Daily Market Analysis from ForexMart

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EUR/USD. September 11, 2020 – Euro demonstrates strengthening after ECB meeting

The EUR/USD currency pair demonstrates increased trading volatility after yesterday's meeting of the ECB. Yesterday, at the moment, the pair managed to renew the high of early September at 1.1915, falling almost immediately to 1.1800. The current quote for the euro is 1.1860.

At the end of the meeting, it was decided to keep the monetary policy unchanged, and the rate at zero. The head of the regulator Christine Lagarde also noted that the PEPP program, designed for the purchase of assets in the amount of 1.35 billion euros, will continue its work, but over time the regulator intends to switch to a flexible system of asset repurchase.

Today, you should pay attention to the data on inflation in the United States, which should rise from 1.0% to 1.1%. And in comparison with Europe, which has already faced deflation, statistics from the United States can give the dollar strength. Perhaps it is these data that will entail the long-awaited correction in the EUR/USD pair.

 

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GBP/USD. September 14, 2020 – Pound is weakly correcting after falling the day before

On Monday, the GBP/USD pair is recovering after falling to local lows last week. The pound dropped to 1.2760 on Thursday, recovering to 1.2850 today.

The pressure on the British currency continues to be exerted by the growing likelihood of the UK leaving the EU in a «tough» scenario, without a trade deal. British Prime Minister Boris Johnson continues to criticize the European authorities, only exacerbating the situation.

For example, today it became known that the politician accused the EU of a food blockade of Great Britain. Moreover, last week the British authorities passed a law on the border of Northern Ireland, which cancels last year's agreements with Brussels. All this uncertainty around Brexit is putting strong pressure on the sterling exchange rate, and the currency is unlikely to be able to recover to its recent highs in the near future.

 

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GBP/USD. September 15, 2020 – Pound recovers moderately after long decline

Although the GBP/USD pair remains in a downward trend, it has been showing signs of recovery since the beginning of this week, responding to the positive British statistics. The current quote for the pair is 1.2890.

The UK released several economic reports this morning to support the pound. In particular, in July the growth of the average wages amounted to -1.0% against the forecast of -1.3%. The number of applications for unemployment benefits also fell in August. The actual number of requests was 73.7 thousand, while the forecasts assumed an increase to 100 thousand. Unemployment remained at the same level of 4.1%.

At the same time, the US dollar is under pressure from the protracted dispute in the US Congress over the issue of an additional package of monetary stimulus measures. In the evening hours, you should pay attention to the data on industrial production in the United States. Experts predict a slowdown in the decline in production from -8.2% to -6.1%, which may support the dollar.

The RSI indicator continues to rise towards the resistance zone, which signals the continued growth of the pound to the level of 1.29 and subsequent consolidation in this area.

 

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Brent. September 16, 2020 – Oil market is growing again

Oil prices are rising for the second day in a row. The current Brent quotation is $41.40 per barrel.

The reason for the strengthening was the suspension of oil and gas production in the United States due to hurricane Sally in the Gulf of Mexico. The current estimate for the total loss of production is between 3 and 6 million barrels of oil in about 11 days.

Additional support to prices was provided by yesterday's report from the American Petroleum Institute (API), which showed a decrease in oil reserves in the United States by 9.5 million barrels, to 494.6 million. Analysts predicted an increase in reserves by 1.3 million barrels.

The dynamics of the oil market also depends on the results of the two-day meeting of the US Federal Reserve System. If the event provides support for the dollar, oil prices are expected to show a correction.

USD/CAD. September 16, 2020 – Canadian dollar rises moderately in anticipation of inflation data

On Wednesday, the USD/CAD pair is moderately declining from the level of 1.3200. The current quote of the pair is 1.3160.

Statistics released yesterday from the US and Canada turned out to be weak. In the United States, data on industrial production were presented, the volume of which fell from 3.5% to 0.4% in August. The forecast assumed a reduction to 1.0%. Canada shared data on manufacturing sales, which fell from 23.0% to 7.0%.

