EUR retreated further. Overview for 18.04.2023

EURUSD on Tuesday remains in a downtrend. The current quote is 1.0940.

At the beginning of the week, there is no important news, so investors focused on currency speculations based on the expectations about future steps that the US Federal Reserve System might make. Curiously, according to the CME FedWatch, the probability of the interest rate being lifted at the meeting in May by 25 base points has already reached 80%, while a week before it used to be 40%. Meanwhile, the market obviously counts on a pause in interest rate increases at the meeting in June.

On the whole, investors can enjoy themselves this way for a very long time. However, before the Fed signals it is ready to stop lifting the rate, EURUSD may fall even deeper only to grow confidently later.

The Eurozone today will publish exciting statistics of the ZEW business sentiment index in April. The index is expected to have grown to 12.2 points from 10.0 points earlier. This could support the EUR. Also, the Eurozone will publish trade balance components in February.

The US on Tuesday will start issuing real estate sector statistics. The construction permits release for March will be the first one to come out alongside the number of new houses laid out.

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

JPY returned to devaluation. Overview for 20.04.2023

The Japanese yen has dropped noticeably against the US dollar. The current quote is 134.80.

The yen is being betrayed by domestic news and the international background equally.

The morning statistics demonstrated that the trade deficit in Japan in fiscal 2022 (ended on 31 March 2023) had reached a high of 44 years, amounting to 160 billion USD. Previously, such an anti-record was registered in 2013. The growth of the deficit this time is connected to the growth of prices for energy carriers that Japan fully imports. Moreover, the weakness of the JPY also played its part.

In the report presented today, the Bank of Japan left assessments of most country regions positive. The regulator is sure that the inflation is driving towards the target of 2% sustainably. In many regions, wages at small enterprises are growing because of a shortage of workplaces and simultaneous growth of prices.

The nearest meeting of the Bank of Japan is scheduled for 28 April. The BoJ is unlikely to normalise the credit and monetary policy right now. The interest rate will most likely remain at -0.10% per annum.

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

JPY's future is disturbing. Overview for 24.04.2023

The Japanese yen against the US dollar has put its decline on pause but looks unstable. The current quote is 134.13.

The block of statistics on Friday came out neutral. The base CCI in March grew 3.1% y/y as expected. Official inflation last month amounted to 3.2% y/y as forecast, while a month before it used to be 3.3%.

The situation with prices is what the new management of the BoJ will attend to in the nearest future. There are reasons to think that at the upcoming meeting at the end of April, the Bank of Japan will give signals for a soon change in the credit and monetary policy.

The yen barely reacts to the statistics if they are not about prices.

The prelim production PMI in March could have risen to 49.5 points. This is a good sign.

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

AUD is getting weaker. Overview for 26.04.2023

The Australian dollar against the US dollar is sliding deeper down. The current quote is 0.6605.

The Australian statistics of today demonstrate that the CPI in the first quarter of 2023 dropped to 1.4% q/q after growing by 1.9% in Q4, 2022. Year by year, inflation amounted to 6.3%. This is lower than before.

Well, inflation has left the 33-year high. Base prices also stepped back.

The market reaction can be explained as follows: the decrease in prices might become a signal for the Reserve Bank of Australia to extend the pause in lifting the interest rate. If so, the rate of 3.6% per annum will become the peak, and a decline will follow here.

This is what presses the Aussie down.

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

New stress for USD. Overview for 28.04.2023

EURUSD on Friday remains neutral after receiving new alarming signals from the US economy. The current quote is 1.1030.

The US GDP in the first quarter of 2023 grew by just 1.1% instead of the forecast 2.0% after growing by 2.6% previously. The economic growth turned out twice as worse as expected.

In the components, it is seen that consumer expenses in January-March increased by 3.7%, which is the high since the spring of 2021. State expenses rose by 4.7%, which is also the high since 2021.

However, private investments betrayed the economy by crashing to the lows since the pandemic times. Inventory and equipment investments also dropped.

So, it is obvious that consumer expenses remain really intense, while the inflation pressure also carries on. This means, the Federal Reserve System will have to lift the interest rate by 25 base points in May. Today a crucial Core PCE report is expected. This is an inflation component that the Fed keeps a close eye on.

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

AUD remains optimistic. Overview for 03.05.2023

The Australian dollar against the US dollar remains ready to grow. The current quote is 0.6667.

Aussie gets supported by the RBA's decision made yesterday to lift the interest rate. It now amounts to 3.85% per annum. In the comments, the regulator warned the market that inflation remains too high, and the credit and monetary conditions might need more tightening.

Today it became known that the Reserve Bank of Australia would also lift the standard floating mortgage rates by the same 25 base points. The new mortgage rate will come into force on 12 May.

Retail sales in Australia in April grew by 0.4% m/m after growing by 0.2% in March and against the forecast 0.2%. These statistics are neutral for the AUD.

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

AUD is climbing up. Overview for 05.05.2023

The Australian dollar is using the impulse of growth efficiently, rising to its two-weeks highs against the US dollar. The current AUDUSD quote is 0.6732.

