The “greenback” strengthened significantly. Overview for 13.09.2021

EURUSD is falling; market players like the USD again.

Early in another September week, the major currency pair is falling. The current quote for the instrument is 1.1790.

The American PPI in August added 0.7% m/m after expanding by 1.0% m/m the month before and against the expected reading of 0.6% m/m. The Core PPI also improved, by 0.6% m/m, which is better than expected.

Inflation in the USA will remain high for a while. At the same time, the logistic structure for producers is as tough as before because of the pandemic effect.

Investors’ attention will be focused on the price data this week: as early as Tuesday, the USA will report on the CPI for August, which is expected to show 0.4% m/m after being 0.5% m/m in the previous month.

Apart from the statistic, the “greenback” was supported by politicians: after a phone talk between American and Chinese Presidents, their first conversation over seven months, market players immediately believed that the USD has a bright future. Leaders talked about economic and financial issues, some of which are still very controversial.

In addition to that, the parties discussed the specifics of working during the pandemic, as well as ecology issues.

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EURUSD is looking neutral. Overview for 15.09.2021

EURUSD keeps saving strengths while expecting the news.

The major currency pair remains neutral on Wednesday afternoon. The current quote for the instrument is 1.1826.

Inflation in the USA is back to normal. According to yesterday’s statistics, the CPI showed 0.3% m/m in August after being 0.5% m/m in July and against the expected reading of 0.4% m/m. On YoY, the indicator showed 5.3% against 5.4% the month before.

The Core CPI added 0.1% m/m in August after expanding by 0.3% in the previous month.

The current inflation growth rate is the slowest over the last 6 months. Early in the year, inflation was high due to a surge in prices for new and second-hand cars. Now there are signs that this sector stopped skyrocketing. Hotel prices are also slowing down. That’s good news. In general, it matches what the US Fed says that the inflation boost was temporary.

At the same time, the labour market is slowly tightening, thus forcing salaries to grow. That’s another reason for inflation to rise.

The regulator is monitoring inflation and the new report might as well become a basis for more speculations and expectations of an early reduction of the Fed’s stimulus programs.

Later today, market players will be focused on the US Industrial Production report for August, which may show worse numbers if compared to July.

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

The USD rose pretty much. Overview for 17.09.2021

EURUSD dropped on Thursday in response to American statistics; investors like the “greenback” again.

The major currency pair is looking weak on Friday. The current quote for the instrument is 1.1777.

The Retail Sales in the USA added 0.7% m/m in August after losing 1.8% m/m in July and against the expected reading of -0.7% m/m. On YoY, the indicator added 15.1%.

The Core Retail Sales m/m showed 1.8% m/m after being -1.0% m/m the month before and against the expected reading of -0.1% m/m.

Investors were lightning-fast in their response. Solid numbers “smoothed” their concerns about the insufficiently strong recovery of the American economy. In addition to that, they believe that based on this data the US Federal Reserve may reduce its stimulus programs ahead of the schedule. The regulator’s meeting is planned for the next week, so these expectations are well justified. However, a single fact of strong numbers is very unlikely to distract the regulator. Then again, market players always tend to be emotional.

The very least what investors are expecting from the Fed’s meeting is a clarification of the issues relating to the QE reduction and interest rates. The more comments about an early reduction of the stimulus, the better for the “greenback”. It will mean that the regulator is pretty close to tightening its monetary policy.

The weekly report on the Unemployment Claims in the USA showed 332K after being 312K the week before. Overall, the data is looking quite neutral.

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

The Australian Dollar is going up. Overview for 21.09.2021

AUDUSD is trying to rise but the mid-term trend remains bearish.

The Aussie is growing against the USD on Tuesday. The current quote for the instrument is 0.7271.

The Reserve Bank of Australia published its Monetary Policy Meeting Minutes today, which turned out to be very interesting and insightful. The key message was the announcement that the regulator wasn’t going to raise its interest rates until 2024. This information is very important for understanding what exactly the RBA is planning to do in the nearest future. Moreover, such specific news may reduce market volatility.

According to the RBA, the recent outbreak of the COVID-19 delta strain slowed down the economic recovery a little bit but didn’t abort it. The regulator is expecting the country’s economy to get back to standard numbers as the anti-coronavirus vaccination campaign is covering more and more areas in Australia to remove social restrictions.

