The Aussie is trying to recover. Overview for 23.08.2022

After being sold for several trading sessions in a row, AUDUSD is trying to rebound.

The Australian Dollar is trying to revive the positive momentum against the USD on Tuesday. The current quote for the instrument is 0.6865.

Not to say the Aussie is looking bad or insecure in comparison to other traded currencies – the situation is absolutely the same. All of them are being pressured by the “greenback”.

In addition, there is a clear negative vibe in the AUD – a serious slump in the Chinese economy. China has always been Australia’s key trade and economic partner, so everything that is happening to its economy is very essential for the economic outlook of the “Green continent”.

The statistics published by Australia in the morning turned out to be rather unimpressive, just as expected. Preliminary reports on Manufacturing/Services PMIs showed worse number than expected. The first indicator dropped to 54.5 points in August after being 55.7 points the month before. The second one went from 50.9 points in July to 49.6 points this month.

The fact that the indicator broke the psychologically important level of 50 points that separates decline and growth is bad for the AUD. At the same time, August is finishing the Australian winter, so one can expect some local improvement in  the spring.

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

EURUSD: back to parity. Overview for 25.08.2022

After three days of plummeting, EURUSD managed to recover to parity.

The major currency pair is trying to regain  its positions. The current quote for the instrument is 0.9990.

The statistics published by the US yesterday turned out to be not as disappointing as it could have been.

The Durable Goods Orders report showed no changes in July after gaining 2.0% m/m in June and against the expected reading of 0.9% m/m. Core Durable Goods Orders added 0.3% m/m, which is better than expectations of 0.2% m/m.

Durable Goods Orders ex. Defence gained 1.2% m/m. Non-Defence Goods Orders ex. Air dropped 0.7% m/m.

Reports confirm that there is a demand for expensive goods despite rising inflation. It’s good news.

The Pending Home Sales report showed -1.0% m/m in July, which is better than market expectations of -2.6% m/m, and high above the June reading of -8.9% m/m. In fact, this report is very important and illustrative – it shows deals that were signed but haven’t been paid yet. As a rule, it takes about two months.

Later in the afternoon, investors should pay attention to a couple of things: ECB Monetary Policy Meeting Accounts and the US Q2 GDP report. The better the reading, the calmer the market might get.

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

The Pound is plummeting. Overview for 29.08.2022

GBPUSD is plunging and updating its multi-month lows.

The Pound Sterling can’t help plummeting against the USD. The current quote for the instrument is 1.1674.

Apart from the strong ”greenback” factor and global risk aversion, negative news came from the British energy regulator, The Office of Gas and Electricity Markets (Ofgem).

The regulator said that an average energy bill for households in the country would rise by 80%, up to £3,549. The reason is simple – the energy crisis in Europe. The HM Treasury quickly responded and said that it was thoroughly working on developing new options to support households with energy subsidies. However, it didn’t cheer anyone up.

The energy price surge will push inflation and aggravate the UK’s economic situation. Right now, it’s quite vague how authorities are planning to handle that.

However, investors shouldn’t definitely count on the Bank of England – the regulator will raise the benchmark interest rate at its own pace, because it doesn’t make any sense to try and catch the US FOMC. In addition, as long as energy supplies and prices aren’t stable, inflation will continue rising. And monetary mechanisms can’t help here.

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

Forex Technical Analysis & Forecast 31.08.2022

EURUSD, “Euro vs US Dollar”

After completing the descending structure at 0.9982, EURUSD is growing towards 1.0057 and may later fall to return to 0.9982, thus forming a wide consolidation range around the latter level. If the price breaks this range to the downside, the market may resume moving downwards with the target at 0.9800; if to the upside – start another growth to reach 1.0097.

Read more - Forex Technical Analysis & Forecast 31.08.2022

The Yen is plunging quickly. Overview for 01.09.2022

USDJPY is ready to update its multi-year lows again.

The Japanese Yen is back to devaluating against the USD. The current quote for the instrument is 139.38.