Today you should pay attention to the results of the two-day meeting of the US Federal Reserve. Investors do not expect changes in interest rates or the course of monetary policy, policy, but the subsequent press conference of Jerome Powell will be of interest. The head of the Fed should comment on the issue of further interest rate cuts.

In Canada, a block of data on the dynamics of consumer prices will be published today. Market participants expect inflation to rise from 0.1% to 0.3%, which may provide some support to the Canadian dollar.

 

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EUR/USD. September 17, 2020 – The dollar strengthened after the meeting of the US Federal Reserve, but not for long

Yesterday, the results of the two-day meeting of the US Federal Reserve became known, which provided significant support to the dollar. In the evening hours, the quotes of the EUR/USD pair fell to the level of 1.1735. However, on Thursday the euro managed to make up for all the losses and return to the level of 1.1800.

The Open Markets Committee of the Federal Reserve System decided to leave the parameters of monetary policy unchanged. The key rate was kept at the historically minimal level – in the range of 0-0.25% per annum. At the same time, most Fed leaders expect the rate to remain in the current range until the end of 2023.

The ultra-soft monetary policy will continue until unemployment drops to estimated levels and inflation accelerates to 2%.

The Central Bank also improved its forecasts for GDP and unemployment for 2020: from -6.5% to -3.7% and from 9.3% to 7.6%. Jerome Powell noted that over the past two months, the US economy has been recovering faster than expected.

Today you should pay attention to the data on inflation in the euro area. Experts forecast a decline from 0.4% to -0.2%. And this will already become the official recognition of Europe's slide into deflation. The states will provide data on the number of applications for unemployment benefits. Experts expect further growth in the number of applications.

 

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GBP/USD. September 18, 2020 – The pound is recovering from yesterday's decline

The pound sterling is showing signs of strengthening and is trading just below the 1.3000 level. Yesterday, after the release of the minutes of the Bank of England, the British currency came under pressure and fell to 1.2860. The regulator decided to keep the base interest rate at 0.1%, and the program of asset repurchase from the market – at 745 billion pounds.

At the same time, the Central Bank noted that it is ready to consider the possibility of reducing rates to the negative area, if necessary.

The pair changed direction after the release of data on the number of applications for unemployment benefits in the United States. Fresh numbers turned out to be worse than forecast: the figure fell to 860 thousand against expectations of a reduction to 850 thousand.

Additional support to the pound today was provided by the report on retail sales, the volume of which increased by 0.8% in monthly terms (better than expected) and by 2.8% in annual terms.

The RSI indicator is moving almost horizontally, which means that it will be difficult for the pound to overcome the resistance level of 1.30. During the day, the GBP/USD pair will continue to fluctuate at current levels.

 

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Brent. September 21, 2020 – The oil market began to recover

Oil prices recovered more than 10% last week and Brent quotes returned to the area above $42 per barrel. The current quotation of the asset is $42.40. The weekly high was $43.78 per barrel. Experts believe that the «bullish» rally to the $45 area may resume.

The prices were supported by data on changes in oil reserves in the United States, as well as restrictions on production in the Gulf of Mexico caused by the hurricane season. According to the US Energy Information Administration (EIA), oil reserves in the United States fell 4.4 million barrels, exceeding the forecast for a decline of 1.8 million barrels.

In the US, the active hurricane season continues. To date, due to the threat of Hurricane Sally in the Gulf of Mexico, the work of 27.48% of oil production capacities has been suspended.

An additional driver of price growth was the outcome of the OPEC + meeting, during which the participants in the energy pact reaffirmed their commitment to the current agreement. Earlier, the organization reduced the production cut from 9.7 million barrels per day to 7.7 million, starting in August. At the same time, countries that had not previously completed the deal in full, pledged to compensate for excess production in the coming months.

