Daily Market Analysis from ForexMart

[KostiaForexMart]

EUR/USD. June 03, 2020 – Euro overcomes 1.12 level for the first time since early March

An optimistic atmosphere prevails on global markets, and the euro has reached 1.1200. Demand for risky assets is growing as market participants focused on the prospects for business recovery after the coronavirus pandemic, despite ongoing riots in the United States.

In addition to the general weakening of the US dollar in the Forex market, the impact on the euro is expected by tomorrow's meeting of the ECB, according to which the regulator can increase the program for the purchase of financial assets by 500 billion euros and extend this program after 2020.

Today, you should pay attention to the ISM index of business activity in the US services sector for May and data on the labor market from ADP. Analysts predict an increase in the number of repeated applications for unemployment benefits after a sudden decrease last week. Moreover, a new record value is predicted - 26,690 thousand. These data can put further pressure on the exchange rate of the American currency.

 

[KostiaForexMart]

GBP/USD. June 04, 2020 – Sterling rises from 1.25

In the morning hours, the British currency continued to recede paired with the dollar, but the «bears» failed to overcome the level of 1.25. The current quotation of the pair GBP/USD is 1.2535. The pressure on sterling was exerted by statements by the Bank of England that it was necessary to be ready for Brexit without a trade transaction in transition. The regulator intends to prepare the financial system in the country for probable risks and economic stresses.

Yesterday, the UK released data on business activity in the service sector: the indicator unexpectedly rose from 13.4 to 29.0 points. However, these data did not support the British pound.

The US dollar, on the contrary, strengthened after the release of data on the labor market from ADP: the number of people employed in the country fell by only 2.7 million people, while experts forecast that this figure would fall by 9 million people.

 

[KostiaForexMart]

EUR/USD. 05.06. Euro keeps growing momentum

The euro strengthened at the end of the week, reaching 1.1390. However, in the morning hours, the pair shows a decline to the level of 1.13 as part of the correction. Yesterday, the European Central Bank announced that it intends to support the economy in all available ways, including increasing the volume of the PEPP program by 600 billion euros per month (about $ 1.35 trillion). The program was extended until June 2021.

The regulator also noted the risk of lowering core inflation in 2020 to 0.9%, which is too little for the European region. Therefore, stimulating the economy can last not only until the summer of next year.

Today, you should pay attention to statistics on the US labor market. The unemployment rate, at a record high of 14.7%, could rise to even more frightening levels – 19.5%. Last month, the number of jobs decreased by 20,500 thousand, now it can decrease by another 4,870 thousand. And this picture looks extremely pessimistic for the American currency.

 

[elebibi]

On Tuesday, the European currency continues to decline, reaching 1.0840. Sentix data exerted pressure on the euro: the May consumer confidence index fell to -41.8 points against the forecast of a decline to -33.5. Moreover, the index of business activity in the manufacturing sector in Germany fell in April from 45.4 points to 34.5, while the experts' forecast suggested a fall to 34.4 points. The indicator for the entire region fell to 33.4 points against the forecast of 33.6.

 

[KostiaForexMart]

EUR/USD. June 08, 2020 – US dollar gets support from labor market data

EUR/USD is falling at the beginning of a new trading week. The current quote of the instrument is 1.1275. The US dollar was supported by data on the US labor market: the unemployment rate in the country in May was 13.3% compared to 14.7% in April. These statistics turned out to be much better than the forecast suggesting an increase in the indicator to the level of 19.8%.

The number of jobs outside the agricultural sector increased during the reporting period by 2.5 million, the forecast assumed a decline of 8 million. The data for April were simultaneously revised to deteriorate to -20.687 million from -20.537 million. The average hourly wage in May fell by 1% m/m, which turned out to be worse than the forecast suggesting growth by the same amount.

Today is calm in terms of the release of important macroeconomic statistics. Of interest will only be the speech of the ECB President Christine Lagarde.

 

[KostiaForexMart]

Brent. June 09, 2020 – Oil declines due to several factors

Oil quotes show a decrease from yesterday's highs above the level of $43 to $40 per barrel. The oil market is weakening, despite the extension of the OPEC+ deal until the end of July and the decision to increase production cuts by countries that have not fully fulfilled their obligations in the past months (Iraq, Nigeria, Kazakhstan). Analysts suggest that the pressure on oil prices was caused by doubts of market participants about the success of the new deal.

