EURUSD waiting for Fed data. Overview for 13.03.2023

EURUSD recovered strongly on Monday. The current quote in EURUSD is 1.0720.

The market is "full of nervousness and doubt". A closed extraordinary meeting of the US Federal Reserve is scheduled for Monday. The official agenda suggests that the parameters for the federal funds rate within the banking system will be discussed. However, given the current situation, it can be assumed that the key topic will be the sustainability of the banking sector as a whole.

Investors are worried about the possibility of a banking crisis. Let's see what the Fed has to say. The Central Bank is prepared to maintain the required liquidity in the sector, but everyone knows that this will only delay the "breakdown".

This week the US will present a lot of statistics, including retail sales data. The Eurozone will gather for a meeting of finance ministers at the beginning of the five days and then the EU will hold a summit of finance and economy ministers. Everyone is concerned about the outlook, and what is to come.

It is going to be an exciting and emotional week, so you should be cautious with your market trades.

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

EURUSD has risen. Overview for 15.03.2023

The main currency pair gained further on Wednesday. The current quote in EURUSD is 1.0740.

The statistics published the day before from the USA showed that the problem with inflation is still relevant. Consumer price index fell to 6.0% y/y in February compared to the previous value of 6.4%, as expected. Monthly inflation was 0.4% in line with expectations but the core CPI expanded by 0.5% against expectations of an increase by its standard 0.4%.

The maximum inflation rate was recorded in June last year. At that time, the CPI approached 9%.

Yes, prices are rising more moderately now than in January or six months ago. However, the current development (based on the Baseline Report) is not sufficient to indicate a "deceleration" of the inflationary rally.

Today the Eurozone will release its industrial production data. The producer price release is also worth a look. It is just one more piece of the puzzle for the price picture in the USA. Amongst other things the USA will release February retail sales figures where the figure might have fallen 0.3% m/m after a 3.0% increase in January. The more confident the report is, the better for the USD.

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

USD fans need to be patient. Overview for 20.03.2023

EURUSD starts the week quite reservedly. The current quote is 1.0670.

It seems that for a few days, we have been hearing of just the US and EU statistics and nothing else. The flow of this news is so strong that investors fail to take account of everything.

The final CPI in the Eurozone in February dropped to 8.5% y/y as expected. Base inflation remained at 5.6% y/y. While the first report is more or less satisfactory, the second one allows for no optimism as base prices remain high and may start growing at any moment.

The situation with prices will remain the reason for the ECB to go on with the interest rate increases. In such circumstances, the threatening banking crisis does not look that scary.

Industrial production in the US in February demonstrated no changes after growth of 0.3% m/m previously. A small increase had been expected, but high prices hindered it. The capacity utilisation rate remained at 78%, which is not bad.

The prelim CCI by Michigan University in March demonstrates a decline to 63.4 points from 67 points previously. This is logical, considering the tension in the banking sector.

Today is going to be a quiet day in terms of macrostatistics. EURUSD will be saving power until Wednesday when the Fed’s meeting will close.

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

JPY gave in partially. Overview for 22.03.2023

On Wednesday, the Japanese yen against the US dollar is stabilising. The current quote is 132.44.

Earlier the JPY grew noticeably because the USD declined.

The Japanese Minister of finance Shunichi Suzuki has mentioned in his speech today that the country’s financial system looks stable. To react flexibly to price changes, the Ministry of Finance plans to use its reserves. It is also going to work tightly with the Bank of Japan to take care of all the possible risks.

It is important that the national currency remained stable in the international market and represented fundamental figures.

On Wednesday, it became known that Japan was ready to spend 2 billion JPY from reserves on smoothing out the consequences of fast growth of prices and COVID measures.

Interestingly, the key task of the BoJ’s monetary policy is to liven up prices. And it certainly works, though the effect is not very expressed. At the same time, the Ministry of Finance plans to smooth out the consequences of inflation by reserve funds.

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

GBP remained balanced. Overview for 24.03.2023

On Friday, the British pound against the US dollar is stable. The current quote is 1.2284.

At the March meeting, the Bank of England lifted the interest rate by 25 base points from 4.00% to 4.25% per annum. In the comments, the regulator voiced its readiness to lift the rate again if the inflation pressure grows.

According to Andrew Bailey, the head of the BoE, at the beginning of summer, British inflation should fall abruptly. By the way, in February 2023 the CPI in the country sky-rocketed to 10.4% from 10.1% a month before. Bailey was a bit more optimistic than earlier. He said that in February the British economy had been on the verge of recession but by now such risks had been reduced.

In reality, the situation with prices leaves little room for being happy. Logistic chains were broken during the pandemic already, and last year the issue got even worse. Prices are growing worldwide, including on food. For Britain, this is a serious problem that can deteriorate the life quality of many households.

For the GBP, the moderate comments of the BoE were no surprise as the regulator has always been conservative.

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

Aussie found a reason for growth. Overview for 28.03.2023

On Tuesday, the Australian dollar against the US dollar returned to growth. The current AUDUSD quote is 0.6690.

Retail sales in Australia in February grew by 0.2% m/m as expected after growing previously by 1.8%. The index look neutral after sharp fluctuations at the end of last year and the beginning of 2023, while the figures are coming out smaller. This means that consumers are bringing down their expenses because the cost of life is growing. High interest rate provides no optimism either.

The retail sales report from today signals quite clearly that at the April meeting the Reserve bank of Australia will make a pause in lifting the interest rate.

Earlier the RBA itself did not exclude the probability to put on halt the process of deciding upon the crediting price. The interest rate now equals 3.5%. This is the peak of 11 years.

