Forex Analysis by LiteForex

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

Yesterday, EUR declined against USD, continuing the development of a poor “bearish” impulse formed at the beginning of the week, due to technical factors. In addition, investors are disappointed with the growth rate of the European economy, which is unable to reach the forecasted levels, despite the extremely soft monetary policy of the regulator. Moderate support was provided by macroeconomic statistics from the ZEW Institute. April’s German ZEW Economic Sentiment rose from 3.6 to 3.1 points, while the growth only to 0.8 points was expected. German ZEW Current Conditions for the same period decreased from 11.1 to 5.5 points, which was worse than market expectations of 8.0 points. April’s ZEW EU Economic Sentiment also grew steadily –2.5 to 4.5 points, with a forecast of 1.2 points. Today, investors are focused on March EU data on consumer inflation and the publication of the Fed’s economic review Beige Book.

GBP/USD

Yesterday, GBP fell against USD, receiving no significant support from the UK labor market report. The Unemployment Rate in February remained at 3.9% 3m/Yr, which coincided with market forecasts. Average Earnings without bonus decreased slightly by 0.1% to 3.4% 3m/Yr in February, as expected. March Claimant Count Change increased from 26.7 to 28.3K, while analysts had expected a decline to 20.0K. Today, during the Asian session, the pair is trading upwards, receiving minor support from Chinese publications. Investors are awaiting the release of March statistics on consumer inflation in the UK. It is predicted that the CPI will rise by 0.3% MoM, slowing down against the previous +0.5% MoM, and grow by +2.0% YoY. The market also expects the speech of the head of the Bank of England Mark Carney, who can tell about the plans of monetary policy in the context of new terms for Brexit.

AUD/USD

Yesterday, AUD moved in different directions against USD, ending the day session with almost zero results. In the morning, the price was under pressure by the published RBA protocols, which focused on growing external risks and a slowdown in the growth rate of the Australian economy. With the opening of the American session, the instrument was able to quickly recoup, as USD was under pressure from industrial production statistics. In March, the index fell by 0.1% MoM after rising by 0.1% MoM last month. Analysts were counting on acceleration to +0.2% MoM. Capacity Utilization fell from 79.0% to 78.8% in March, which also was worse than market forecasts of 79.1%. Today, during the Asian session, AUD is supported by strong statistics from China. March Retail Sales increased by 8.7% YoY after rising by 8.2% YoY in February. Industrial production for the same period rose by 8.5% YoY after rising by 5.3% YoY in February.

USD/JPY

USD is moving horizontally against JPY, remaining around local highs since March 5. The positions of USD are under pressure, as there is a lack of strong US macroeconomic statistics on the market, and investors are awaiting the resolution of the US-China trade negotiations. In addition, the market fears harsh statements by Donald Trump, who accuses the regulator of slowing economic growth and extremely weak inflation. The President urges the Fed to resume quantitative easing. Meanwhile, traders are following US and Japanese trade negotiations. While the parties are very optimistic but no specific decisions have yet been made. Japanese exports fell by 2.4% YoY in March, which was twice as bad as the decline in February. Imports, in contrast, rose by 1.1% YoY after a decrease of 6.6% YoY in February. Due to a sharp decline in exports, the overall March trade balance increased from 334.9 to 528.5 billion JPY.

Oil

Yesterday, oil prices resumed moderate growth, responding to new exacerbations in Libya and a decline in exports of petroleum products from Venezuela and Iran. The quotes, in turn, are under pressure from uncertain prospects of the OPEC+ transaction. In particular, Russia may decide to increase the rate of oil production in order to compete with the ever-increasing supplies from the United States. The further fate of the current transaction will be decided in June when the cartel gathers for the next summit. Published on the eve of the report of the American Petroleum Institute on oil reserves reflected the decline in stocks for the week of April 12 to 3.096 million barrels after rising by 4.091 million barrels for the previous period. Today, investors are awaiting publication of a report on production and reserves from the US Department of Energy.