An additional negative impact on Brent quotes was made by statements by the Minister of Energy of Saudi Arabia that the Persian Gulf countries, which intended to reduce production by another 1.18 million barrels per day, no longer plan to extend this reduction after June.

Moreover, Mexico refused to reduce production in its country and, on the contrary, intends to resume production after five months of downtime due to the civil war in the country.

The current Brent quote is $40.11 per barrel. Analysts note that price reductions will continue in the near future, as the news on the extension of the OPEC+ deal has already been fully taken into account in quotes.

 

[KostiaForexMart]

GBP/USD. June 10, 2020 – Sterling approaches 1.28

The British currency continues to grow, approaching the level of 1.2800. Sterling was supported by data from BRC, according to which retail sales in May increased by 7.9% year on year against 5.7% a month earlier.

Additional support for the British currency was provided by high demand for risky assets. Investors are increasing long positions in the stock markets, commodity market and the market for high-yield currencies, as the yield on US government bonds is below 1%.

Tonight you should pay attention to the outcome of the meeting of the US Federal Reserve, which is likely to confirm its intention to maintain low interest rates for a long period of time. And for risky assets, this will be another good signal.

Thus, the British currency will continue to grow to an area above 1.28. The RSI indicator rushed up, which confirms this scenario.

 

[KostiaForexMart]

EUR/USD. June 11, 2020 – Euro weakly declining from 1.14

The EUR/USD pair is consolidating at 1.14. The dollar was supported by the results of the meeting of the Federal Reserve, according to which the regulator kept the rate in the target range of 0-0.25% per annum and gave fairly clear signals about maintaining full-scale stimulation for as long as required.

At the same time, the Fed shared forecasts for US GDP: experts expect a contraction of the economy by 6.5% this year, and the unemployment rate may reach 9.3%, rather than 3.5%, as previously expected. However, these data did not exert any visible pressure on the exchange rate of the American currency.

Today, you should pay attention to the producer price index in the US for May and the number of initial applications for unemployment benefits. Experts predict a gradual decrease in the number of calls – both primary and repeated. If these forecasts are confirmed, then it will be possible to speak not about improving the situation, but at least about the beginning of stabilization in the American labor market. And this can provide significant support to the dollar.

 

[KostiaForexMart]

EUR/USD. June 15, 2020 – Euro moves away from highs

The euro remains under pressure after falling to 1.12 at the end of last week. The current quotation of the EUR/USD pair is 1.1240. Today, the macroeconomic calendar is almost empty, the main events of the United States and the eurozone will be held later this week.

Today, attention should be paid only to inflation data in Italy: consumer prices in the country in May fell by 0.2% after a zero change in April. This suggests that the third eurozone economy has already faced deflation, which could push the ECB to further soften the parameters of its monetary policy.

The dollar was supported by data on consumer confidence from the University of Michigan: the index rose in June to 78.9 points against the May mark of 72.3. The restoration of the indicator signals that the «bottom» of consumer sentiment has already been passed. However, fears of the second wave of the US epidemic continue to be a risk factor for the US currency.

 

[KostiaForexMart]

EUR/USD. June 16, 2020 – Dollar resumes its growth

Yesterday, the EUR/USD pair appreciably strengthened, reaching the level of 1.1350. However, on Tuesday, the euro began to decline to 1.1300. Before the US dollar was under pressure amid a fall in the levels of ten-year government bond yields and a general improvement in investor risk appetite.

However, the decline was replaced by strengthening after the publication of data on business activity in the manufacturing sector of New York in June: the index was -0.2 points against the May value of -48.5. This means that business and production are gradually returning to life.

Today you should pay attention to the statistics block from Europe. Germany and the eurozone will present reports on the business sentiment index from ZEW in June, experts predict a noticeable improvement in both cases. The day will end, most likely, with a weakening dollar after the publication of the report on retail sales: the rate of decline should accelerate from -21.6% to -32.6%.

 

[KostiaForexMart]

Fundamental GBP/USD analysis for June 17

Today, the British sterling does not show visible price fluctuations paired with the US dollar, as market participants are still analyzing the released statistics. In particular, the May consumer price index in the country was 0.5% year on year versus the April value of 0.8% y/y. The producer price index in May rose 0.3% mom after a 5.5% decline in April.

Core inflation in the UK was recorded at 1.2% y/y – lower than it was a month earlier, and weaker than expected. At the same time, the retail price index in the country amounted to only 1.0% y/y in May against the April level of 1.5%.