On Wednesday, the inflation report will come out, and it may also be a turning point for the RBA. The CPI might have dropped to 7.1% from 7.4% earlier.

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

GBP is growing smoothly. Overview for 30.03.2023

The British pound against the US dollar remains ready to grow. The current quote is 1.2316.

The British statistics from yesterday demonstrated that the net volume of loans given to individuals in February had dropped to 2.2 billion GBP from 3.7 billion GBP previously. At the same time, the number of mortgage permits had grown to 44 thousand from 40 thousand.

The decrease in crediting sounds logical: when the interest rate is growing successively, the consumer activity must be slowing down.

Today the Bank of England will publish a quarterly report on the state of the economy. What we are interested in is the inflation components and price expectations, as well as the speed of the GDP growth and the development of the key sectors of the economy.

On the whole, the dynamics of the GBP is adequate to the macroeconomic conditions.

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

EUR is consolidating. Overview for 03.04.2023

EURUSD on Monday looks neutral. The current quote is 1.0790.

This week not only starts a new month but also opens a quarter. Many important reports are scheduled for this period, so investors will definitely need forces.

Last Friday, the US presented a cardinal release of the basic personal consumption expenses index in February. This is the component of inflation that the Federal Reserve System studies most attentively before making an interest rate decision. For example, the Core PCE grew by 0.3% m/m instead of the 0.4% predicted and after growing by 0.5% previously.

Year by year, the index dropped by 5%. This had a bad influence on the USD: the Fed might consider that the prices are falling at acceptable speed and might take a pause in the increases of the interest rate.

Personal expenses of Americans in February grew by 0.2% m/m instead of the expected 0.3%. The income, in turn, grew by 0.3% instead of the 0.2% predicted. Things are quite neutral, keeping in mind the possible amplitude of normal fluctuations here.

The final Michigan University CCI in March dropped to 62 points from 63.4 points previously. This might be connected to the slowdown of consumer activity on the whole.

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

NZD grew noticeably. Overview for 05.04.2023

The New Zealand dollar against the US dollar reacted positively to the actions of the RBNZ. The current NZDUSD quote is 0.6347.

The Reserve Bank of New Zealand at its April meeting lifted the interest rate to 5.25% per annum from 4.75% previously. The forecast had suggested growth to 5.00%.

It seems that the regulator sees some evidence of growing inflation and acts to prevent it. Unlike its Australian colleague, the RBNZ is more or less consistent in lifting the crediting cost. It has not yet given any signals that the process is about to pause. The RBNZ started the cycle of increasing the interest rate in October 2021. Since then, the rate has grown from 0.25% to 5.25% per annum.

The NZD gets additional support from the weakness of the USD.

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

EURUSD climbed higher. Overview for 07.04.2023

The situation with the unemployment claims in the US is, indeed, weird. For many weeks, this report used to be a stronghold of stability and optimism that represented confidence of the employment sector. Everything changed last week, when the figure of primary claims sky-rocketed to 246 thousand from the average median value of 195-200 thousand. Yesterday, the statistics confirmed the change: the figure turned out at 228 thousand against the 200 thousand forecast.

The US Ministry of Labour claimed that starting this week, it would be accounting for the seasonal multiple in the statistics. However, this is unlikely to change anything as long as the labour market is flooded with the unemployed.

This development was not unexpected. Due to the Fed’s high interest rate and constantly growing crediting costs, companies can no more be competing over the workforce. This is also represented by a decline in the number of part-time jobs, in the number of new vacancies, as well as in the number of the fired. Corporations are laying off the staff fast and straight-out, pursuing the goal to make their businesses live.

It seems that the problem has just started to unfold. With this kept in mind, the US average wage report for March, the NFP, and the full unemployment rate report scheduled for today are going to be especially informative. Most probably, the data will come out weak, which could make the USD retreat further.

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

JPY goes on retreating. Overview for 11.04.2023

The Japanese yen is losing to the US dollar. The current quote is 133.50.

The March statistics of the Japanese CCI published yesterday demonstrated growth of the indicator to 33.9 points from 31.1 points earlier. This is a good signal that means that households are beginning to trust the policy of the Bank of Japan and its financial course. However, the indicator remains under the psychologically important level of 50 points that separates growth from falling. Hence, there are not as much reasons for optimism as we would like them.

The Eco Watchers Current Index in March saw an increase to 53.3 points from 52.0 earlier.

This week, the new head of the BoJ is taking office. The Ministry of Finance commented that it was counting on cooperation with the government in carrying out the monetary policy.

In fact, no changes in the policy are expected. Kazuo Ueda will be repeating the existing ultra-soft policy to the slightest detail. He is, indeed, not a pigeon but he is a strong economist and manager, which will let him be more flexible in making fiscal decisions.

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

AUD has found a foothold. Overview for 13.04.2023

The Australian dollar against the US dollar is securing the ascending impulse. The current quote is 0.6700.

The morning statistics from Australia demonstrated that the unemployment rate in February remained at 3.5%, though it had been expected to rise to 3.6%. The number of workplaces increased by 53.0 thousand after growing by 63.3 thousand earlier. The data came out better than the forecast growth by 20.8 thousand.

Bearing in mind the seasonal factor, the labour market report looks rather confident.

Most probably, the CPI in Australia has reached its peak. The Reserve Bank of Australia mentioned it previously, and now the main banks over the country are saying the same. Average inflation in the first quarter might have reached 6.8% against 6.9% in the fourth quarter of 2022. Meanwhile, the official statistics demonstrate that in Q4 2022 the CPI in the country amounted to 7.8% y/y.

The RBA has already paused lifting the interest rate in order to contemplate the situation. If the releases scheduled for 26 April confirm the stabilisation of prices, the pause will last.

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