EURUSD recovered a bit. Overview for 11.03.2021

Pressure on EURUSD reduced by Thursday as the pair is slowly rising.

The major currency pair reversed in favor of recovery and started growing slowly. The current quote for the instrument is 1.1930.

Market players will focus their attention on the ECB meeting to be held today. the benchmark rate is highly likely to remain the same as before but investors are waiting for either hints or specific decisions on expansion and extension of stimulus programs. so far, the situation is as follows: the PEPP program, which is initially was planned to operate until March 2022, will probably be extended. Also, there is an option that the program volume may be increased, but it’s quite unlikely. 

Chances are high that the regulator will talk about the latest increase in the bond yield, which was based on the forecasts for the economic recovery and inflation boost in the region. Market players believe that if the CPI skyrockets, the ECB will have to quickly revise its strategy and tighten its monetary policy earlier than the system requires.

Basically, the European regulator has to make a decision whether to interfere with its monetary policy or wait and watch as long as the situation allows.  There is a sneaking feeling that the ECB will decide to act.

Probably, the ECB may publish revised economic outlooks for the key parameters. In December 2020, the regulator expected the GDP to add 3.9% and 4.2% in 2021 and 2022 respectively. However, in September the same year, the indicator was predicted to add 5.0% in 2021, but later these expectations were revised downwards. Let’s see what number will be in the March report, but it might be even worse.

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

The USD remains strong. Overview for 15.03.2021

EURUSD is falling again under the attack of the “greenback”.

The major currency pair is starting another March Monday with a decline under pressure from the USD. The current quote for the instrument is 1.1935.

The American currency became more active when the US 10-year bond yield resumed growing. this improvement once again raised concerns about inflation boost in the USA a sellout of risky assets. Taken together, these factors helped the USD to recover as a “safe haven” asset.

In the nearest future, the USD may mostly focus on the bond yield, new highs in which won’t be a surprise to anyone.

Also, one should note that the American currency is well supported by the US Fed and Government policy, while the approach of the ECB with its variety of supporting tools is looking rather weak. Last week, the European regulator decided to print more money to support the region’s economy and expand the PEPP program, thus putting pressure on the Euro.

Inflation boost in the USA is becoming more and more topical, especially after the approval of the $1.9 trillion stimulus package by the US Government – this topic will get much attention in the nearest future.

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

The Australian Dollar continues falling. Overview for 17.03.2021

AUDUSD has been slowly falling for the sixth consecutive trading session.

The Australian Dollar continues falling against the USD and doesn’t seem to be able to benefit from the USD weakness on global financial markets. The current quote for the instrument is 0.7729.

Christopher Kent, the Assistant Governor at the Reserve Bank of Australia, said today that smaller businesses had been heavily affected by the pandemic and were still concerned about additional taxes, as well as the future economic outlook. These factors had a negative influence on their activities, although this segment of the country’s economy might be significant support of the GDP growth.

Kent once again said that the regulator’s benchmark rate wouldn’t be revised until inflation in the country reached 2-3%. In Kent’s opinion, the rate is currently close to the downside border of its effectiveness. The negative rate is very unlikely to be useful for Australia because it may prevent banks from making loans and credits.

According to Kent, the RBA will consider buying additional securities later this year but this decision will be made based on the economic environment. This was probably the comment that influenced the Aussie fundamentally.

On Thursday, Australia is scheduled to report on the Unemployment Rate, which is expected to go from 6.4% in January to 6.3% in February, and the Employment Change, which may remain pretty the same. The stronger the numbers, the better for the Aussie.

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

The Yen started recovering. Overview for 19.03.2021

USDJPY is falling on Friday after the meeting of the Bank of Japan.

The Japanese Yen is strengthening against the USD at the end of the trading week. The current quote for the instrument is 108.83.

Following its two-day policy meeting that ended today, the Bank of Japan made a decision to keep the current rate unchanged at -0.1% and said it would only buy exchange-traded funds (ETF) that are linked to the Topix index. The BoJ said it would buy up to 12 trillion Yen at most and also slightly broadened a trading band for its 10-year bond yield target, widely as expected.

The Central Bank also said it would decrease up to 6 trillion a year but keep the option to buy up more if necessary open. Even after the pandemic dies out, the program wouldn’t be closed as it provides good support to the country’s economy.

At the moment, the BoJ's stock holdings are worth more than $450 billion, which means that the regulator is the biggest stockholder on the Japanese stock and debt markets.

The inflation target of 2% wasn’t revised but it’s quite obvious that the Japanese regulator has a long way to go before the CPI fixes above 1.5% at least.

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

The USD weakened due to the decrease in US bond yield. Overview for 23.03.2021

EURUSD recovered pretty much yesterday due to the US bond yield decrease.

On Tuesday morning, the major currency pair reached stability after growing earlier. The current quote for the instrument is 1.1920.

The American Dollar’s recent behavior is a clear reflection of the changes in the US bond yield: when bonds are rising, the greenback is rallying as well. However, yesterday the indicator was falling, although still being close to this year’s high. This decline was a correctional one and the key factor that supports the American currency remained the same – investors are very positive in their expectations of a quick recovery of the American economy backed by, among other things, additional stimulus measures.