Such dynamics fully corresponds to the conditions when neither business nor consumers are active in the country. Fresh statistics did not reflect either a positive or a clear negative, so the pair GBP/USD will continue to fluctuate near the level of 1.2560 during the day.

 

[KostiaForexMart]

GBP/USD. June 18, 2020 – Sterling continues to decline in anticipation of the Bank of England meeting

On Thursday, the GBP/USD pair continues to decline, following the dynamics of yesterday. The current quotation of the pair is 1.2475. The pressure on the sterling was exerted by weak macroeconomic data from the UK: the consumer price index (CPI) in May rose by only 0.5% after rising by 0.8% in April. At the same time, the target level of the Bank of England is at around 2%.

Such a sharp decline in inflation may force the British Central Bank to introduce additional monetary incentives, which will negatively affect the exchange rate of the national currency. Today, a meeting of the Board of the Bank of England will take place, from which market participants expect the interest rate to remain at 0.1% and increase the QE program.

An additional source of pressure on the pound remains uncertainty around Brexit. And if today the regulator decides on a new round of monetary easing, the British currency could fall to the level of 1.2400.

 

[KostiaForexMart]

EUR/USD. June 19, 2020 – The euro is growing slightly from the level of 1.12

Yesterday's trading ended with a decrease in the euro to around 1.1180. The dollar rose in price to its main currency competitors amid sales of the euro and the pound, as well as amid growing investor appetite for defensive assets. The probability of the potential occurrence of the second wave of the coronavirus epidemic puts pressure on the entire spectrum of risky assets.

However, today the EU summit took place, during which the head of the European Parliament, David Sassoli, called on the heads of state to approve a plan for the restoration of the EU economy by €750 billion and a draft next seven-year budget for 2021-2027. At the same time, he recognized the presence of many disagreements on important issues and the need for another summit in the future. Such news provided some support to the European currency, and today we will see a weak growth of the euro from the level of 1.12.

 

[KostiaForexMart]

EUR/USD. June 22, 2020 – Euro fluctuates slightly near the level of 1.12

The EUR/USD pair continues to trade near the level of 1.12, fluctuating slightly on both sides of it. Today, the macroeconomic calendar is almost empty, so the dynamics of the instrument will not differ in activity.

At the end of last week, market participants drew attention to the speech of US Federal Reserve Chairman J. Powell, who noted that economic recovery would be long and difficult. These comments put pressure on the dollar, which led to the pair growing to the level of 1.1230.

Today, you should pay attention to data on home sales in the US secondary market. The indicator may show growth of 1.6%, which will provide some support to the US dollar. On Thursday, important statistics on the final estimate of GDP will be released: experts predict confirmation of a preliminary estimate of the economic decline by 5%.

 

[KostiaForexMart]

EUR/USD. June 23, 2020 – Euro could not overcome the level of 1.13

Yesterday, trading on the euro ended with an increase to the level of 1.1300. The reason for the growth of the EUR/USD pair was made by the statements of the White House economic adviser Larry Kudlow. The politician noted that in the USA there is no second wave of coronavirus diseases, which led to an increase in demand for risky assets.

Today, the eurozone countries have submitted their reports on business activity in the manufacturing sector and the services sector. Eurozone PMI rose from 39.4 to 46.9 points, better than forecast. The index of business activity in Germany also showed growth: from 36.6 points to 44.6, which was higher than analysts' forecasts either. Such figures provided strong support for the European currency.

In the afternoon, the US will publish business activity indexes in the manufacturing sector and services for June. Experts forecast growth from 39.8 to 48.0 points. You should also pay attention to data on new home sales in the USA for May: the forecast assumes an increase from 623 thousand to 640 thousand.

The RSI indicator pushed off the resistance level and turned towards the neutral zone. This signals that the euro is limited by the level of 1.13, and during the day we can expect a corrective decline in the pair to the level of 1.1270.

 

[KostiaForexMart]

Brent. June 25, 2020 – Oil declines amid expectations of the second wave of coronavirus in the world

On Thursday, Brent quotes continued to be under pressure, fluctuating slightly at $40 per barrel. Concerns about a new outbreak of the coronavirus infection pandemic have a negative effect on the asset. WHO has announced a significant increase in the number of new diseases in the United States, China and Latin America. As a result, concerns about the slowdown in global economic recovery and lower demand for hydrocarbons returned to the market.

