Daily Market Analysis from ForexMart

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GBP/USD. January 28, 2020 – Sterling drops to 1.30

The pound continues to decline actively, having approached the level of 1.30. This week is very important for the British currency – on Thursday a meeting of the Bank of England will take place, at which the regulator can soften its monetary policy.

In addition, January 31 is the date of Brexit, when the UK will officially cease to be part of the European Union. This event could lead to increased market volatility.

Additional pressure on the sterling is provided by the general strengthening of the US dollar, which has received support, as investors tend to invest in less risky assets amid the spread of concerns about the Chinese coronavirus.

 

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EUR/USD. January 29, 2020 – Euro remains in the area of local lows 1.10

The sentiment in global markets is gradually recovering amid a decrease in investor anxiety about the further spread of the Chinese coronavirus. Experts note that the spread of infection outside of China is extremely slow, which returns the interest to risky assets.

However, the EUR/USD pair continues to trade at the low of November nearby 1.1000. Today we should pay attention to the meeting of the US Federal Reserve. Markets expect Fed to keep rates unchanged at the level of 1,75%. At the same time, the US regulator can confirm its readiness to continue purchasing treasury bills to maintain dollar liquidity in the system. And this can support the entire block of risky assets and put some pressure on the dollar in the evening.

 

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Brent/USD. January 30, 2020

Oil quotes again began to decline, moving in line with all risky assets. The current Brent quote is $57.60 per barrel. The asset again was under pressure of increased concerns about the further spread of coronavirus from China. Information that the current epidemic could cause global damage to the Chinese economy in the I quarter of 2020 also puts pressure on Brent. As a result, concerns about the demand for raw materials dominate the oil market.

Additional pressure on the oil rate was provided by data from the US Department of Energy, refuting preliminary data from the API. The agency reported an increase in crude oil reserves in the country of 3.5 million barrels, while a report from the API reflected a decrease in reserves of more than 4 million barrels. Today, oil will continue to decline under the pressure of a negative external background.

 

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EUR/USD. January 31,2020 – Euro in the range of 1.10-1.1040

The EUR/USD pair continues to trade in the range 1,1000-1,1040, reacting to news regarding the further spread of coronavirus outside of China. Representatives of the World Health Organization (WHO) said yesterday that there is no need to limit travel and trade with China, which has slightly increased the demand for risky assets.

Today, attention should be paid to inflation data in the eurozone. Eurostat said in January consumer prices fell 1.0% month-on-month, and rose 1,4% year-on-year. Fresh statistics may give a slight support to the euro today.

 

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EUR/USD. February 03, 2020 – The dollar is moving towards 1.1050

Global market sentiment is again taking on a negative connotation due to news about the further spread of the Chinese virus.The number of infections and deaths continues to grow. In an attempt to limit the negative impact of recent events on the country's economy, the People’s Bank of China provided 1.2 billion yuan ($171 billion) in 7 and 14-day repurchase transactions, as well as reduced rates on these instruments. Such actions should provide some support for risky assets.

Quotes of the EUR/USD pair are falling to the level of 1.1050 after rising to almost 1.11. Today, you should pay attention to the statistics block from Europe and the USA, where countries will present data on business activity. The indicator in the eurozone should grow from 46.3 to 47.8, and in the UK – from 47.5 to 49.8 points. In the States, the index should decline from 52.4 to 51.7. At the same time, the dollar may be supported by the publication of the ISM production index – an increase from 47.2 to 48.5 points is expected.

During the day, the dollar will continue to strengthen to the level of 1.1050.

 

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GBP/USD. February 04, 2020 – Sterling collapsed to 1.30 area

British sterling crashed into the 1.3000 area yesterday after market participants realized how difficult the period of trade negotiations between Britain and the EU would be. British Prime Minister Boris Johnson in his speech said that he would rather agree with the tariffs than with the jurisdiction of the European Court, which once again heated the degree of relations between the parties.

Today, you should pay attention to data on business activity in the services sector and the construction sector in Britain. The country's construction sector is going through hard times due to Brexit, since the EU will not allow London to remain the financial capital of Europe, which significantly reduces the demand for luxury housing and offices. Nevertheless, analysts expect the indicator to rise from 44.4 to 46.2, which may support the pound.

Also, investor interest may be attracted by data on the rate of decline in producer prices: the indicator may slow down from -1.4% to -0.5%.

 

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EUR/USD. February 05, 2020 – The pair is steadily declining to 1.10

The trading range of the pair was limited by the levels of 1.10-1.11. There is still a moderate appetite for risky assets on global sites, despite the emergence of new reports about the Chinese coronavirus. Yesterday, the number of cases increased by more than 3 thousand people, and the number of deaths approached 500.

The pair EUR/USD is falling on Wednesday to the level of 1.10. The dollar was supported by the comments of US economic adviser L. Kudlow, who noted that China’s trade obligations could be extended over time due to the negative consequences of the outbreak of coronavirus. You should also pay attention to data on business activity in the US services sector in the evening. It is expected that the ISM index in the non-manufacturing sector will remain at a comfortable level near the mark of 55. These statistics will allow the dollar to come close to the level of 1.10.