 

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EUR/USD. September 22, 2020 – Euro continues to weaken

The European currency continues to weaken against the US dollar, falling to the level of 1.1690. The current quote for the EUR/USD pair is 1.1700. The main pressure on the European currency is exerted by the increase in the number of cases of coronavirus in Europe, which creates a risk for the introduction of new quarantine measures in the region.

Additional pressure on the euro rate came from the speech of the head of the European Central Bank Christine Lagarde. She stated the need to carefully study the macroeconomic reports of the euro area, as the economic recovery is uneven and unstable. In the evening hours today, you should pay attention to the speech of the head of the Fed D. Powell.

The RSI indicator maintains momentum for further decline. The forecast for tomorrow assumes attempts to consolidate the dollar below the level of 1.17.

 

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GBP/USD. September 23, 2020 – Pound weakly strengthens from 1.2700

The GBP/USD pair continues to decline against the dollar, falling to 1.2670 for the first time since late July. The current quote for the pair is 1.2730.

The main pressure on the British pound comes from the uncertainty over Brexit. The date of the country's withdrawal from the EU is approaching, but the parties have failed to reach agreements on many issues, and a «hard» Brexit scenario is becoming more and more likely.

Additional pressure on the British currency is exerted by a sharp deterioration of the epidemiological situation in the UK. Prime Minister Boris Johnson yesterday announced new restrictive measures and advised companies to move their employees to work remotely. Most likely, the country will face a new lockdown with the shutdown of enterprises, which will once again cause huge damage to the British economy.

Bank of England Governor Andrew Bailey made a speech yesterday. He stated that negative rates are an important tool in the regulator's arsenal, but that their introduction will take time and technical preparatory work. Thus, the head of the Bank of England signaled a possible transition of monetary policy from zero to negative rates.

EUR/USD. September 23, 2020 – Euro is recovering after yesterday's fall

During yesterday's day, the EUR/USD pair dipped to the level of 1.1670, the current quote of the pair is 1.1710. The pressure on the European currency is exerted by the worsening epidemiological situation with regard to Covid-19 in the eurozone and the UK. The British Prime Minister announced new restrictive measures and invited companies to transfer as many workers as possible to remote work.

In addition, the dynamics of the pair is also affected by the strengthening of the dollar, which rose after the statement of Charles Evans about the possibility of moving to raising rates earlier than planned.

Yesterday's speeches by J. Powell and C. Lagarde increased the volatility in EUR/USD trading. Powell noted that the US banking system is holding up well during the pandemic, but there is much work to be done to restore the economy in the future and the prospects for the banking sector have not been determined. Today the head of the Fed will speak in the House of Representatives, and on Thursday – in the Senate Banking Committee.

The head of the ECB, in turn, said at yesterday's speech that the regulator is closely monitoring the rate of the single European currency. Today, the euro was supported by data from Germany, where the index of business activity in the manufacturing sector rose better than expected – to 56.6 points (the forecast assumed that the indicator would remain at the level of 52.2).

 

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EUR/USD. September 24, 2020 – Euro is trading in the area of local lows

On Thursday, the euro remains in a weak position and hovers around 1.1640. The pressure on the currency is exerting strong demand for the dollar as a «safe» asset amid a rise in the number of new cases of coronavirus in the world. According to experts, in Germany, Spain, Portugal and other countries, daily incidence records are being updated.

The dollar rallies even as the preliminary September Markit index of US services PMI declines. The indicator was 54.6 points against the previous value of 55.0. At the same time, the official data on this indicator reflected a slight improvement and showed an increase to 53.5 points from the previous 53.1.

At the same time, the euro was under pressure today from the data on the business climate from IFO in Germany. The index rose to just 93.4 points, while the forecasts assumed growth to 93.8. In the afternoon, you should pay attention to the data on applications for unemployment benefits in the United States. The number of applications is expected to decrease from 860 thousand to 845 thousand. If the forecasts justify themselves, the dollar will receive additional support, since such data signal a further recovery of the labor market.

 

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EUR/USD. September 25, 2020 – The dollar is confidently moving to new highs

The EUR/USD pair continues to decline on Friday, and the euro runs the risk of renewing local minimums in the 1.1620 area during the day. The current quote for the pair is 1.1635.

