EUR is stuck consolidating. Overview for 20.01.2023

EURUSD is going to consolidate. The current quote is 1.0810.

In the nearest future the EUR might experience some local pressure because the weather in Europe has changed, and because gas prices are growing again. For the current heating g season, there are no risks. After all, the biggest part of winter has passed. However, investors might feel some tension.

The US employment market has given us a nice surprise. The number of unemployment claims this week has dropped to 190 thousands from 205 thousands, while the forecasts implied growth to 214 thousands.

These statistics are quite positive but the market has got questions. For example, when will we notice the flow of the unemployed generated by corps such as Microsoft. The most conservative view is that we will notice it in Q2. However, companies are cutting down on the staff so fast that we might notice it earlier.

Today an eye shoud be kept on the PPI from Germany for December. Also the US will publish the December report about houses sold in the secondary market.

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

EURUSD took a pause. Overview for 06.02.2023

EURUSD has used all the active signals and is waiting for new ones. The current quote is 1.0800.

Many things have happened. The US Federal Reserve System carried out its long-awaited meeting, where they decided to lift the interest rate by 25 base points and gave quite controversial signals. Practically, they said that would be lifting the interest rate smoothly but were ready to consider bringing the tight monetary policy to the end.

After the rate sky-rocketed in 2022, the current growth looks slow and carefree. This makes capital markets happy.

The European Central Bank also lifted the interest rate but by 0.50% as expected. The regulator commented that it was not the peak yet and still had a way to go. In March, the rate will again be lifted by 50 base points. According to the ECB, economic activity in the region has dropped.

The USD turned out in a stronger position.

The US employment market statistics for January gave the currency additional support. The unemployment rate dropped to 3.4%, and the NFP grew by more than had been expected.

The Fed this week will be giving a lot of comments – let us see what they will be touching upon. Inflation esteems are vague and restrained, and little is said about the prospects of the monetary policy. The USD may start falling again if it does not get more support.

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

USD remains strong. Overview for 08.02.2023

At the end of the week, EURUSD looks neutral but there are still risks of a decline. The current quote is 1.0730.

In his speech delivered yesterday, the chairman of the Fed Jerome Powell singled out the strength of the employment market in the country and announced that the CB would be working hard to decrease inflation. There is, indeed, some evidence of the desinflation process forming but this is clearly not enough.

No one from the Fed had expected that the labour sector would be that strong, Powell said. He meant the statistics that came out on Friday where the NFP had grown by 517 thousand workplaces. This year, the Fed counts on a serious decline in the CPI. The inflation goal is around 2%. However, before it happens, the interest rate must remain restrictive.

The main reason why Powell does not want to see the employment market so strong is simple. Such dynamics will push wages up. And this will help inflation remain high. As unemployment grows, households cut down on expenses, and professionals who lose jobs cannot count on previous income levels. Thus inflation slows down. Things are simple but only from the regulator’s point of view. From the point of economic processes, this is a very ambiguous story.

To put it simple: the Fed needs to make the economy weak to beat inflation. The dollar likes it and remains strong.

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

EURUSD aims down again. Overview for 10.02.2023

EURUSD got depressed again. The current quote is 1.0720.

The falling of the market major overnight is not the most common event, but now it looks normal. Investors are cautious, waiting for inflation statistics. The publication is scheduled for the next week.

The scariest thing for the market is the probability of the economic slow-down and stable growth of the interest rate lifted by the Federal Reserve System. All this affected market moods.

By average market expectations, the US CPI in January grew by 0.5% m/m after a decline in December by 0.1% m/m. Year-by-year, inflation should have dropped to 6.2% from 6.5%. The devil, as usual, will be in the detail. Investors are already waiting for an ambiguous report.

For the dollar index, by the way, this week will be the second one closing by growth. For the last time, this happened in October 2022.

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

JPY took a pause. Overview for 14.02.2023

The US dollar in the pair with the Japanese yen found a foothold. The current quote is 132.00.

The wave of growth that started in the USD some time ago made the yen go down. Moreover, the market argument that the US Federal Reserve System would go on lifting the interest rate also pressed down on the yen due to the difference in the rates.

The morning statistics demonstrated that the Japanese GDP in Q4 2022 grew by 0.2% q/q and 0.6% y/y. Both increases turned out weaker than forecast.

The Japanese economy has trouble recovering for two reasons minimum. The first one is the weakness of the domestic demand, while the second one is the decline in export due to persistent supply chains problems. If household expenses do not grow, any actions of the Bank of Japan towards inflation stimulation will be making almost no sense.

As for the export situation, it is not the problem of just Japan. The British economy, for example, is living through the same trouble.

It looks like the Japanese economy is developing two parallel scenarios at a time. On the one hand, the BoJ is fighting as if for its life with the prices and sometimes even wins. On the other hand, households go on living like they are used to and show no reaction to inflation or negative interest rates. Anyway, while the Japanese interest rate remains at -0.1% a year, the JPY will remain vulnerable.

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

AUD looks depressed. Overview for 16.02.2023

The Australian dollar in the pair with its US counterpart is under pressure. The current quote is 0.6915.

Trying to recover, Aussie gets under more and more influence of sellers.

The morning Australian statistics have shown that the unemployment rate in January grew to 3.7% from 3.5% previously. At the same time, the number of workplaces dropped by 11.5 thousand after a decline by 20.0 thousand in December. The forecast had suggested growth by 19.8 thousand.

