The Pound is having tough times. Overview for 29.09.2022

The Pound Sterling is keeping balance against the USD as much as possible. The current quote for the instrument is 1.0800.

The news released yesterday were rather puzzling. The Bank of England announced its decision to buy long-term bonds to calm markets starting 28 September, thus stopping the bond buying programme that started earlier. The programme volume is not limited – the regulator said the purchases might be any number necessary to achieve the target.

The target is to get back to normal market conditions.

The surge in profitability of the British national debt was caused by the programme to cut taxes in the country, which might add over 70 billion to the UK budget this year alone.

What does it mean? First of all, the BoE acknowledged a defeat in its fight against inflation. It happens. But now the UK is facing hyperinflation. In other words, they use gasoline to fight fire.

A as result, the new Prime Minister Liz Truss has met all concerned expectations so far – her policy is aggressive and rather questionable. She was already asked to fire Chancellor of the Exchequer, but she hasn’t made the decision yet.

In this light, the Pound found itself even in a more complicated position.

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

EURUSD has reached stability. Overview for 03.10.2022

The major currency pair is looking rather neutral early in a new week, which is promising to be quite volatile. The current quote for the instrument is 0.9788.

In September, EURUSD lost 2.5%. Also, it has declined 16% since the beginning of 2022.

This week, the US will release new numbers on the labour market. The first September report, ADP Non-Farm Employment Change, will be published on Wednesday and might show 200K after being 132K the month before. On Friday, investors will witness the Unemployment Rate and Non-Farm Payrolls data. The NFP is expected to show 265K after being 315K in August.

Signals from the labour market will be extremely important – they will provide the understanding of how stable the American economy is after the tight monetary decisions introduced by the US Fed.

There is an opinion that the fourth quarter might be quite successful for the “greenback” due to rising demand for “safe haven” asset and additional rate hikes. Still, expectations are rather different. For example, Wells Fargo experts believe EURUSD might drop to 0.9100 by the end of 2022 due to global inflation boost and a decline in consumer and business confidence in Europe.

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

EURUSD: back to parity again. Overview for 05.10.2022

The major currency is ready to test parity on Wednesday. The current quote for the instrument is 0.9990.

The key trigger for the EUR right now is a huge rebound in global capital markets, which revived risk attitude. The USD, in its turn, is being failed by a decline in the US bond yield.

Investors are clearly longing for purchases.

Today’s trading session is expected to be quite interesting statistically-wise. The Euro Area and some of its members will release final reports on their Services PMIs in September. For the Euro Area, the indicator is still below the psychologically important level of 50 points and will probably remain there. As long as inflation is high, it’s rather difficult to expect anything else.

On Wednesday, the US is scheduled to start reporting on its labour market. The first repot to be published is the ADP Non-Farm Employment Change, which is expected to show 200K in September after being 132K the month before. It would be good news.

We remind you that there is no direct correlation between the ADP Non-Farm Employment Change and the Non-Farm Payrolls, which will be released on Friday. However, the first report might help to gain an overview.

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

Investors must accept the weak Euro. Overview for 07.10.2022

The major currency pair is looking weak on Friday. The current quote for the instrument is 0.9800.

Investors revived their interest in “safe haven” assets amid deterioration of market sentiment and the USD is taking the centre stage. At the same time, the Euro is getting weaker after the comments from the International Monetary Fund about raising concerns about global recession and worsening forecasts of the global economy next year.

Yesterday, the US reported on the Unemployment Claims, which showed 219K against the expected reading of 205K. The last week’s reading was revised downwards. It looks like the previous improvement was local.

Today’s trading session is going to be interesting. The US continue publishing the labour market statistics. The Unemployment Rate is expected to remain at 3.7%, while the Average Hourly Earnings might add 0.3% m/m. The key highlight is the Non-Farm Payrolls, which may show 265K In September after being 315K the month before.

The US FOMC is keeping a close eye to the statistics – the data will help the regulator make monetary policy effectiveness. As a result, EURUSD might get more volatile in the evening.

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

Statistics made the Pound fall. Overview for 11.10.2022

The Pound Sterling is retreating against the USD. The current quote for the instrument is 1.1012.

The USD is raising pressure on other currencies. The reason is global risk aversion in capital markets.

The statistics published by the United Kingdom in the morning were rather mixed. For example, the Unemployment Rate dropped to 3.5% in August after being 3.6% the month before, although it wasn’t expected to change. The Average Earnings Index gained 6.0% 3m/y after adding 5.5% 3m/y in the previous period and against the expected growth of 5.9% 3m/y.

It appears that the growth in salaries is the result of mass strikes that took place in the UK in July and August.

There is some tension resulting from the Claimant Count Change report, which showed 25.5K in September against the expected reading of 4.2K. At the same time, the August reading was revised upwards, from 6.3K to 1.1K.

In September, the labour market might have lost a lot of job due to seasonal periodicity. However, if the October data confirms the trend, one may talk about an escalation of the labour market crisis. For the Pound, it’s bad news.

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

EURUSD is stable. Overview for 13.10.2022

The major currency pair is looking neutral on Thursday. The current quote for the instrument is 0.9700.

The currency market seems to have calmed down – you don’t often see such a situation recently. Investors decided to simply monitor what is happening in the market in anticipation of important statistics.

Yesterday, the US FOMC released its latest Meeting Minutes. The document says that the regulator must switch and stick to a more aggressive monetary policy to reach inflation targets. Many members of the Committee revised their opinions on the highest rate value. They say that after raising the rate to the particular level, the FOMC should keep it there for a specific period of time.