The RBA remains steadfast in its commitment to support a friendly fiscal environment in the economy. The importance of available lending is not brought into question.

At the same time, the regulator admits that the economic recovery may be not as fast as it was thought before.

The strong USD doesn’t scare the Aussie enthusiasts because there are fundamental reasons for the Australian Dollar growth.

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

The “greenback” got a huge boost. Overview for 23.09.2021

EURUSD plummeted after the Fed’s comments.

The major currency pair plunged yesterday but had enough time to regain its positions. The current quote for the instrument is 1.1723.

So, the September meeting of the US Federal Reserve System “pushed the envelope” after all. Perhaps it was the most “colourful” and insightful session in months. The benchmark interest rate remained intact at 0-0.25% but no one really expected it to be revised.

However, there were changes in the Fed’s comments. The regulator announced that the country’s economy might require the QE program to be reduced in the nearest future. The stimulus might be over by mid-2022. This, in its turn, will allow to raise interest rates.

The fact that the Fed announced the time of the QE completion with some degree of certainty is very important. It means that the regulator confirms it likes the economic recovery speed and sees the prospects quite clearly.

In addition to that, the regulator said that the demand for manpower in the economy remained high and strong and may grow even more as the pandemic was dying down. At the same time, the economic recovery may unravel some problems shipment problems, which can be already seen.

Long-term inflation expectations, according to the Fed, are stable. If necessary, the regulator is ready to contain inflation. The sooner inflation reaches stability at its target levels, the closer the time the regulator closes the QE program.

The Fed is believed to announce the first reduction as early as November. The second reduction is expected to be in March 2022 and the last one in June. This is what gave the “greenback” a huge boost.

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

EURUSD took a break. Overview for 27.09.2021

Early in another week of September, EURUSD is calm without any mood swings.

The major currency pair remains neutral on Monday. The current quote for the instrument is 1.1689.

A notable risk appetite prevents the “greenback” from continuing its rally, although investors are truly positive towards the USD right now.

Last weekend, there were elections in Germany, the first ones in 16 years without Angela Merkel being a candidate. The Social Democratic Party, which earlier formed a coalition with the Green Party and the Free Democratic Party, was victorious. There are some frictions in the coalition regarding China and the Russian project called Nord Stream, as well as power supply issues but they can be resolved.

As for the Euro, the election results are mostly positive because they do not imply any dramatic changes in the country’s political strategy.

The USD is still supported by the Fed’s comments and market expectations that the regulator may reduce its stimulus program as early as November and raise the benchmark interest rate late in 2022 for the first time in a long period.

Later today, one should pay attention to the American statistics on the Durable Goods Orders for August, which is expected to show 0.7% m/m after being -0.1% m/m the month before. The indicator is extremely volatile, that’s why it will be interesting to view its components.

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

The USD updated its 5-week highs. Overview for 29.09.2021

EURUSD continues falling; Powell supported the “greenback”.

The major currency pair is still falling on Wednesday. The current quote for the instrument is 1.1658.

The American currency was significantly supported yesterday by the US Fed Chairman Jerome Powell. During his speech, Powell said that the regulator was really planning to reduce or even close the stimulus program in the future. These words revived discussions of the monetary policy tightening in the USA and the “greenback” immediately responded with a growth.

At the same time, the US 10-year bond yield also continued improving, thus giving the USD an additional boost.

The FED is planning to reduce the QE program as early as November and that’s good news for the “greenback”.

Talks about a maximum allowable limit for the US national debt are quite topical right now but there are a lot of obstacles here, as always. Earlier, the Republicans blocked the government financing bill, the one that was approved by the House of Representatives. Now, it’s important to agree on the key aspects of government financing by October 1st. Nuances can be discussed later.

The national debt limit has to be agreed on until mid-October, so there’s plenty of time for that.

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

The “greenback” is skyrocketing. Overview for 01.10.2021

EURUSD continues updating its lows; everyone likes the USD.

The major currency air continues plummeting. The current quote for the instrument is 1.1578.