The main support for the dollar, driving its growth, comes from the need of global investors for «safe» assets, as more countries mark the signs of a second wave of coronavirus. At the same time, market participants ignore the relatively weak American statistics. According to yesterday's data, the number of applications for unemployment benefits showed an increase to 870 thousand from the previous level of 866 thousand. The forecast was more optimistic and assumed a decrease in the indicator to 845 thousand.

The dollar showed some weakening yesterday, as investors' appetite for risky assets increased amid resumption of talks on additional stimulus for the US economy in the amount of $2.2 trillion.

Today we should pay attention to the publication of the US report on orders for durable goods for August, where the indicator could have increased by 1.1% m/m after earlier growth by 11.4% m/m. Macroeconomic publications are not expected in the euro area, so the dynamics of the EUR/USD pair will depend on data from the United States.

 

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GBP/USD. September 28, 2020 – Sterling is correcting after long weakening

On Monday, the British pound rate is showing some growth, approaching the level of 1.2850. However, this recovery can be regarded more as a corrective movement against a long downtrend, since the fundamental background for the sterling remains negative.

The British currency is still under pressure amid Brexit uncertainty. There is very little time left before the UK's exit from the EU, but the parties failed to reach an agreement on a trade deal. British Prime Minister Boris Johnson does not compromise with Brussels and is determined to leave the European Union on any terms.

In addition, the UK is showing the most dangerous situation among other European countries with the second wave of coronavirus. The authorities are forced to strengthen restrictive measures in order to avoid a complete lockdown, like in the spring.

Today the economic calendar is empty, therefore, given the news background, the pair will continue to fluctuate below the level of 1.2850 until new drivers appear.

 

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USD/CAD. September 29, 2020 – Looney makes weak attempts to recover

On Tuesday, the USD/CAD pair is showing a moderate decline, moving in the range of 1.3350-1.3400. The current quote for the pair is 1.3360.

The trading instrument is in the area of local highs in anticipation of new movement drivers. In the context of the coming second wave of the pandemic, the US dollar feels more confident than the «Canadian». However, there are factors that put some pressure on the USD rate. In particular, this is the uncertainty associated with the upcoming presidential elections.

The first debate between Donald Trump and Joe Biden kicks off tomorrow. The further direction of the American currency and its main Forex opponents will depend on the results of the meeting.

Macroeconomic calendar for today is not rich in publications. Attention should be paid to data on producer prices in Canada, but the rate of their decline should remain unchanged at 0.7%, so they are unlikely to somehow affect the Canadian dollar. The US is to report on the Conference Board Consumer Confidence Index. The indicator is expected to grow from 84.8 to 89.2 points.

 

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Brent. October 01, 2020 – Oil recovers after EIA report

During trading on Wednesday, oil started to rise to $42.50 per barrel. The prices were supported by data from the US Department of Energy on crude oil reserves in the country. According to a report by the Energy Information Administration (EIA), oil reserves in the reporting week fell by 2 million barrels to 492.4 million barrels. Analysts predicted an increase in reserves by 800 thousand barrels.

Now total US stocks are about 13% above the 5-year average. At the same time, gasoline inventories unexpectedly rose by 683 thousand barrels to 228.2 million barrels, while analysts expected their decline by 700 thousand barrels. Oil production in the US remained unchanged from the previous week at 10.7 million barrels per day.

Additional support for oil prices was provided by the decline in the US dollar across the Forex market amid increased hopes for the approval of a new package of fiscal stimulus measures in the United States. Market participants expect that the new bailout fund will be able to improve the prospects for economic growth and positively affect the demand for commodity assets. Thus, in case of agreement on the aid package, the current recovery in Brent may continue, the main target of the «bulls» is the $43 per barrel area.