All these remarks are quite standard. Among more important and unusual things was the comment about the importance of adjusting the pace of future rate hikes and monetary policy strengthening in order to avoid significant negative consequences of the country’s economy and its future outlook.

In other words – the regulator should raise the rate in a way it won’t hurt the economy.

Later today, investors should pay attention to the inflation data for September from the US. The indicator is expected to show 0.2% m/m after being 0.1% m/m in the previous month.

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

Yen heading for new lows. Overview for 17.10.2022

Japanese yen paired with the US dollar has returned to a devaluation strategy. The current quote in USDJPY is 148.70. It is close to a 32-year high.

Morning statistics showed that Japan's final volume of industrial production for August rose to 3.4% y/y, while a gain of 2.7% y/y was expected, as before. This is not a bad signal, although there are opinions that it has a purely local nature.

Japanese monetary policy makers have spoken this morning and said it is appropriate to continue monetary policy easing. The Prime Minister noted the possibility of taking action against currency speculation.

The yen's devaluation is a consequence of the difference between the monetary strategies of the BoJ and the world's leading central banks. The BoE is now probably the only one that implements economic stimulus and keeps the interest rate negative.

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

EURUSD is stable. Overview for 19.10.2022

The main currency pair looks stable on Wednesday. The current quote in EURUSD is 0.9830. The day before there was a local increase in risk appetite. On the one hand, spot gas prices in Europe have normalised. This is due to the high level of gas storage capacity (e.g. 97% in Germany) and the warm weather. As long as climatic conditions permit, gas withdrawals have been reduced.

On the other hand, China has refused to publish Q3 GDP statistics and a number of other indicators. The decision probably stems from a desire not to disturb the already emotional capital markets. Overall, this is what is keeping EURUSD "balanced".

Today the Eurozone will present the final inflation calculation for September. The consumer price index is likely to remain at 10.0% y/y, as shown by the initial release. Core inflation was 4.8% y/y. There are no "surprises" in the data, but one can be surprised by how quickly prices are "accelerating".

The US is preparing to release reports on the number of building permits and new home starts. Reactions to the data are unlikely: investors are interested in news of a different order - for example, what the Fed's rate will do next.

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

The Pound "says goodbye" to the prime minister. Overview for 21.10.2022

The British pound sterling is down against the US dollar on Friday. The current quote in GBPUSD is 1.1190. So, another political intrigue in the UK has been resolved. Prime Minister Liz Truss has resigned over the consequences of the economic programme she was promoting. "A 'split' in the ranks of the Conservative Party is unusual in itself. But when you remember that Truss proposed to reduce taxes by increasing the national debt and at the same time reducing confidence in the British economy in general, everything falls into place.

Truss' resignation came a day after the minister of the interior stepped down. Earlier, the finance minister had left their post.

For now the political debate and the search for a new head of government will remain the "focus" of market attention.

At the same time, it is worth keeping an eye on what the Bank of England will do now. Earlier comments were made by its representatives that rates might not rise as quickly as the markets would like them to. The English regulator is facing a fantastically difficult task in reducing inflationary pressures. The consumer price index has reached double digits and for conservative England this is a huge "stress".

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

Pound is looking for foothold. Overview for 25.10.2022

On Tuesday, the British pound against the US dollar looks neutral. The current quote is 1.1300. The main political intrigue of Great Britain got solved faster than anyone could expect. The new head of the Conservative Party and simultaneously the new PM was elected Rishi Sunak. He is the first PM of Indian origin and the youngest one over the last 200 years.

For GBP, this is good news, though it remains unclear how Sunak will be saving the drowning economy of Britain.

The market is now focusing on the November meeting of the Bank of England. It is scheduled for the first week of the month already. Averaged market expectations presume that the interest rate might be lifted by a lot at once. However, compared to the aggressive monetary policy of the US, this will definitely not be enough. In these circumstances, no aggressive growth of the pound should be expected.

The weak fundamental background in the medium run will for now be playing against any attempts of the pound to start growing.

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

Australian dollar paused. Overview for 27.10.2022

The Australian dollar against its US colleague has stabilised after a wave of growth. The current quote is 0.6473.

The Reserve Bank of Australia doubts the economic perspectives due to high inflation. In a tweet posted yesterday, the RBA still expresses its resignation to keep lifting the interest rate until inflation is brought to order.

This is a positive message for the AUD. It means the financial policy will remain tight, which is good for the national currency.

With the USD being weak, the Aussie got much stronger earlier. Now the market is wondering whether the time has come for a technical pullback; strategically, however, the situation in the currency sector has not changed. Risks can become acute at any moment, and the USD has no rivals as a protective asset.

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

Yen is balanced. Overview for 31.20.2022

On Monday, the Japanese yen against the US dollar looks neutral. The current quote is 148.25.

The yen is becoming weaker again after large-scale interventions of the Bank of Japan. The process will not be fast, because the market is still full of money. However, the yen has no other option than to fall as long as the difference between monetary approaches and interest rates of the Bank of Japan and the US Federal Reserve System remains so huge.

Morning statistics from Japan turned out to be mixed.

Particularly, retail sales in September grew by 4.5% y/y against 4.1% in August and the forecast decline to 4.0%. This is a good signal even with the growing inflation.

The Japanese CCI dropped to 29.9 points from 30.8 before. It had been expected, however, to grow to 31 points.

The number of new houses starts in September, which is the most important index for the real estate market, grew by just 1% upon growing by 4.6% in August. The decrease in the segment might be due to the speeding-up of growth of the CPI.

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