Market players’ attention is focused on the US national debt. Most of the expectations in this issue are positive – it may be discussed for the next couple of weeks. It’s also important to decide on government financing in time but the Senate already has enough votes for that. In fact, today is the most important day and the first news must appear closer to the evening.

Yesterday, the “greenback” enthusiasts were a little bit puzzled by the statistics. For example, the weekly report on the Unemployment Claims showed 362K after being 351K the week before and against the expected reading of 335K.

The final GDP for the second quarter in the USA showed 6.7% q/q against the previous estimate of 6.6% q/q. The key support here lies in consumer spending: the money for supporting the economy allotted by the government found its destination.

The economic growth estimate for the third quarter is below 5% and that’s not very good.

Later today, one should pay attention to final data on the Manufacturing PMIs from Germany and the Euro Area, as well as the preliminary report on the European CPI. Apart from that, the USA is scheduled to report on the Personal Spending/Income for August – the first indicator is expected to rise.

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

The Australian Dollar couldn’t keep balance. Overview for 05.10.2021

AUDUSD is falling after the RBA meeting and the statistics release.

The Australian Dollar is falling against the USD on Tuesday afternoon. The current quote for the instrument is 0.7281.

So, during its October meeting, the Reserve Bank of Australia decided to keep the benchmark interest rate intact at 0.10%, just as expected. The QE program also remained unchanged: AU$4B every week until February 2022 at least to support the economic recovery process in Australia.

In the comments, the RBA said that there were no necessary conditions that could make the regulator change its rate-related stance – it might change closer to 2024. 

At the same time, the RBA believes that the current slowdown in the economic growth rate is temporary and the recovery will boost once the vaccination campaign accelerates. The regulator, in its turn, is going to keep the business-friendly monetary policy.

The data published in the morning showed that the Retail Sales lost 1.7% m/m in August, just as expected. Moreover, this time the decline is the same it was in July. That’s not good for the Aussie.

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

The “greenback” found a reason to get stronger. Overview for 07.10.2021

EURUSD dropped again; the USD remains strong.

The major currency pair got under another wave of market pressure. The current quote for the instrument is 1.1558.

Yesterday’s surge in the American currency was caused by a rally in the US 10-year bond yield. Apart from that, the continuous uptrend in energy commodities made investors think that inflation might boost on a global scale, and that reduced the risk appetite. “Safe haven” assets are once again got on market players’ radars.

Investors believe that everything that is happening on financial markets right now is a consequence of all possible inflation concerns, and nothing else.

These concerns may have an influence on the US Fed’s intention to revise the parameters of its QE program. The regulator is expected to make its first moves next month and announce exact dates and volumes in the nearest future.

The ADP Non-Farm Employment Change published yesterday was positive as it showed 568K in September after being 340K in the previous month and against the expected reading of 425K.

Now market players are paying their undivided attention to the reports to be published on Friday, which may provide insight into what is happening in the country’s economy and illustrate the Fed’s readiness to wind up stimulation. 

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

The Euro managed to strengthen. Overview for 11.10.2021

EURUSD is rising a little bit on Monday afternoon; investors are hoping for a calm trading session.

Early in another October week, the major currency pair is slowly growing. The current quote for the instrument is 1.1574.

American statistics published last Friday were rather mixed. It was the last pack of information before the November meeting of the US Federal Reserve System, during which the regulator is expected to decide on its stimulus program. That’s why the data attracted a lot of attention.

The Unemployment Rate in the USA dropped to 4.8% in September after 5.2% in the previous month and against the expected reading of 5.1% – that’s an excellent result. The Average Hourly Earnings added 0.6% m/m after expanding by 0.4% m/m the month before. It means that businesses are feeling strong enough to compete for manpower.

On the other hand, the NFP showed only 194K after being 366K in August and against the expected reading of 490K.

Obviously, there is some “vacuum” of the labour supply, so the employment sector is experiencing some pressure.

It’s quite difficult to make clear sense of this data: on one hand, everything is quite good, the sector is moving in the right direction and improving. On the other hand, a continuous problem with the labour shortage may cause a lot of difficulties in the future. However, we won’t know how the Fed is going to perceive this information until November.

American markets are closed today due to the Bank Holiday and there are no important statistics from both the USA and the Euro Area.

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