GBP/USD. September 30, 2020 – The pound is consolidating at the 1.2850 area

The pound sterling has suspended growth against the dollar and is consolidating in the area of 1.2850. Statistics released today in the UK reflected local improvements in the UK economy. However, these data relate more to the II quarter, so the market is in no hurry to assess them too positively.

In particular, final UK 2Q GDP fell 19.8% QoQ versus a previous estimate of a 20.4% decline. Analysts did not predict a revision of the indicator, so we can say that the statistics have become a little more positive.

The final calculation of the volume of business investments in the second quarter reflected a decrease of 26.5% qoq, while according to the first estimate, the indicator fell by 31.4%. Business caution can be attributed not only to the coronavirus pandemic, but also to the difficult Brexit negotiations. It can be assumed that business is simply not in a hurry to invest finance so as not to take risks, while the prospects for Brexit are so uncertain.

Today the pair will spend the day in a narrow range of 1.2800-1.2850. The RSI indicator has stabilized in the neutral zone, which only confirms this scenario.

 

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EUR/USD. October 05, 2020 – Euro continues to move to new highs

At the beginning of the week, the EUR/USD pair managed to recover to the level of 1.1760, retracing the weak data on the US labor market, published last Friday. At the end of September, the US economy was able to create only 661 thousand new jobs outside agriculture, while the last month was marked by an increase of 1.489 million. Analysts predicted an increase of 850 thousand. At the same time, the unemployment rate in the United States in September fell from 8.4% to 7.9%.

The current quote for the pair is 1.1745. Some support for the dollar, as a defensive asset, was provided by the news of a positive test for coronavirus from US President D. Trump. On the eve of the presidential elections, Trump's illness could seriously harm the candidacy of the incumbent, who, as you know, is already lagging behind his opponent Joe Biden.

In addition to the situation with Trump's disease, investors are awaiting the decision of the US Congress on a new package of fiscal assistance to the population and companies affected by the pandemic. As soon as the stimulus is agreed upon, the pressure on the US dollar will intensify, which will lead to further growth of the European currency.

 

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EUR/USD. October 06, 2020 – Euro strengthens amid growing appetite for risky assets

At the trading on Monday, the EUR/USD pair managed to rise to the level of 1.1800 amid increased demand for risky assets after the news of D. Trump's discharge from the hospital. Moreover, rumors emerged in the American session that an agreement between Democrats and Republicans would soon be reached on economic stimulus, further fueling investors' appetite for risk.

However, on Tuesday the asset dropped to 1.1780. It became known that the American president, although he refused hospitalization, still feels unwell, which increases political uncertainty in the United States on the eve of the upcoming presidential election. As you know, while the candidate from the Democratic Party Joe Biden in the ratings is 14 points ahead of the incumbent president.

At the same time, the upcoming Brexit continues to exert pressure on the European currency. And until the UK's exit from the EU takes place, one should not expect an active strengthening of EUR/USD.

Today in the eurozone were published data on the volume of industrial orders in Germany: the indicator rose above forecasts (growth to 4.5% against the forecast of decline to 2.6%). The United States will provide statistics on imports and exports, as well as the number of vacancies in the JOLTS labor market in August. You should also pay attention to the speeches of the heads of the Central Banks of Europe (Christine Lagarde) and the USA (J. Powell).

 

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EUR/USD. October 07, 2020 – Trump has increased the volatility of the pair

At the end of Tuesday, the EUR/USD pair dipped to the level of 1.1745. Increased trading volatility was observed throughout the day, since after the discharge of American President D. Trump from the hospital, the demand for risky assets increased, and the euro managed to grow to 1.1765.

However, then Trump surprised the markets with his decision to end negotiations with Democrats on additional stimulus, which led to an increase in demand for the US dollar. Trump noted that he does not want the money to go to help the poorly governed states under Democratic rule. It is worth noting that the Republicans made a $1.6 trillion proposal to the Democrats. Democrats, in turn, insisted on the allocation of amounts from $2.2 to $2.6 trillion.

Democratic presidential candidate Joseph Biden equated such a decision by the incumbent with a betrayal of the American people.

