to add more problems with sentiment in the country.

On top of that, the Pound tends to fall when global Central Banks tighten their monetary policies. This year, all major regulators, except for Japan, are following this path.

Even disregarding the statistics, it’s quite clear that the overall picture being formed right now is rather unstable for the British currency.

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

The Yen may drop. Overview for 07.07.2022

USDJPY is preparing a new attack on the highs.

The Japanese Yen is slowly falling against the USD. The current quote for the instrument is 136.16.

The statistics published by Japan in the morning showed that the Leading Economic Index dropped to 101.4 points in May after being 102.8 points the month before. The Coincident Index went from 96.6 points in April to 95.5 points in May. 

The Japanese media reported today that the Bank of Japan might revise its GDP forecasts for 2022 downwards. Jiji experts believe that the regulator is also willing to revise its inflation forecast as well. The current target for inflation is 2% and it’s rather difficult to imagine that it might be high. However, everything is possible.

The Bank of Japan is highly likely to refrain from influencing the Yen rate in any way. This year, the Japanese currency has already lost almost 15% against the “greenback” and the sky seems to be the limit. However, there is no point in interventions: as long as the regulator’s monetary policy remains ultrasoft, the rate difference may count against the Yen.

It’s interesting that the “greenback” is not as aggressive against the Yen as against other traded currencies. Perhaps, it’s because devaluation of the Japanese currency started a long time ago and it’s not quite clear when it might end. If so, why hurry?

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

The Yen updated the lows. Overview for 11.07.2022

USDJPY reached new highs – the “greenback” continues to get stronger.

The Japanese Yen plunged against the USD. The current quote for the instrument is 137.02.

A new high for the pair is at 137.28.

The USD keeps getting stronger, making the Yen retreat. Despite an unstable situation in the market, investors barely have any interest in the Yen as a “safe haven” asset.

As a result, the devaluation issue, which seemed to have been put on the back burner, has  been revived.

The statistics published by Japan earlier this morning showed that Core Machinery Orders dropped 5.6% m/m in May after adding 10.8% m/m in April and against the expected decline of 5.3% m/m.

On YoY, the indicator gained 7.4%, above market expectations of 5.8%.

The domestic statistics reflect not the stablest situation in the Japanese economy. For example, the Household Spending report for May released earlier indicates difficulties with prices and spending – the report showed -0/5% y/y, although it was anticipated to gain 2.2% y/y. In April, the indicator lost 1.7% y/y.

One may assume that the country’s population is once again concerned with the inflation boost caused by the energy price surge, making people switch to a “save money” spending pattern.

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

The Euro is trying to grow. Overview for 13.07.2022

EURUSD remains close to parity but keeps trying to recover.

The major currency pair perseveres in its attempts to rise after yesterday’s decline. The current quote for the instrument is 1.0039.

The key highlight is the parity EURUSD reached yesterday, something that investors haven’t seen in 20 years and, probably, wouldn’t like to see. However, it should come as no surprise. The difference between benchmark interest rates of the ECB and the US FOMC is playing against the European currency. In addition, the Euro Area is facing a trade balance deficit due to the energy price surge and problems with supplies – all this also put pressure on the EUR.

Europe’s energy crisis is bad news for the EUR. Everything that is happening right now can’t be solved quickly, which means that the Euro will remain strategically weak despite all its attempts to recover.

Later today, market players should switch their attention to the US CPI, which is expected to show 1.1% m/m and 8.8% y/y.  Inflation in the US may show a new high, increasing the chances for a 75-point rate hike in July.

High inflation won’t shock investors – they've already got used to it. The Core CPI might drop, but not too much.

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

The Aussie is in the “bearish” clutch. Overview for 15.07.2022

AUDUSD is falling despite the rate expectations and statistics.

The Australian Dollar is falling against the USD on Friday. The current quote for the instrument is 0.6726.

The USD keeps attacking and it prevents the AUD from recovering, even considering strong statistics.

The data published yesterday showed that Employment Change was 88.4K in June against the expected reading of 30K. The current trend is quite positive – in May, the indicator was 60.6K in May. The unemployment rate in Australia dropped from 3.9% in May to 3.5% in June.

As a result, the Australian economy was experiencing the “hiring boom” in June, forcing the Unemployment Rate to drop to its 50-year lows. Such a stable labour market boosts market expectations of more aggressive moves from the Reserve Bank of Australia during its next meeting. Investors believe the regulator will raise the benchmark interest rate.

This might be a good move, considering the global inflation boost. The КИФ might have to act more aggressively than usual and it’s good for the Aussie.

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

The Pound is not going to stop. Overview for 02.08.2022

GBPUSD is keeping the positive momentum gained earlier.

The Pound Sterling continues to rise against the USD. The current quote for the instrument is 1.2235.

The statistics published yesterday showed that Manufacturing PMI in the United Kingdom dropped to 52.1 points in July against the expected reading of 52.2 points. The indicator is slowing down in response to monetary policy tightening.

This week, the Bank of England is scheduled to have another meeting and decide on the benchmark interest rate. One of the scenarios implies a 50-point rate hike, from 1.25% to 1.75%. Investors have already received signals in favour of it.

The rate hike will additionally reduce business activities. However, it will mean that the strategy is working and the regulator is talking control over inflation.

The influence of domestic political turmoil on the GBP has declined in recent weeks, and it’s a good thing for the British currency.

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

The Aussie intends to rise. Overview for 04.08.2022

AUDUSD is rising after a major plunge this week.

The Australian Dollar is strengthening against the USD on Thursday. The current quote for the instrument is 0.6985.

The Reserve Bank of Australian had another meeting this week where it raised the benchmark interest rate by 50 basis points, from 1.35% to 1.85%. The rate hike was expected, hence no surprises for investors.