An additional factor in lowering oil prices was also data on changes in US oil reserves. Yesterday, the US Energy Information Administration (EIA) announced a 1.4 million barrels increase in raw material inventories in a week, while experts forecast a decrease of 100 thousand barrels. Stock growth has been observed for the third week in a row.

Today, attention should be paid to data on US GDP and durable goods orders. If statistics support the US dollar, oil will have another factor for further decline.

 

[KostiaForexMart]

EUR/USD. June 26, 2020 – Euro is under pressure near the level of 1.12

The European currency continues to remain under pressure paired with the dollar amid growing demand for safe assets. Investors fear the second wave of Covid-19, as more and more new cases of coronavirus infection are recorded in the world. The current quotation of the EUR/USD pair is 1.1225.

Additional pressure on the euro was exerted by reports that the White House administration is considering options to introduce new and increase existing tariffs on imports of products from the European Union and the UK worth $7.5 billion.

At the same time, the US dollar received support from data on the volume of orders for durable goods: the indicator in May showed an increase of 15.8% m/m after a month earlier decline of 17.7% m/m. Today, you should pay attention to the publication of statistics on personal income and expenses of Americans for May.

 

[KostiaForexMart]

GBP/USD. June 29, 2020 – Sterling down to 1.23

The British sterling continues to decline at the beginning of a new trading week. The current quotation of the pair is 1.2300. Last Friday, the United States presented macroeconomic data that signaled in favor of further strengthening of the US currency. In particular, personal expenses of US citizens in May grew by 8.2% mom after a decrease of 12.6% mom in April. Analysts expected an increase of 8% m/m. Revenues, on the other hand, decreased by 4.2% m/m after rising by 10.8% m/m in April. Investors expected a decrease of 6% m/m.

In addition to statistics, the dollar was supported by reports from the Fed that the regulator suspended cash injections into financial markets and launched the reverse process. Thus, the balance of the Federal Reserve for the week decreased by $ 75.5 billion, and a week earlier – by $ 28 billion.

At the same time, pressure on the sterling continues to exert uncertainty on Brexit. Last week, Britain’s chief negotiator, David Frost, accused the EU of creating a deadlock in the negotiations. And EU negotiator Michel Barnier expects a breakthrough in resolving the issue only in October. Negotiations on Brexit will start today, however, the participants are skeptical in advance about its effectiveness. Thus, a further decline in the pound to the level of 1.23 seems quite probable.

 

[KostiaForexMart]

EUR/USD. June 30, 2020 – Euro consolidated at 1.12

On Tuesday, the EUR/USD pair continues to decline, breaking the level of 1.12. The euro was pressured by weak macroeconomic data from the eurozone: the consumer and business confidence index in June recovered from 67.5 to 75.7 points, which was worse than analysts' forecasts, expecting the indicator to rise to 80 points.

In the United States, on the contrary, economic statistics provided substantial support to the US dollar: pending sales in the secondary housing market in May rose to 44.3% m/m compared to a decline of 21.8% in April.

Today, the eurozone has presented preliminary data on the consumer price index for June: annual inflation accelerated from the May level of 0.1% to 0.3%. According to preliminary estimates, core annual inflation this June was 0.8%.

In the evening hours, attention should be paid to the speech by the head of the US Federal Reserve, J. Powell, which will help market participants understand the regulator's further actions to stimulate the US economy.

 

[KostiaForexMart]

EUR/USD. July 02, 2020 – Euro rose to the level of 1.1300, but failed to overcome it

The pair EUR/USD yesterday managed to grow to the level of 1.13, however today the quotes turned down to the level of 1.1275. Pressure on the euro was exerted by statements by German Chancellor Angela Merkel that EU members are far from an agreement on a restoration fund and budget. An additional negative brought data on the producer price index in the eurozone for May, reflecting an insufficient recovery of the indicator (-0.6% against the forecast -0.5%).

Yesterday, the USA presented data on the labor market from ADP: in June, the number of jobs increased by 2.369 million, which significantly exceeds the «failure» in May by 3.065 million. The forecast assumed a recovery of the indicator by 2.850 million. Today we should pay attention to unemployment statistics and the number of people employed in the non-agricultural sector in June. The dollar is likely to receive significant support after publication.

However, one should also take into account the fact that a certain appetite for risky assets has returned to the market, so the euro will feel confident during the day. Moreover, unemployment data in the eurozone turned out to be better than expected (7.4% against the forecast of 7.7%), which will also support the European currency.