The “greenback” is extremely strong. In addition to that, market players didn’t get any signal from the Bank of Japan concerning the revision of its monetary policy. It makes the BoJ and the Yen very vulnerable.

According to statistics published yesterday, the Retail Sales report showed 2.4% y/y in July after being 1.5% y/y in the previous month and against the expected reading of 1.9% y/y. The preliminary report on Industrial Production showed 1.0% m/m in June, although it was expected to decline after skyrocketing 9.2% nm/m in May.

It’s quite interesting that Consumer Confidence in Japan improved: in August, the indicator showed 32.5 points after being 30.2 points the month before and against the expected reading of 29.4 points.

One of the BoJ members said yesterday that during its September meeting the regulator was going to make a decision about the remaining stimulus introduced during the pandemic. He said that the CPI had surpassed 2%, but it was still not enough. The Bank of Japan is working towards a positive cycle, when both inflation and salaries rise based on an increase in corporate profits and improvements in the labour market.

His words are surely positive. However, will the Japanese regulator deviate from its standard conservative course? Highly unlikely.

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

EURUSD: going down again. Overview for 05.09.2022

Our major starts the first full week of September by a decline. The current quote is 0.9920. The main factor that undermines the EURUSD rate is the development of the energy crisis in Europe. The EU, on its side, is doing everything to avoid fuel supply problems in the upcoming winter season, yet there are issues that do not depend on Europe. The growth of prices for energy carriers will go on heating up the European inflation that noticeably depresses the EUR.

The US labour market statistics on Friday turned out to be mixed. The NFP in August grew by 315 thousand places against the forecast 300 thousand. Average hourly wage grew by 5.2% y/y against the expected 5.3% y/y. Suddenly, the unemployment rare grew to 3.7% against the forecast 3.5%.

So, workplaces are still being created. However, the dynamics of the most important indicators in the employment sector demonstrates a slow-down. For the USD, this unequivocally means that in September, the Fed will continue raising the interest rate even higher.

On Monday, US markets are closed because of the Labour Day. Volatility will be lower but moods will remain passionate.

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

Euro remains vulnerable. Overview for 07.09.2022

The market major remains depressed. The current quote is 0.9900.

As previously, the euro is affected by the energy crisis unveiling in Europe. While the winter season is coming, this factor will be acquiring more and more significance. On the other hand, the USD is supported by the demand for safe-haven assets from investors who are fleeing from risks worldwide.

Moreover, the market is interested in the dollar because the September meeting of the Fed is close. Most probably, the interest rate will be raised for no less than 50 base points. The main goal of the Fed’s tough monetary policy is control over inflation. As the regulator has mentioned, all measures will do.

Yesterday the US reported an unexpected increase in the PMI in non-production. The ISM in August grew to 56.9 from 56.7 points. However, by Markit, it dropped to 43.7 from 44.1 points.

As for important statistics planned for today, only the Beige Book is expected in the US.

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

Euro managed to recover. Overview for 09.09.2022

The market major recovered quite noticeably. The current quote is 1.0100.

The European Central bank raised the interest rate by 75 base points at once, bringing it to 1.25% a year. This result of the meeting was anticipated but not the most looked forward to one.

In the comments, the ECB mentioned that the growth of inflation pressure was provoked, among other things, by the weakness of the EUR. Future interest rate decisions will depend on macroeconomic factors, and the new increase will not necessarily be by 75 base points. Inflation called for decisive measures but the economy might later do without them.

The current rate is not neutral; later on, lifting it to a neutral one will be necessary.

As for the situation in the economy, the ECB mentioned that the GDP was likely to shrink in 2023, and the perspective is, indeed, quite gloomy. The ECB goes on stimulating the economy, but in the future something will need to be decided about TLTRO and other support measures.

Then attention shifted to the Fed. The head of the regulator Jerome Powell mentioned that the Fed would be doing everything to fight with inflation. His speech made the market expect the rate to be lifted by 75 base points in September. According to CME, the probability of such a decision is no less than 80%.