The US Federal Reserve System Chairman Jerome Powell spoke yesterday and said that the regulator wasn’t competing with banks given the two-level system and didn’t use the national currency for destabilizing the financial situation. At the same time, the Fed is carrying out a lot of experiments to understand what is happening in the country’s economy at the moment. Powell also mentioned the digital currency and said that in order to move forwards in this issue, the regulator would require support from Congress and public opinion.

The statistics published earlier showed that the Existing Home Sales dropped to 6.22M in February after being 6.66M in January and against the expected reading of 6.55M. The key reason for this decline was the weather – would-be buyers tend to reschedule their visits to seу over real estate during cold and snowy winters.

Today’s economic calendar is as busy as it was the day before: a lot of monetary politicians, including Powell himself, are going to speak. As for the statistics, market players should pay attention to the New Home Sales in the USA in February, which is also expected to drop.

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

The Euro dropped to its four-month low. Overview for 25.03.2021

EURUSD is under the most significant pressure in the 4 previous months amid the growing demand for “safe haven” assets.

The major currency pair continues falling. The current quote for the instrument is 1.1813.

So, the pair is updating its four-month lows and remains under significant pressure due to several reasons at once. One of them is another rally in the US bond yield profitability, which supports the “greenback” pretty much. Another reason is the growing demand for “safe haven” assets, including the USD, because investors are starting to worry about a possible tax increase in the USA. There will be more information about this the next week. 

Yesterday, we heard a couple of speeches from US Secretary of the Treasury Janet Yellen and US Federal Reserve Chairman Jerome Powell. This time, Powell said that in order to recover quickly, the country’s economy required, among other things, a strong tax and budgetary policy. At the moment, the regulator is expecting a slight decline in the unemployment rate due to the increase of the economically active population.

The statistics published yesterday weren’t too great. For example, numbers from the Euro Area couldn’t support the Euro despite being quite good. The Services PMI showed 48.8 points in March after being 45.7 points the month before. The Manufacturing PMI went from 57.9 points in February to 62.4 points this month, which is very positive. However, it seems like market players believe it to be a temporary phenomenon but not a tendency.

The Durable Goods Orders in the USA dropped 1.1% m/m in February after adding 3.5% m/m in January and against the expected reading of 0.7% m/m. The indicator is quite volatile but this decline might have something to do with the cold and snowy winter in the country.

Later today, the USA is scheduled to publish the final GDP report for the fourth quarter of 2020. The previous estimate was 4.1% q/q. The stronger the reading, the better for the “greenback”.

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

The Euro is staying at its four-month low. Overview for 29.03.2021

EURUSD is staying at its local lows amid optimistic spirits in the USA.

On the last Monday of March, the major currency pair is falling again. The current quote for the instrument is 1.1779.

After updating its four-month highs against the Euro, the “greenback” is still looking pretty strong. The key triggers that support the American currency remain the same – market players are very optimistic about an aggressive anti-coronavirus vaccination campaign and the positive signals coming from the US economy. Even the statistics on consumer spending that showed a decline in February didn’t spoil the mood.

Everything is quite simple: investors believe that the aggressive vaccination campaign will help to remove quarantine restrictions much earlier and that might influence inflation – it is expected to go up. This, in its turn, may force the US Federal Reserve System to revise its ultrasoft monetary policy and increase the benchmark rate ahead of time. It’s quite logical but investors should understand that the American regulator, which earlier announced its intentions to keep the rate low until 2023, can’t be controlled.

The Euro managed to recover a little bit after Germany had published its statistics. The Services PMI showed 50.8 Points in March after being 45.7 points the month before. The Manufacturing PMI also skyrocketed to 66.6 points after being 60.7 points over the same period of time.

All the important statistics from the USA, such as the labor market data in March, are planned for the second half of the week. These reports will be very important for the key economic processes.

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

The Pound is stable after the statistics. Overview for 31.03.2021

GBPUSD is looking weak but not boosting its decline after the statistics.

The British Pound remains weak against the USD on Wednesday but the statistics published yesterday prevent it from falling deeper. The current quite for the instrument is 1.3776.

According to the final estimate, the British GDP showed 1.3% q/q in the fourth quarter of 2020 against the expected reading of 1.0% q/q. In 2020, the British economy lost 7.4% y/y against the expected decline of 7.8% y/y. The year was extremely difficult so the latest growth might be considered positive – the economy finally started gathering strengths.

The Nationwide HPI lost 0.2% m/min March after adding 0.7% m/m in February. The actual reading is worse than expected but was probably influenced by the cold weather this winter and the lockdowns.

According to the BRC, the Shop Price Index lost 2.4% y/y in March because of huge sales, discounts, and special offers. Prices for non-food items lost 4.0%, while food prices added 0.3%. Seasonal clothes and footwear attract little attention but the food prices growth all over the world is finally shown here as well.