 

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EUR/USD. February 06, 2020 – Dollar continues to grow

The euro halted its fall in the 1.1000 area after China announced a decision to halve import duties on US goods worth about $75 billion to improve trade relations. At the same time, markets ignore the topic of the further spread of the Chinese virus, despite the continuing increase in cases of the disease.

Yesterday, the dollar showed strong growth after the release of data on business activity in the service sector. ISM's Procurement Managers Index for the US non-manufacturing sector rose from 54.9 to 55.5, while the number of jobs created in the private sector of the US economy increased by 291 thousand in January against expectations for growth of 157 thousand.

Today we expect the dollar to grow to the 1.0980 area.

 

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07.02. Euro updated its minimum at 1.0950

The euro continues to update lows in the 1.0950 area. Moods at global sites remain negative amid continued growth in infections and deaths from the Wuhan coronavirus. High infection rates limit risk appetite.

The dollar continues to receive support from the publication of macroeconomic reports from the United States. ISM indices and ADP data released this week turned out to be significantly better than analysts' forecasts, which provided significant support to the American currency.

Today, you should pay attention to official statistics on the US labor market. If the data reflect the increase in the number of new jobs in the US economy in January, the dollar will be able to finish the week at very favorable levels.

 

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EUR/USD. February 10, 2020 – Euro continues to drift in the area of lows

The pair EUR/USD starts the week at the low of 1.0945. The US dollar remains strong after the release of statistics on the labor market. The number of newly created jobs in the United States increased by 225 thousand, which significantly exceeded the consensus forecast of analysts, suggesting an increase of only 165 thousand.

Today the news background is calm. The dynamics of the pair will be determined mainly by the appearance of news on the situation with coronavirus in China. To date, the number of deaths from the virus continues to grow, as does the number of new cases worldwide. This situation puts strong pressure on the entire range of risky assets.

 

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Fundamental Brent analysis for February 11, 2020

Today, Brent quotes show some growth during the morning trading, although the risks of further decline are still elevated. Oil prices were supported by the comments of the Energy Minister of Kazakhstan that the OPEC+ countries intend to postpone the ministerial meeting from March to the end of February.

Last week, the OPEC+ Technical committee recommended that countries increase oil production by 0.6 million barrels per day in the second quarter of this year amid a decline in demand for raw materials from China. However, OPEC+ member countries have not yet expressed a unified position on this recommendation, which does not allow prices for «black gold» to demonstrate a steady recovery from local lows.

Today, you should pay attention to data from the American Petroleum Institute (API) on US crude oil reserves. Analysts expect an increase in reserves of 3 million barrels. If the forecast is confirmed, pressure on Brent will resume again.

 

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EUR/USD. February 12, 2020 – Euro consolidated at 1.09 lows

The sentiment on global sites remains moderately positive in the face of a slowdown in the spread of coronavirus infection around the world. In recent days, experts have noted a decrease in cases of new diseases, which suggests that China's preventive measures have begun to bear fruit.

As a result, the pair's rate stabilized near the level of 1.0900. At the same time, the US dollar remains strong, having received support from yesterday's statement by J. Powell. The head of the US Federal Reserve noted that the US economy remains very stable, and the current monetary policy of the regulator is optimal in the current conditions.

Also, ECB President Christine Lagarde shared her vision of fiscal stimulus yesterday. The politician urged European officials to carefully study the possibilities of stimulating the economy through fiscal policy, since the ECB's zero rates do not really help to achieve the inflation target.

Thus, against this background, the US dollar looks more attractive for purchases. During the day, the pair will fluctuate slightly near the level of 1.09.

 

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GBP/USD. February 13, 2020 – Sterling confidently broke through the level 1,30

The sterling is growing steadily today, breaking the level of 1.30 The pair is under the multidirectional influence of several factors at once. On the one hand, in the credit market, there is a decrease in the yield spread of 10-year UK/US government bonds, which is negative for the British currency.

On the other hand, macroeconomic data from the UK provided some support to the pound. Despite the fact that statistics for the IV quarter of 2019 showed stagnation of the economy, annualized growth was 1.1%. Analysts had expected a slowdown of 0.8%. Industrial production did not grow as much as analysts had expected, but Britain recorded an unexpected trade surplus in December amid a jump in metal exports (0.85B).

Thus, the pound is growing, the main goal of the «bulls» is the area near the level of 1.3050.

 

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EUR/USD. February 14, 2020 – Euro remains in the lows of 2017

The euro continues to move within the downward channel near the 1.0840 mark. The sentiment in global markets remains moderately negative in the absence of new negative news on the spread of coronavirus in China.