Today the EUR/USD pair will consolidate in the 1.1750 area. In the evening, you should pay attention to the publication of the FOMC minutes.

 

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EUR/USD. October 08, 2020 – The pair is volatile above the 1.1750 level

On Thursday, the euro fell to 1.1750 after rising to 1.1780 earlier. On Tuesday, US President Donald Trump unexpectedly stopped negotiations with Democrats on an economic aid package, which led to the escape from risky assets and strengthening of the US dollar.

On Wednesday, the head of the White House said that he was already ready to sign some stimulus measures. Congress immediately voted for the government bills, which, among other things, include a package of measures to support airlines.

The dynamics of the pair is also influenced by the situation with the presidential elections in the United States. Pre-election polls show that the Democratic candidate Joe Biden is in the lead, and if he wins, Democrats could take control of the US Senate. As a result, the authorities will begin to adopt bills that run counter to previous policies.

Today we should pay attention to the data on the number of applications for unemployment benefits in the United States. Moreover, these data can provoke a jump in volatility in the market and a weakening of the dollar, since the number of initial applications is projected to increase. The current quotation of the EUR/USD pair is 1.1765, which confirms the forecast for further growth of the euro.

 

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EUR/USD. October 09, 2020 – Euro has returned to the highs of 1.1800

On Friday, the EUR/USD pair continued its confident ascent and reached the 1.1800 level. Interest in risky assets returned to the markets after Donald Trump announced that Nancy Pelosi, the President of the House of Representatives of the Congress, was ready to conclude an agreement on an aid package that would support the airline industry. The aid also involves a one-time financial payment to the American unemployed in the amount of $1200.

However, the rally in the European currency may be restrained by alarming news from Europe, where the second wave of coronavirus is gaining momentum. For example, in Germany, the number of infected has increased sharply, which may again lead to the introduction of tough restrictions. In this case, the «bears» will be able to seize the initiative in the euro/dollar pair.

The economic calendar is practically empty today. Traders continue to win back yesterday's data on the US labor market, which were worse than expected. In particular, the number of applications for unemployment benefits rose to 840 thousand, while analysts expected an increase to 820 thousand.

GBP/USD. October 09, 2020 – Pound is moving in different directions at the end of the week

At the end of the week, the GBP/USD pair is trading in different directions in the area of 1.2950. Today, macroeconomic data from the UK was published, which somewhat disappointed investors, but did not have a visible impact on the dynamics of the pair.

In particular, GDP growth for the month decreased from 6.6% to 2.1%. Industrial output fell to 0.3%, while manufacturing output fell to 0.7%.

The current moderate strengthening of the sterling can be explained by the general weakness of the US dollar in the Forex market. Earlier the US released data on applications for unemployment benefits, which were worse than forecasts. Also, pressure on the dollar was exerted by yesterday's statements by representatives of world Central Banks that the US economic recovery is developing worse than expected, which clearly shows the Fed's shortcomings.

 

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USD/CAD. October 12, 2020 – Canadian dollar strengthens to 1.31

At the beginning of the week, the US dollar is weakening across the entire spectrum of the market, which allowed the USD/CAD pair to fall to the 1.3100 area. The current quote is 1.3135.

The weakening of the US dollar was fueled by news of the resumption of talks by US lawmakers on an additional fiscal stimulus package. Market participants expect that an agreement between Democrats and Republicans will be reached soon, which will weaken the national currency.

At the same time, the Canadian dollar is receiving support from high oil prices and strong macroeconomic statistics. For several days in a row, Brent oil quotes traded above $43 per barrel, and the growth of the oil market, as a rule, acts as a driver for the strengthening of commodity currencies, including the Canadian dollar.

Moreover, last week a Canadian labor market report was published, according to which the number of employed people increased by 378.2 thousand in September, while the forecast of growth was only 156.6 thousand. Unemployment, respectively, fell from 10.2% to 9.0%. Today the economic calendar is almost empty, the pair will trade slightly above 1.31.