The Yen plummeted. Overview for 21.02.2020

USDJPY has been rising pretty much for the last couple of trading sessions; it is trading close to the highs of April 2019.

The Japanese Yen significantly weakened against the USD in several previous days; however, it is trying to reach stability on Friday. The current quote for the instrument is 111.85.

The Japanese currency became less attractive as a “safe haven” asset after China took control over the coronavirus outbreak. Chinese authorities said that the virus was under control on the mainland. At the same time, coronavirus cases outside china are still attracting a lot of attention.

The Japanese statistics made an additional contribution to the Yen’s decline, although usually it barely responds to macroeconomic numbers. The Core Machinery Orders lost 12.5% m/m in December after adding 18.0% m/m in November and against the expected reading of -9.0% m/m. 

The National Core CPI was 0.8% y/y in January. It’s better than expected but still worse than it should be.

The All Industries Activity didn’t change in January after adding 0.9% m/m in the previous month and against the expected reading of 0.3% m/m.

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

The Pound rose and shows no fussiness. Overview for 26.02.2020

GBPUSD is neutral in anticipation of trade and economic relations negotiations with the European Union.

In the middle of the week, the British Pound is rather neutral against the USD. The current quote for the instrument is 1.2992.

Yesterday, the United Kingdom reported on the CBI Realized Sales in December, which showed 1 point after being 0 the month before. The problem is that the expected reading was 4 points.

Investors’ attention is focused on Brexit. Early in March, the European Commission is ready to discuss with the United Kingdom their trade and economic relations after the Brexit. The Commission said that they wanted to build close relations with Britain for an ambitious partnership.

In the preliminary documents, the European Commission announced that it was high time for the parties to discuss a free trade area in order to secure businesses from excessive pressure and talk about healthy competition conditions. The next thing to do is to work out a mutual agreement on access to water areas, as well as discuss digital trading and purchasing systems at the highest level. All these things should be done before the transition period is over.

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

The Yen is skyrocketing. Overview for 28.02.2020

On the final trading day of this winter, the Japanese Yen is strengthening against the USD the current quote for the instrument is 108.82.

After all, market players do require “safe haven” assets as their panic relating to the Chinese coronavirus and its transmission continues. When one looks more closely, it can be seen that nothing critical is going on and nothing critical even can’t be happening, it just turned out that indices and assets were too expensive and badly needed corrections, but couldn’t find a good reason for them. Now, they’ve got this reason, and both media and speculators are successfully hyping on it.

The statistics published by Japan this morning showed that the Unemployment Rate went up from 2.2% in December to 2.4% in January. The indicator wasn’t expected to change, that’s why the actual reading was quite surprising.

The latest numbers once again draw attention to the problems inside the Japanese economy, which remain very serious. Sooner or later, the Bank of Japan will have to expand the QE program in order to keep the country’s economy afloat.

The current strengthening of the Yen is not very positive of Japanese exporters.

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

The Australian Dollar found support. Overview for 03.03.2020

AUDUSD continues the trend reversal; this time, with some support from the Reserve Bank of Australia.

The Aussie continues recovering against the USD after the RBA’s decision. The current quote for the instrument is 0.6542.

Today’s meeting of the Australian regulator ended quite unexpectedly: the RBA decided to cut the rate from 0.75% to 0.50%. Market players anticipated such a move, but they weren’t sure that it might happen so soon.

By the way, the Australian rate has been reduced for the fourth time in less than 12 months.

In the comments, the RBA said that the decision was aimed at decreasing possible negative consequences of the coronavirus transmission all over the world. The Australian economy is very closely connected to China, so the RBA’s decision seemed pretty logical after a lot of minor statistics from China published yesterday.

It’s known that the coronavirus outbreak has already affected Australia’s travel industry, as well as the mobility sector and retail sales. This impact may get more serious in the future, that’s why the rate cut may “soften” it a little bit.

However, one shouldn’t exclude a possibility that the RBA’s decision to cut the rate might be supported by other global central banks.

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

The USD has corrected. Overview for 05.03.2020

On Thursday, the major currency pair moved away from two-month highs; right now, it is correcting.

EURUSD is falling a little bit on Thursday afternoon, which seems quite logical. The current quote for the instrument is 1.1129.

Market emotions caused by the Fed’s unexpected decision to cut the rate calmed down and were followed by a thorough analysis. Nothing critical happened, although it should be admitted that the decision to urgently revise the rate without any warnings sent shockwaves across the global financial community. The American economy remains stable and the numbers confirm this fact. However, the rate was cut and market players will have to deal with it.

