GBP: another lows. Overview for 15.03.2022

GBPUSD updated its local “bottom”; the labour market statistics managed to smooth “negative vibes”.

The British Pound is looking weak against the USD on Tuesday. The current quote for the instrument is 1.3046.

Earlier this morning, the pair updated its local lows at 1.2997. It happened before the UK reported on the labour market – pressure from the “greenback” was increasing and market players had to sell the pair. After the UK released some numbers, the situation reached stability, although one should admit that it is still pretty far from neutral.

So, the Unemployment Rate in the country dropped to 3.9% in January after being 4.1% the month before. The Claimant Count Change showed -48.1K in February. These are good signals: after the coronavirus-related social restrictions were removed, businesses and enterprises managed to rebound very quickly and get back to a more or less regular way of life.

The Average Earnings (weekly) excl. Bonus added 3.8% y/y in January against the expected reading of 3.7% y/y. The Average Earnings incl. Bonus expanded by 4.8% y/y after adding 4.3% y/y in the previous month.

One may assume that the statistics turned out to be quite positive. In February reports, the influence of interruptions in deliveries will increase, and the March data will show it even better. However, the labour market in the UK is looking quite stable so far.

Investors are slowly switching their attention to the BoE meeting scheduled for Thursday. As we mentioned before, the interest rate might go from 0.50% to 0.75%. If it happens, the national currency, which is not looking too good, might get some support.

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

The Aussie is coming back to life. Overview for 17.03.2022

AUDUSD continues recovering supported by the statistics.

The Australian Dollar is steadily rising against the USD on Thursday. The current quote for the instrument is 0.7322.

Earlier today, Australia released several reports on its labour market. The data turned out to be quite positive and provided the Aussie with great support.

The Unemployment Rate in Australia dropped to 4.0% in February after being 4.2% the month before and against the expected reading of 4.1%. The Participation Rate increased from 66.3% to 66.4%. The Employment Change showed 77.4K after being 37K in the previous month.

The labour market quickly recovered after an Omikron outbreak that occurred in winter. The unemployment rate is now the lowest since 2008.

The strong labour market data may be another sound reason for the Reserve Bank of Australia to raise its rates.

The stronger the data, the more support the Aussie gets.

The national currency can now find additional support in a decrease of the market demand for the “greenback” after the US Fed March meeting.

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

The Aussie is in the firing line. Overview for 21.03.2022

AUDUSD is falling amid global risk aversion.

The Australian Dollar is falling against the USD early in the week. The current quote for the instrument is 0.7389.

AUDUSD moved away from its 2-week highs amid global risk aversion in financial markets. Risk is now the major trigger on all exchanges.

In the meantime, Australian authorities are considering fighting the current inflation boost in the country. For example, they are discussing the measures to hold down the energy price surge, from budget resources. On 29 March, Australia is planning to announce a new federal budget, which may include the methods to control fuel prices, such as petrol excise duty holiday.

In some Australian regions, the petrol price at the pump exceeded A$2.2, and it’s a great impact on both household budgets and consumer activities. The Australian government says that the fuel price surge may eventually damage the entire economic system of the country.

The budget must be balanced in such a manner as to provide the economy with some local support and opportunities to further pursue the GDP growth plan. Many experts wonder how it will work out for Australia.

This week, Australia is scheduled to release preliminary reports on Markit Manufacturing/Services PMIs for March. The data will be announced on Thursday and might have no serious influence on the AUD in case it is neutral. However, some negative numbers might put pressure on the Aussie.

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

The Pound will try to take advantage of the statistics. Overview for 23.03.2022

GBPUSD reached its two-week highs; the future movements depend on reactions to the statistics.

The pound sterling recovered a bit against the USD. The current quote for the instrument is 1.3222.

The UK released several macroeconomic reports on prices, which might be very interesting because of their direct influence on the BoE’s stance on the interest rates.

The CPI in the UK was 0.8% m/m in February after 0.6% m/m the month before. One might say it’s another slight price surge but the predicted reading was 1.0% m/m. On YoY, the CPI showed 6.2% after being 5.9% in the previous month and against the expected reading of 6.1%.

Both numbers seem like new multi-year highs.

The Core CPI in the UK was 5.2% y/y in February, higher than the forecast 5.1% y/y.

The higher the CPI, the more active and aggressive the Bank of England is expected to be. This month, the regulator already raised the benchmark interest rate by 25 basis points, up to 0.75%. However, the economy might need one more step like this.

As a rule, when it comes to inflation, the British regulator adheres to a very conservative stance and prefers to sit and watch without interfering. In the past, it worked. But what is currently happening to the prices is looking too global.