The USВ remains strong, thus putting significant pressure on the Pound and making it retreat.

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

The Euro managed to rise a bit. Overview for 02.04.2021

EURUSD recovered pretty much on Thursday and intends to keep its positive momentum throughout Friday as well.

The major currency pair stopped its long-term decline and tried to reach stability. The current quote for the instrument is 1.1777. The local low was tested on the last day of March at 1.1703.

The USD remains strong as nothing has changed in the market environment and informational flow. However, market players probably decided that the “greenback” required a correction after updating its five-month highs. Moreover, investors are becoming less active in anticipation of the Easter holidays, so that might be a chance for the Euro to recover.

The statistics from the Euro Area turned out to be as expected. The German Manufacturing PMI was 66.6 points in March. The Manufacturing PMI in the Euro Area showed 62.5 points after being 62.4 points in February.

The numbers from the USA were rather mixed. For example, the weekly report on the Unemployment Claims threw a curve and showed 719K after being 658K the week before.

The ISM Manufacturing PMI was 64.7 points in March after being 60.8 points in the previous month. The final report on the Markit Manufacturing PMI showed 59.1 points after the previous estimate of 59.0 points. Everything that is higher than 50 points indicates improvement in the sector.

Today is a very important day in the economic calendar – the USA is publishing March reports on the labor market. The Unemployment Rate is expected to reduce from 6.2% to 6.0%, while the Non-Farm Employment Change may show 652K in March, which is twice as much as the February reading. Market layers believe that the reports are going to be good because weekly reports on the Unemployment Claims were quite convincing.

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

Euro got from under pressure. Overview for 06.04.2021

The major has been growing steadily for two days and has all the chances to continue its productive growth today. The current quotation is 1.1814.

The market is curious: how will the dollar react to the good US statistics and can it grow without catalysts? For now, reactions are uneven though the reply to strong statistics yesterday was absolutely clear. The dollar had grown enough to let the correction smooth the market out.

The statistics published yesterday showed that the Markit PMI in services in March had grown to 60.4 points from 60 points previously, which was a bit better than expected. As for the official ISM, in March it reached 63.7 points, starting from 55.3 points earlier.

The plant order volume in February dropped by 0.8% m/m against expected 0.5% m/m and previous growth by 2.7%.

Today statistics is going yo be more abundant. The EU is publishing the Sentix investor confidence index in April that mught have grown to 6.8 points from 5 points previously. The unemployment rate in February might have remained at 8.1% which is good for a region in a lockdown. The USA macroeconomic calendar is yet inactive.

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

Yen growing steadily. Overview for 08.04.2021

The Japanese yen against the US dollar is growing in Thursday morning, playing back what it has lost. The current USDJPY quotation is 109.67.

The statistics published yesterday showed that household expenses dropped by 6.6%y/y against the previous decline by 6.1% y/y and a forecast improvement to - 5.3% y/y. As for the m/m calculation, consumer expenses in February grew by 2.4% against the expected growth by 2.8% m/m. However, compared to the Japanese statistics where we saw a decline by 7.3% m/m, the current result looks rather bright.

The Japanese leading indicator index in February grew by 1.2 points against the previous increase by 0.8 points. This is a good signal that might mean some improvement in the economy of Japan.

Fresh statistics demonstrates theat the CCI in March grew by 36.1 points while in February, it rested at 33.8 points. This is very good news because in Japanese economy, consumers' moods seem to decide virtually everything. As soon as the consumer starts spending actively, the economy will liven up. However, this miracle has not been seen for long.

Now the yen is restoring quite well, finding a foothold in the weakening of the dollar.

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

The Euro is waiting for news. Overview for 12.04.2021

Early in another April week, EURUSD is a little bit retreating; investors are waiting for new catalysts.

The major currency pair is falling a bit on Monday afternoon. The current quote for the instrument is 1.1887.

Earlier, Germany reported on its Industrial Production for February. The indicator dropped by 1.6% m/m after losing 2.0% m/m the month before and against the expected reading of +1.6% m/m. Investors are frightened by weak reports from Germany because it might lead t much more serious problems in the key European economy. Germany has always been an economic engine of the Euro Area and it’s rather unclear who may replace it.

Last Friday, the USA reported on the Core PPI, which added 0.7% m/m in March after expanding by 0.2% m/m in the previous month and against the same expected reading. The Wholesale Inventories added 0.6% m/m against the expected reading of +0.5% m/m.

The USD is somehow supported by the US bond yield growth. The Euro, in its turn, is looking weaker because market players can’t be sure about the European economy and its ability to quickly recover after the coronavirus pandemic. Lockdowns are still in effect in some European countries and it’s not too optimistic.

Later today, the Euro Area is scheduled to report on the Retail Sales for February and it might be interesting: the indicator is expected to show +1.3% m/m after being -5.9% m/m in January. The stronger the reading, the better for the Euro. Also, the USA will publish the Federal Budget Balance but it won’t have any influence on the market volatility. At the same time, Fed Chair Powell is going to speak and this is what may attract market players’ attention.

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