The statistics published yesterday showed that the ADP Non-Farm Employment Change was 183K in February after being 209K in the previous month and against the expected reading of 183K.

The ISM Non-Manufacturing PMI in the USA went from 55.5 points in January to 57.3 points in February, although it was expected to reduce down to 54.9 points. It’s a positive signal for the US economy, which means that consumers are ready to spend money.

Later in the evening, the USA is scheduled to publish revised reports on the Nonfarm Productivity and the Unit Labor Costs in the fourth quarter of 2019. Also, investors will be offered reports on the Factory Orders for January, which may worsen a little bit, and the Unemployment Claims, which may show 213-215K, a rather neutral reading for the USD.

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

The Aussie is quite unsteady. Overview for 10.03.2020

Yesterday, AUDUSD updated its all-time lows; later it managed to recover a little bit, but still remains under pressure.

On Tuesday morning. the Australian Dollar recovered a bit against the USD but is still looking very insecure. The current quote for the instrument is 0.6550.

Yesterday, the Aussie updated its all-time lows against the USD and tested 0.6310 – is seems like the national currency has never been so cheap. This decline is the result of financial panic that “flooded” global markets yesterday. After the collapse of OPEC+ and considering the lack of any distinct economic prospects relating to the oil extraction, investors all over the world started avoiding risks and switching to “safe haven” assets. As a result, the Aussie got under pressure, just like a lot of other traded currencies.

By now, AUDUSD has recovered a little bit but the long-term downtrend is still dominating.

The statistics published in the morning showed that the NAB Business Confidence in Australia dropped to -4 points in February after being -1 point in the previous month. However, it was difficult to expect any different after forest fires this winter and the current coronavirus outbreak.

As for the numbers from China, the CPI showed 5.2% y/y in February, the same as expected, after being 5.4% y/y the month before.

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

EURUSD is starting to grow. Overview for 12.03.2020

After falling for a couple of days, the major currency pair is back to rising.

EURUSD is “in the black” on Thursday morning. The current quote for the instrument is 1.1295.

The World Health Organization on Wednesday declared the rapidly spreading coronavirus outbreak a pandemic. This information sparked more panic, made oil prices fall again, and once again caused a mass exodus of investors from risky assets. Starting March 13th, the USA is going to close its borders for European countries in order to prevent further virus transmission. Airlines all over the world are reducing the number of flights.

Given the circumstances, it is very interesting what decisions the European Central Bank will make during its March meeting. At the moment, its benchmark rate is zero, while the deposit rate is -0.4%. The QE program is active and there are options to extend it in order to support the Euro Area’s economy. The regulator may announce some selective stimulus, for example for Italy, the future financial outlook of which seems pretty gloomy.

So far, market players aren’t very nervous and don’t’ play against the Euro, at least for now.

In the evening, the USA is scheduled to report on the PPI, which may lose 0.1% m/m in February after adding 0.5% m/m in the previous month. The Core PPI, in its turn, may add 0.1% m/m after expanding by 0.5% m/m in January.

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

The USD managed to keep balance after the Fed’s attack. Overview for 16.03.2020

The major currency pair is rising a little bit on Monday morning after the Fed’s decision to cut the rate down to zero.

On Monday, EURUSD remains positive after the Fed’s unscheduled meeting and its decision to cut the rate. The current quote for the instrument is 1.1130.

So, the US Federal Reserve had another unscheduled meeting and decided to cut the key rate for the second time this month. This time, it was reduced down to 0% - 0.25%, which is a “rock-bottom low”. In the comments, the regulator said that the decision was made due to the coronavirus pandemic

As a result, the rate dropped by 150 basis points over a month and that’s what may help global markets to reverse to the upside. However, one shouldn’t exclude a possibility that the first reactions might be rather negative: now that the Fed cut the rate down to zero, it means that the situation might get out of control and economic effects might be much more serious than expected.

It is known that the regulator is going to keep the rate low up until the moment it is sure that the worst is behind.

It’s quite interesting that the regulator’s March meeting, which is scheduled for this week, hasn’t been canceled yet.

The USD President Donald Trump responded to this news in his usual upbeat fashion and said that the decision was positive for the economy. In fact, everything happened the way Trump wanted, except that it was quite naturally and he didn’t have to put pressure on the Fed. 

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

The Euro is looking down again. Overview for 18.03.2020

On Wednesday afternoon, the major currency pair dropped to its three-week lows.