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

Euro reached 3-weeks' highs. Overview for 13.09.2022

The market major on Tuesday remains strong, the current quote is 1.0148.

No important news was published yesterday, so investors had enough time to show their positive attitude in the quotes.

At the meeting in September the ECB gave absolutely unambiguous signals of readiness to make its credit and monetary policy tougher. This will take from two to five sessions. Such a confident behaviour of the regulator lifts some risks off the euro.

Moreover, the euro is also supported by a decrease in stop prices for gas in Europe. Yesterday it dropped to 2,000 USD per thousand cubic meters for the first time since June. This happened because the demand from European consumers dropped and because supply by the North Stream stopped.

Today the market is focused on the US inflation statistics. In August, the CPI is supposed to have dropped by 0.1% m/m. Americans are decreasing expectations waiting for the release: 5-years forecasts are on 2.0% after 2.35% in July and 3% in January. The hope for a decline of inflation parameters can both support market moods and push down the USD.

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

Australian dollar is stressed. Overview for 15.09.2022

The Australian dollar against the US dollar continues falling. The current quote is 0.6742.

After a crash on Tuesday, the Aussie has somewhat stabilized but sellers are still prevailing.

As morning statistics demonstrated, the unemployment rate in Australia in August grew to 3.5% against 3.4% in July, while no changes had been expected. The number of jobs last month grew by 33.5 thousand workplaces, which turns out to be much lower than forecast (35.5 thousand). Still, the decline of July is mostly covered up.

Components of the report look neutral. The proportion of working population has not changed, remaining at 66.6%, while full employment has increased quite noticeably. Moreover, the rush season starts, when employment in services naturally grows.

The situation in the Chinese economy is a serious stress for the economy of Australia because China is its major trade and economic partner. China is obviously in trouble, and mutual trade may be affected.

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

The Yen recovered a bit. Overview for 22.09.2022

USDJPY is falling on Thursday after interventions by the Bank of Japan.

The Japanese Yen reached stability against the USD. The current quote for the instrument is 142.85.

The Yen was weakening against the USD yesterday but managed to reach stability this morning. The Japanese currency might be interesting for investors as a “safe haven” asset.

The Bank of Japan had a meeting in the morning and decided to keep the rate unchanged at -0.10%, the same as expected.

In the comments, the regulator said that the Japanese economy might recover faster when the pandemic and limited supplies were over. At the same time, the BoJ is expecting the core CPI to boost by the end of 2022 due to an energy and food price surge.

The regulator said it was expecting inflation to continue rising.

Among other important things: the BoJ decided to close the programme of financing that was introduced during the pandemic.

Also, it looks like the regulator intervened in the foreign-exchange market to lower the pressure on the Yen. After announcing its readiness to intervene into currency trading, the BoJ is expected to make more moves.

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

The Pound is falling freely. Overview for 26.09.2022

The Pound Sterling dropped against the USD to the lowest levels since 1985. The current quote for the instrument is 1.0740.

The Pound got under pressure from two sides simultaneously - the strong “greenback” and decisions made by the British regulator.

The USD has an extremely strong influence on the British currency which can hardly be avoided. As along as the capital markets are escaping from risks, this factor will remain effective.

Domestic news doesn’t improve risk attitude. Earlier, the British chancellor announced a £45-billion tax cut package, which is expected to be the biggest in the last 50 years. The package will be financed from selling government bonds to compensate for electricity expenses for the country’s population and companies.

The government bears some of the expenses, admitting severe complications in the financial conditions. However, market players are absolutely not confident whether it will work.

At the same time, there is a parallel story with the Bank of England, which, under the circumstances, should raise the benchmark interest rate by 100 basis points or more, but evidently is not ready for such a move.

Investor are trying to buy out some of the emotional sales of the British currency, but the overall situation is clearly against the Pound.

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