In the comments, the RBA said that the rate was raised as a part of monetary policy normalisation. At the same time, the regulator’s rhetoric changed, became more aggressive, and clearly sounded like it would continue tightening its monetary policy and raising rates. 

By doing this, the RBA sticks to a global approach of rate hikes and doesn’t allow carry trade investors to interfere with currency trading – spreads between the rates are not so big.

As for the national currency, the rate hike is rather negative for the Aussie.

One report published yesterday showed that Retail Sales added 0.2% m/m in July, the same as expected. Australia is going through a season of low consumption, that’s why weak readings might be temporary.

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

EURUSD is confused. Overview for 08.08.2022

EURUSD reached stability; the asset remains inside its strategic sideways channel.

The major currency pair is slowly rising, but it can be clearly seen that investors have no idea of what to do next. The current quote for the instrument is 1.0183.

On one hand, investors got a very clear signal that the stability of the US labour market allows the FOMC to continue tightening its monetary policy. This factor provided the “greenback” with much support. On the other hand, market players are trying to escape risks that are already priced in. They are sick and tired of being afraid and want some movement.

The Unemployment Rate in the US dropped to 3.5% in July after being 3.6% the month before, although it wasn’t expected to change. The NFP showed significant improvement and was 528K against the expected reading of 250K. The Average Hourly Earnings gained 0.5% m/m, which is more than expected, 0.3% m/m.

In other words, businesses have enough safety margin in terms of jobs. It means that nothing prevents the Fed from raising the rate by another 50 basis points in September.

The Consumer Credit in the US showed $40.2 billion. It looks like consumers are expecting loans to be more expensive in the future due to possible rate hikes and are trying to benefit from the situation right here and now. 

As for fresh economic statistics, today’s trading session is going to be calm. However, the external background is rather negative, so the demand for the “greenback” as a “safe haven” asset might go up.

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

EURUSD is trying to rise. Overview for 10.08.2022

EURUSD hopes for a local improvement, but there might be surprises.

The major currency pair remains positive. The current quote for the instrument is 1.0222.

The currency market has been rather quiet for a couple of days. It’s some kind of summer vacation – no news, no statistics, it’s time to relax a bit.

However, today investors will switch their attention to the CPI data from the US. Average market expectations are rather conservative: the indicator might add 0.2% m/m after gaining 1.3% m/m in June.

Market players have already priced in these expectations, but there always might be nuances and surprises.

By the way, at Morgan Stanley they believe that markets underestimate the stability of inflation and the willingness of the US fed to fight it. If the CPI turns out to be higher than expected, the regulator will continue tightening its monetary policy, hence causing the “greenback” to rally.

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

The Pound is trying to rise. Overview for 12.08.2022

GBPUSD is keeping its positive momentum while the “greenback” remains weak.

The Pound Sterling is looking good against the USD on Friday. The current quote for the instrument is 1.2178.

In the morning, the United Kingdom released a great deal of numbers.

Industrial Production lost 0.9% m/m in June after adding 1.3% m/m in the previous month and against the expected decline of -1.3% m/m. Manufacturing Production dropped 1.6% m/m after gaining 1.7% m/m in May and against market expectations of -1.9% m/m. Construction Output showed -1.4% m/m, which is, of course, better than the “apocalyptic” forecast (-2.0%), but still not good.

The key reason for these declines seems to be inflation, which makes businesses and enterprises cut down production to avoid the impossibility of selling goods.

The British GDP dropped 0.6% m/m in June after adding 0.4% m/m in May and against the expected decline of 1.2% m/m. 

The preliminary GDP report for the second quarter showed -0.1% q/q. It’s better than expected, -/02% q/q, but much worse than the Q1 reading, +0.8% q/q.

All these changes are easily explained by what is happening to the British economy and outside the country.

It’s interesting that the Pound is barely reacting to the latest statistics – after all, there is nothing really surprising in the numbers – and is trying to keep its positive momentum while the “greenback” remains weak.

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

The Pound is losing to gravity. Overview for 16.08.2022

GBPUSD is falling on Tuesday; bears are getting more aggressive.

The Pound Sterling continues to fall against the USD without any breaks. The current quote for the instrument is 1.2022.

Earlier today, the United Kingdom released several reports on its labour market. The Unemployment Rate remained unchanged in June at 3.8%. Average Earnings Index added 5.1% 3m/y after gaining 6.4% 3m/y before and against the expected reading of 4.5% 3m/y.

Claimant Count Change showed -10.5K in July after being -26.8K the month before and against the expected reading of -32.0K.

The Pound barely paid any attention to the statistics. The reasons are obvious – the aggressiveness of the “greenback” and the global risk mitigation tendency.

The reports can be called rather neutral. However, considering the problems the United Kingdom and the rest of Europe may face in the near future, the labour market might as well have hard times ahead.

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

The Aussie keeps selling. Overview for 18.08.2022
AUDUSD has been plunging for the fifth consecutive trading session; the labour market data turned out to be very weak.

The Australian Dollar is looking unimpressive against the USD. The current quote for the instrument is 0.6940.

The statistics published by Australia in the morning were rather controversial. On one hand, Unemployment Rate in the country dropped to 3.4% in July after being 3.5% the month before, and it’s good news. On the other hand, Employment Change showed -40.9K after being 88.4K in June and against the expected reading of 26.5K.

Participation Rate was 66.4% in July against the expected reading of 66.8%. Full Time Employment change plummeted.

What is happening? There are no viable explanations so far. It’s the end of winter in Australia, so it might be a seasonal factor. In addition, the economy might cut jobs due to demand issues amid an inflation boost and rate hikes.

In any case, market players should see how the situation unfolds before drawing any far-reaching conclusions. For the AUD, this labour market slump is moderately negative.

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