For the Pound, inflation boost is no news, but it may limit the intraday growth.

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

EURUSD hopes to recover. Overview for 25.03.2022

EURUSD is trying to keep its positive momentum and remain “in the black”.

The major currency pair is slowly growing on Friday. The current quote for the instrument is 1.1014.

The statistics published yesterday by the US showed that the country’s labour market is eventually recovering. The Initial Jobless Claims was 187K after being 215K the week before and against the expected reading of 210K.

The labour market stability is the aspect the US Fed considers when making monetary decisions. Inflation is just a trigger and “irritatory agent”.

The Durable Goods Orders in the US lost 2.2% m/m in February after adding 1.6% m/m in the previous month and against the expected reading of -0.5% m/m. The indicator is extremely volatile, that’s why it’s important to look at its components. The Core Durable Goods Orders dropped 0.6% m/m after adding 0.8% m/m in January.

It means that consumers are not really interested in big purchases and remain rathe neutral to everything else. Probably, it’s a temporary reaction.

As for other data, it’s quite good. The preliminary Markit Manufacturing PMI in March showed 58.5 points after being 57.3 points the month before. The Services PMI went from 56.5 points to 58.9 points.

Later in the evening, investors should check the Michigan Consumer Sentiment report for March. The higher 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 Aussie stopped rising. Overview for 29.03.2022

After several trading sessions of growth, AUDUSD took a break.

The Australian Dollar is consolidating against the USD. The current quote for the instrument is 0.7481.

Market players are focused on geopolitical tensions and energy prices growth, that’s why their responses to the statistics are rather restrained.

Earlier today, Australia reported on the Retail Sales for February – the indicator added 1.8% m/m against the expected reading of 1.0% m/m and continue the momentum that started in January. In response to the data, the Aussie rose a little bit. 

The Retail Sales data is very important for understanding the economic growth rate and consumption parameters. Based on the fact that the retail sales cover about 80% of the entire retail turnover, one may form a quite realistic impression of what is happening. Moreover, the indicator has a direct correlation with inflation and the GDP growth rate. The stronger the retail sales data, the better for the AUD.

The Reserve Bank of Australia is monitoring this data and using it in its estimations of the Australian economy.

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

The Yen is restoring the balance. Overview for 31.03.2022

USDJPY is falling after updating its 7-year highs.

The Japanese yen is recovering against the USD. The current quote for the instrument is 121.99.

The Yen suffered serious stress in March and has lost 6% against the “greenback” since the beginning of 2022. Amid global risk aversion, market players chose the USD but right now the Yen is slowly restoring.

Today’s data showed that the Industrial Production in Japan in February was worse than expected: +0.1% m/m against +0/5% m/m. On YoY, the indicator added 0.2% against the expected decline of 2.3% m/m.

Curious things are happening in the Japanese construction industry. For example, the Housing Starts report showed +6.3% y/y against the expected reading of +1.1% y/y (0.872M against 0.820M). At the same time, the Construction Orders dropped 2.3% y/y against the expected growth of 1.5% y/y. It seems like new houses were “frozen” right after the start so that everyone could wait and see what would happen with prices.

It appears that there is domestic demand and interest in construction but the global uncertainty spoils everything.

According to Chief Cabinet Secretary Hirokazu Matsuno, the Yen decline in March can have a negative impact and consequences on the country’s economy. He said that the government was keeping a close eye on what was happening in the currency market and thought the Yen stability was very important.

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

The Euro remains weak. Overview for 04.04.2022

EURUSD continues falling; investors are assessing risks.

The major currency pair is falling early in the week. The current quote for the instrument is 1.1022.

Not as if sales in EURUSD were very active, but bears are very consistent. Investors are watching risks and so far, assessing them as quite global.

Last Friday’s statistics on the US labour market were in favour of the USD. The Unemployment Rate dropped to 3.6% in March, which is better than expected, after being 3.8% in the previous month. The Average Hourly Earnings added 0.4% m/m and matched market expectations. However, it wasn’t surprising – preliminary data was raising such a possibility.

However, the Non-Farm Payrolls showed only 431K in March after being 750K (revised data) in February and against the expected reading of 492K. The March reading might have upset market players but the revised February data eliminated this stress.

The US labour market remains stable and follows its course. It’s good news for the “greenback”.

This week, investors should pay attention to the FOMC Meeting Minutes to be published on Thursday. the document is highly unlikely to offer any new information but market players would love to hear confirmations of the data announced earlier. If the document matches their expectations, it might support the USD.

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

The Euro is forced to decline. Overview for 06.04.2022

EURUSD weakened pretty much on Tuesday and remains under bearish pressure on Wednesday.