Most probably, the AUD is supported by the weak dollar factor, while the fundamental background looks rather gloomy. The Reserve Bank of Australia has decreased expectations concerning inflation, wages, and the GDP for this year. By June, the average CPI will be 6.00%, from the earlier 6.25%. It is likely to drop to 4.00% by December.

The forecasts have been revised because the 11 interest rate hikes by the RBA since the start of the monetary policy tightening are beginning to influence the economy.

The current RBA interest rate is 3.85% per annum, and this must be the peak. Forecasts do not exclude a drop to 3.00% by mid-2025.

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

GBP is correcting. Overview for 11.05.2023

The British pound sterling declined against the US dollar on Thursday. The current GBPUSD quote is 1.2577.

The pair tested local highs yesterday but failed to secure them.

Today is a big day for the GBP: the Bank of England is holding a meeting to decide on the interest rate and give signals on further actions. BoE governor Andrew Bailey will be renewing not only the outlook but also the composition of the monetary committee.

The interest rate will most likely increase by 25 base points following today's meeting. The CB might leave the door open for the next hike. However, how the votes of monetary policymakers will be distributed will tell a lot about the real outlook. Most likely, seven members of the monetary committee will vote in favour of an interest rate hike, and two will be against it. This has been the case in the past. The risk is that they may be frightened by the latest statistics, and if so, there will be more votes in favour of a significant increase in the interest rate.

Another question is whether the Bank of England will be maintaining its rhetoric supporting an inclination to further tightening.

Inflation in the UK remains high, and this is the main argument for a rate hike. However, unless there are really unpleasant economic signals in the next few weeks, there could be a pause in the series of interest rate hikes after the next BoE meeting in June.

Overall, the pound is fully focused today on what the BoE has to say.

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

Demand for the US dollar is rising before our eyes. Review for 15.05.2023

The most traded currency pair in the market continues to retreat. The current quote in EURUSD is 1.0860.

The US currency is in high demand as a safe haven asset. It is being heavily supported by rising US government bond yields. This came after Friday's publication of statistics from the University of Michigan.

The preliminary value of the Consumer Confidence Index in May showed a decrease to 57.7 points from 63.5 points earlier, while a decrease to 63.0 was expected. This drop in consumer sentiment has returned investors speculating about the likelihood of a new interest rate hike by the US Federal Reserve at its meeting in June.

At the same time, the investment world is watching the risk attitude and it is shifting in favour of safe assets. The US dollar is clearly in its place here.

Eurozone industrial production data will be released today and the European Commission will provide an updated economic forecast. In the evening, the US will release data on the net volume of long-term security purchases.

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

GBP surrendered without resistance. Overview for 17.05.2023

The British pound remains under pressure against the US dollar. The current GBPUSD quote is 1.2436.

First, the Pound Sterling is under pressure from a strong US Dollar, which is in demand as a safe-haven asset while global capital markets are avoiding risk.

UK employment market statistics released yesterday were disappointing. The unemployment rate rose to 3.9% in March from 3.8% previously. At the same time, no changes had been expected there. The national average wage rose by 5.8% in the January-March period - no surprises here. Unexpectedly, the number of claims for unemployment benefits for April increased by 46.7 thousand from 26.5 thousand previously, while growth by 31.2 thousand had been forecast.

This news is negative for the British pound, and increased already existing pressure.

This week's interesting statistics from the UK will be published only on Friday. It will be the consumer confidence index from GfK for May. Last time, the index fell to -30 points. Recovery of the index could support the Pound, but there is little hope for that.

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

JPY is falling faster. Overview for 19.05.2023

The Japanese yen paired with the US dollar has accelerated the pace of devaluation. The current quote is 138.17.

The yen was declining faster but fresh price statistics stopped its fall. For example, annual inflation in Japan increased by 3.5% in April from 3.2% a month before. The CPI rose by 0.6% m/m after growing 0.4% m/m in March.

Core inflation in April stood at 3.4% y/y, which was in line with the forecast. On a monthly basis, the index rose by 0.7%.

What do we see here? Overall inflation has accelerated despite downward expectations. This poses a challenge for the Bank of Japan: what if the cost pressures on companies and consumers do not disappear by the end of the year as the regulator expects? What if prices continue to rise steadily? Then the BoJ will be forced to cancel its ultra-soft monetary policy.

Meanwhile, the yen remains near its six-month lows under the influence of the US dollar. Demand for the USD is high due to the risks associated with the US debt ceiling.

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

JPY plunged into devaluation again. Overview for 23.05.2023

The Japanese yen, paired with the US dollar, continues to decline. The current USDJPY quote is 138.37.

The strong US dollar, which is in demand as a safe haven asset, is having a remarkable influence on the Japanese yen.

Fresh Japanese statistics have attracted attention. The PMI report turned out positive: the services sector is reviving thanks to the rebound of the tourist flow into the country. Activity is also increasing in the manufacturing sector.

Both reports are favourable for Japan's economy, which is still lagging behind its global counterparts in terms of recovery. Providers of services report noticeable demand and a record increase in business activity. Service-oriented businesses rebounded noticeably after Japan lifted restrictions on the entry of foreign tourists to the country.

Earlier, Japan presented its first-quarter GDP report, which also turned out favourable. It is clear that the Japanese economy has gained momentum. This could eventually be a good signal for the JPY.

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