This decline in the employment sector is unlikely to be seasonal. Regardless of all the effort that Australia puts in the development of the market, these might be signals for structural changes.

The manager of the Reserve Bank of Australia Philip Lowe announced this morning that they would be working on further decline of the CPI. He sees the current RBA policy as neutral and restrictive. However, there are risks that the regulator has not done enough for increasing the rate. The crediting price has not reached its peak.

For Aussie, this could be a good signal if not for the pressure of the USD.

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

EURUSD: time for contemplating. Overview for 20.02.2023

EURUSD started the week neutrally. The current quote is 1.0690.

There has already happened a bounce in the market major, and today is a day off in the US, while Europe has not statistics prepared for publication. Investors have got a chance to take a pause and analyse the situation.

In fact, there is nothing new on the horizon. The market remains focused on future steps of the Federal Reserve System. While earlier the market expected the Fed to increase the interest rate twice by 25 base points each time and put tightening on a pause, nowadays there is no confidence in this.

After the production inflation report got published, it became clear that the price dynamics had not been conquered. The growth of prices has stopped just temporarily and has come to an end on several directions.

This lets the Fed use all available means for fighting with inflation. For the USD, this is a fundamental support.

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

No remedy for NZD. Overview for 22.02.2023

The New Zealand dollar has grown a bit against the US dollar in response to the RBNZ decision. The current quote is 0.6221.

However, the medium-term trend remains as it was: the NZD needs a better foothold than the Reserve Bank of New Zealand can possibly give it.

At today’s meeting the RBNZ made an anticipated decision to raise the interest rate by 50 base points. Crediting price is growing slowly and systematically, as has been promised by the RBNZ.

According to the comments of the chairperson, a recession is expected in the economy in the course of 12 months, so that the demand will decrease seriously. In the upcoming weeks, prices for certain categories of goods are expected to grow over the country, most likely because of the Gabrielle cyclone. In the RBNX, they think that increasing interest on deposits will make people start saving. And this, in turn, will weaken inflation in the future.

In Q1, inflation might amount to 7.3%, which for New Zealand is really high and dangerous.

The voice of the regulator turned out to be cautious and worried, which fundamentally affects the NZD. People would like the RBNZ to be more optimistic but this is one of the few regulators that call things by their names.

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

EUR down again. Overview for 27.02.2023

EURUSD has fallen even deeper. The current quote is 1.0550.

The main thing that triggered growth of the USD was the publication of an inflation report, meaningful for the Fed. Namely, the Core PCE Price Index. These are the data that the regulator uses to decide upon the interest rate.

Well, in January the index grew by 0.6% m/m instead to 0.4% expected. A month before, it did grow by 0.4% m/m. This means inflation is speeding up, and the Federal Reserve System will be increasing the rate quite rightfully. This was what supported the USD.

However, there was more. Personal consumer expenses of the US people in January leaped up by 1.8% m/m, while in December they lost 0.1%. Meanwhile, the index was expected to grow by 1.4%. Personal income, on the other hand, grew by just 0.6% m/m instead of 1.0% forecast. People spend more than they have. The inflation-friendly mechanism is obvious.

There is less than a month left until the nearest Fed's meeting, so any signal given by the regulator will attract lots of attention.

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

AUD stopped falling. Overview for 01.03.2023

The Australian dollar against the US dollar has put its decline on a pause. The current quote is 0.6753.

The report from today demonstrated growth of the Australian GDP in Q4, 2022 by 2.7% y/y just as expected, or by 0.5% y/y instead of the expected 0.8%.

Among other components of the report, the personal expenses part was quite noticeable. This index grew by just 0.4% upon growing by 0.8% previously. Capital expenses in Q4 dropped by 1.4% upon declining by 0.2% in Q3.

There is evidence that the Australian economy is landing smoothly after the increase in the interest rate and issues with trade and economic links that call for adaptation.

Meanwhile, the Aussie fans took the report positively. And now the AUD is additionally supported by the correction in the USD.

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

EUR remained neutral. Overview for 03.03.2023

EURUSD has stabilised after a series of amplitude fluctuations. The current quote is 1.0610.

The EU failed to support the EUR by good news. The prelim CPI in February turned out at 8.5% y/y instead of declining to 8.3% y/y, while earlier it was 8.6%. Base inflation is estimated at 5.6% y/y — higher than in January, when it was at 5.3%.

Prices in Europe remain high, and this is no news. The enforcement of the trend perfectly demonstrated by the purified inflation index must push the ECB towards increasing the interest rate.

The unemployment rate in the EU in January grew to 6.7%, which is also not the best of possible news.

One more interesting price release is scheduled for today, and this is the European PPI. It is expected to drop by 0.3% m/m upon growing by 1.1% earlier. If production prices do decrease somewhat, this will take some pressure off the market.

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

EURUSD gathered strength. Overview for 07.03.2023

EURUSD uses any base for growth efficiently. The current quote is 1.0690.

Investors are nervous before the evening speech of the chairman of the Federal Reserve System Jerome Powell in the Senate. The market abstains from any activity because the tension around Powell’s comments is quite high.

Let us see what Powell will say about inflation prospects and future monetary steps of the Fed. Anything to do with hawkish moods of the regulator might support the USD. Soft comments will make the dollar retreat.

The EUR ignored the publication of German statistics of production orders volume in January. The indicator grew by 1% m/m instead of falling by 1% m/m as expected.

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