The major currency remains weak in the middle of the week. The current quote for the instrument is 1.0911.

Demand for the “greenback” skyrocketed after some harsh comments from American monetary policymakers. For example, Lael Brainard, the vice-chair of the Federal Reserve, said that the regulator was going to continue tightening its monetary policy consistently, as well as raise the rates and cut its own portfolio right after the May meeting. According to her comments, the portfolio will be cut much faster than in 2017-2019.

Esther George, President of the Federal Reserve Bank of Kansas City, mentioned that the US was facing the highest inflation in over 40 years and a 50-point rate hike in May might be one of the possible solutions. In her opinion, the current conditions allow to raise the rate above the neutral value to reduce inflation. In this particular case, the neutral value means annual inflation.

Just like Brainard, George is sure that the regulator will cut its portfolio quicker than before.

Judging by these comments, the US regulator is looking very aggressive. They made stock investors in the US sell and raise demand for the USD as a “safe haven” asset.

Later today, market players should pay attention to the FOMC Minutes. The document is rather unlikely to contain something new but as they say, the devil is in the details.

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

The Aussie is weakening. Overview for 08.04.2022

AUDUSD is falling under the attack of the “greenback” and amid the global risk appetite decline.

The Aussie continues falling against the USD. The current quote for the instrument is 0.7462.

The RBA Financial Stability Review published earlier today says that many Australian loaners are ready for the benchmark interest rate hike. According to the regulator, they are also ready for possible reductions in real estate prices. Moreover, the document mentions a quite high ratio between household debts and income – this aspect makes households more sensitive to a possible rate hike in the future.

As for households, the RBA believes that their financial stability improved after the pandemic thanks to savings and a relatively stable situation with real estate prices. Many households managed to take out mortgages, so they don’t have to worry about the rate hike.

The RBA says that the non-bank lending volume is rather low, about 5% of the total lending market. This fact reduces associated risks and threats to stability.

It appears that the RBA lays the groundwork for the interest rate hikes. At the moment, it is collecting and analysing information, which will lead to conclusions to be used when making the rate decision. On the surface, it looks like everything is ready.

Right now, the AUD is falling for at least two reasons. The first one is the strong “greenback”, which is currently in demand as a “safe haven” asset. The second reason lies in a technical correction of the asset after it updated its local highs.

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

The Yen updated its lows. Overview for 12.04.2022

USDJPY continues rising; the Yen is surrendering.

The Japanese Yen continues its free-fall against the USD. The current quote for the instrument is 125.65.

The Yen hasn’t been able to act as a “safe haven” asset for a long time, although financial and capital markets remain very rough. So, what’s going on?

As a rule, the Yen was falling when investors switched to risky assets but the current situation is different. One may assume that they are re-assessing the current situation in the Japanese economy and its financial system. Possible results? For example, deterioration of the national debt-servicing capacity may lead to a serious debt crisis and the collapse of Japanese stock markets. The current ratio of debt to the GDP in Japan is 170%. The QE programme implemented by the Bank of Japan smooths the problem a little bit but doesn’t solve it completely.

Moreover, the negative interest rate in Japan makes it possible to speculate on rate differences, which can be clearly seen in cross rates. Both Australia and New Zealand have opportunities to raise their rates and are planning to do it later this year.

On the other hand, the weak Yen is good for exporters. But the problem is that Japan is becoming a global importer, mostly of energies and metals. In this case, the JPY rate decline makes the situation more complicated. The currency rate should stabilise trade indices but it doesn’t happen.

So far, the fundamental background prevents the Yen from quick recovery. Of course, unless the monetary and debt policy change.

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

The Euro managed to recover. Overview for 14.04.2022

After updating this month’s lows, EURUSD quickly corrected.

The major currency pair reached some stability. The current quote for the instrument is 1.0914.

The “greenback” weakened yesterday: the US 10-year bond yield dropped, and market sentiment improved. Investors got interested in risky assets again and their demand for the USD declined.

Today’s going to be a very busy day. First of all, the European Central Bank is having another session. The benchmark interest rate is unlikely to change but market players are more interested in the regulator’s rhetoric. The more aggressive the comments, the better for the Euro. It might also be interesting to see how the regulator assesses inflation and what measures it is going to take it under control.

Secondly, the US will release the Retail Sales in March, which may add 0.6% m/m after gaining 0.3% m/m in the previous month, as well as the weekly report on the Initial Jobless Claims. It will be curious to learn the components of the former report – how Americans spend money in the light of the inflation surge.

As for the latter release, the indicator is expected to show 172K after being 166K the week before. The labour market remains quite stable and that’s the only thing everyone needs to know.

Later in the evening, EURUSD might become more volatile.

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