EURUSD is falling again and it keeps getting worse and worse. The current quote for the instrument is 1.0978.

Capital markets are gripped by panic, which brings a rapidly increasing demand for liquidity. In this light, the USD is getting stronger being a “safe haven” asset.

Right now, financial panic is based on what is happening in the world and assumptions that consequences might be much more serious than it was expected before. Quarantine restrictions are crippling the tertiary industry and may actually destroy the services sector along with small enterprises. At the same time, a lot of currencies are depreciated, which is also not good. As a result, investors are switching to the USD.

Market players didn’t pay attention to the statistics from the USA published yesterday. The Retail Sales lost 0.5% m/m in February after adding 0.6% m/m the month before and against the expected reading of +0.2% m/m. The decline is directly connected with the coronavirus outbreak as it made consumers go shopping less often.

The Industrial Production in the USA showed +0.6% m/m in February after being -0.5% m/m in the previous month. The Capacity Utilization Rate went from 76.6% to 77.0% over the same period of time.

Slowly deteriorating numbers on the real estate market may be considered as the start of a slowdown. The NAHB Housing Market Index showed 72 points in March after being 74 points the month before.

However, the USD doesn’t pay attention to this, because right now there are things that are much more important.

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

The Pound hit another bottom. Overview for 20.03.2020

GBPUSD continues falling on Friday: it updated the low again and is trying to correct.

The British Pound remains in a tight corner against the USD. The current quote for the instrument is 1.1685.

In the morning, the pair hit another bottom at 1.1409.

Yesterday, the Bank of England has an unscheduled meeting where it made a decision to cut the benchmark rate from 0.25% to 0.1%. At the same time, for the first time in many years, the regulator increased its holdings of UK government and corporate bonds by £200 billion, up to £645 billion and that was a very decisive move for the Bank of England. 

GBPUSD is currently trading not far from the lows of 1985. This bottom is way too deep to recover from, especially that the positive momentum of the BoE’s activities was effective for a very short period of time.

We remind you that the British economy is suffering additional pressure from the Brexit procedure. Taken together, these factors may be very unpredictable and hurtful for the country’s economy. It’s highly likely that the United Kingdom may lose any positive momentums in its economy for the next several years.

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

The Pound is sinking again. Overview for 24.03.2020

On Tuesday afternoon, GBPUSD is trying to correct but the Pound is looking laughably weak.

The British Pound is correcting against the USD on Tuesday. The current quote for the instrument is 1.1618.

At the moment, everything is against the British currency: the Brexit, the timing of which now seems terrible, quarantine restrictions, implementation of ultrasoft monetary policy, and a sharp decline of consumer demand.

Today, when the BoE’s benchmark rate is reduced down to an extremely low value of 0.1% and the QE program is expanded, the country’s economy must receive more support. However, it turned out to be rather difficult: consumers are not very active because they do not know what to expect in the future, I mean their finance and the coronavirus outbreak consequences.

Later in the evening, the Bank of England is scheduled to publish its previous monetary policy meeting minutes. However, the document will be significantly outdated because the entire world has dramatically changed over the past two weeks.

Apart from this, the United Kingdom is going to report on the CBI Industrial Order Expectations in March, which is expected to show -38 points after being -18 point in February. Another report, the Services PMI, may drop from 53.2 points in February to 45.0 Points this month. Both readings are negative for the Pound. 

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

The Euro recovered to its weekly highs. Overview for 26.03.2020

EURUSD continues recovering while investors believe in the effect of the stimulus offered by the Fed.

On Thursday, EURUSD is keeping positive momentum. The current quote for the instrument is 1.0914.

The statistics published yesterday showed that the Durable Goods Orders in the USA added 1.2% m/m in February after expanding by 0.1% m/m the month before and against the expected reading of -1.0% m/m. The Core Durable Goods Orders lost 0.6% m/m over the same period of time after adding 0.8% m/m in the previous month and against market expectations of -0.4% m/m.

Later today, the USA is scheduled to report on the GDP in the fourth quarter of 2019, which may show 2.1% q/q.

However, today’s highlight is the statistics on the labor market to be published today. The USA is going to publish the Unemployment Claims, which is expected to increase dramatically. Last week, the indicator showed 281K given that it hasn’t been over 200-225K for the last few years. Today’s market expectations imply up to 1.65M.

If the actual reading is close to expectations, the USD may weaken significantly. It is clear that American businesses ware looking pretty well as long as consumers were active. However, as soon as consumer demand slowed down due to quarantine restrictions, the US labor market found itself overcrowded.

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