The European currency is at the lows of 2017 under the pressure of weak macroeconomic data from Europe and a strong US dollar. The US currency received support from yesterday's inflation data in the United States, which reflected a slight acceleration in consumer prices in January (2.5% y/y versus 2.3% y/y). If today's data on retail sales and industrial production for January indicate the preservation of stable business activity in the US, the dollar will continue to grow to 1.0800.

 

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EUR/USD. February 17, 2020 – Euro remains in the area of two-year lows

The sentiment on global sites remains moderately optimistic amid the lack of negative news on the topic of coronavirus. The growth rate of new cases of diseases decreased again after the jump caused by the use of a new method for diagnosing the virus. As a result, the EUR/USD pair is trading at 1.0840, remaining in the area of two-year lows.

Today's news background is calm, and in the week you should pay attention to the macroeconomic data block for January. PMI business activity indices in the European Union and the USA will be published on Friday. If statistics show deterioration, risky assets may again be under pressure.

Today, the pair will be trading primarily in a sideways manner near 1.0840.

 

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EUR/USD. February 18, 2020 – Euro is under pressure after the release of data from Germany

Risky assets again came under pressure after Apple announced that it would not be able to fulfill its revenue plan in Q1 due to existing problems with shipments from China in the context of the coronavirus epidemic. An additional influence on investor sentiment was provided by reports that the US plans to limit technology exports to China to restrain Chinese technological development.

The pair EUR/USD remains in weak positions near 1.0830. In the daytime, German ZEW economic expectations and sentiment indices were published. The indicator unexpectedly dropped from 26.7 points to 8.7 points. Analysts had predicted a decline in the index only to around 21.5. Such statistics will put pressure on the euro during the day and may send the pair below 1.08.

 

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USD/CAD. February 19, 2020 – Looney grows in anticipation of inflation data

Today, the USD/CAD pair is showing a decline after strong growth the day before. The instrument continues to move within the trading range of 1.32-1.33, reacting to the publication of macroeconomic data from the US and Canada.

Yesterday, the US dollar managed to grow to 1.3280 after the release of data on business activity in the manufacturing sector of the Federal Reserve Bank of New York: in February the index rose from 4.8 to 12.9 points. Statistics from Canada, on the contrary, reflected a decline in production sales in December by 0.7% m/m after a decline of 1% m/m last month.

However, today Canadian dollar began to grow in anticipation of data on the consumer price index of Canada, which will be published today in the evening. Experts expect annual inflation to rise to 2.3% in January against growth to 2.2% in December. If the forecast is confirmed, the likelihood that the Bank of Canada will decide to mitigate monetary policy will decrease significantly, and the Canadian dollar will receive an incentive for further growth.

 

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EUR/USD. February 20, 2020 – Euro sideways at 1.08

The euro is moving horizontally at the level 1.0800. Market dynamics remain calm in the absence of negative news on the topic of coronavirus. The US dollar is still strong reacting to comments from the Fed on the stability of the US economy.

Thursday is not rich in significant events, the pair will continue to fluctuate slightly near the level of 1.08. Tomorrow you should pay attention to the publication of PMI indices in the EU and the US. If the indices turn out to be worse than expected, this could reduce the risk appetite on global markets at the end of the week.

 

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EUR/USD. February 21, 2020 – Dollar continues to strengthen

Negative sentiment at global sites has been rising again due to a sharp increase in the number of coronavirus infected in South Korea. At the same time, the markets continue to trend towards the strengthening of the US dollar, which is growing in tandem with the main currency competitors.

Yesterday, the Philadelphia Fed index of business activity was published, which rose sharply to 36.7 points. Positive regional data give reason to expect an increase in the ISM business activity index for the United States as a whole, which supports the dollar.

Statistics on business activity in Europe were published today. The index of business activity in the manufacturing sector (PMI) in Germany increased from the level of 45.3 to 47.8 points. Experts predicted a decline to 44.8. The IHS Markit composite purchasing managers' index (PMI) in France also rose – to 51.9 points in February from 51.1 in January. Analysts predicted a value of 51.0 points.

However, these statistics provided the euro only temporary support – the pair managed to rise slightly above the 1.08 level, but the growth was quickly replaced by a decline. During the day, the euro will continue to fall to an area below 1.08.

 

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EUR/USD. February 25, 2020 – Euro under pressure amid the spread of coronavirus in Italy

Sentiments at global sites are again deteriorating amid a sharp increase in the number of coronavirus cases outside of China. Northern Italy became the new epicenter of the outbreak, where more than 200 cases of the disease are currently recorded. This situation puts pressure on the European currency, since the further spread of the disease can lead to a significant decrease in the GDP of European countries in the future.

The pair EUR/USD continues to move in the range of 1.08-1.09. The current euro quote is 1.0830. Yesterday, the currency rose significantly after the German business climate index IFO was released: the indicator unexpectedly rose to 96.1 points, while analysts expected a decline to 95.3.

Today we should pay attention to the speech of Richard Clarida from the Fed – the politician intends to highlight the impact of coronavirus on the US economy and to clarify the further course of movement of the monetary policy of the Fed.