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

The euro showed ambiguous dynamics against the US dollar on Wednesday, updating local highs of April 12. However, by the close of the day session, the instrument lost most of the positions it had won. Investors were focused on European consumer inflation statistics, which managed to provide tangible support for the euro. In March, the consumer price index rose by 1.0% MoM and 1.4% YoY after rising by 0.3% MoM and 1.4% YoY in February. The core CPI in March rose by 0.8% YoY, which coincided with market expectations. Investors were also optimistic about the statistics for the Eurozone trade balance. The surplus in February rose from 17.4 to 19.5 billion euros, while analysts expected a decline to 14.7 billion. Today the instrument is relatively stable and expects new drivers to appear. On Thursday, investors expect the publication of European data on business activity in April.

GBP/USD

The pound slightly declined against the US dollar on Wednesday, updating local lows of April 8. The British currency was pressured by an uncertain macroeconomic statistics from the UK. In March, the consumer price index slowed down from 0.5% MoM to 0.2% MoM, which turned out to be worse than analysts' expectations of 0.3% MoM. YoY, inflation remained at 1.9%, while the market expected an acceleration of up to 2.0%. The retail price index was also disappointing. In March, it showed zero dynamics after rising by 0.7% MoM last month. The forecast for the indicator was 0.2% MoM. YoY, the retail price index slowed from 2.5% in February to 2.4% in March, with a forecast of 2.6% YoY.

AUD/USD

The Australian dollar showed ambiguous dynamics against the US dollar on Wednesday, having managed to update local highs of February 21. The "Australian" was supported by strong macroeconomic data from China. In March, retail sales increased by 8.7% YoY after rising by 8.2% YoY in February. Industrial production rose by 8.5% YoY against February growth of 5.3% YoY. GDP growth in Q1 2019 remained at 6.4% YoY, with the forecasts of a slowdown to 6.3% YoY. Today, the pair is trading in both directions. Investors are focused on the report on the Australian labor market in March. The unemployment rate in March rose from 4.9% to 5.0%, while the employment rate jumped sharply by 25.7K jobs, while the forecast suggested an increase of only 12K. The total employment rate in March was 48.3K after a decrease of 7.3K last month.

USD/JPY

The US dollar is relatively stable against the Japanese yen and has been trading near local highs since March 5. A certain pressure on the US currency on Wednesday was provided by a published economic review of the Fed, the Beige Book. The regulator again noted weak economic growth, however, some US districts reporting of accelerated growth. The labor market remains fairly stable, but there is still an acute shortage of highly skilled workers in industrial production and construction. Today, the yen shows moderate growth, receiving support from publications from Japan. Nikkei Manufacturing PMI grew from 49.2 to 49.5 points in April which was above average forecasts. On Thursday, investors expect the publication of data on the US retail sales for March and a block of preliminary statistics on business activity in April.

Oil

Oil prices showed an increase on April 17, but failed to consolidate on new highs and declined by the end of the day session. The quotes were supported by strong data on industrial production from China and by an unexpected decline in US oil reserves. According to a published EIA report, during the week of April 12, oil and petroleum products in the US warehouses decreased by 1.396 million barrels, while investors expected growth of 1.711 million. A slight decrease in production in the USA from 12.200 to 12.100 million barrels per day was also a positive signal.

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

Yesterday, EUR declined significantly against USD, renewing the local lows since April 8. The negative dynamics is due to disappointing statistics on EU business activity. April Markit Service PMI decreased from 53.3 to 52.5 points, against the expected decrease only to 53.2 points. April Manufacturing PMI fell from 51.6 to 51.3 points against the forecast of 51.8 points. German data were better than expected. Markit Service PMI rose from 55.4 to 55.6 points, while the market expected a decline to 55.1 points. The only exception was Manufacturing PMI, which rose from 44.1 to 44.5 points while the forecast was 45.0 points. In addition to ambiguous macroeconomic statistics, EUR was under pressure from the prospects of a new trade war between the US and the EU. Yesterday, Brussels announced the possibility of introducing response import duties on American goods worth more than $20 billion.

GBP/USD

Yesterday, GBP fell against USD, renewing local lows since March 29. Mostly, the decline in GBP was of a technical nature, since the UK was able to support investor sentiment in the market after the publication of strong Retail Sales statistics. In March, it increased by 1.1% MoM and 6.7% YoY, which was significantly better than the February data: + 0.6% MoM and + 4.0% YoY. Analysts expected a decline by 0.3% MoM and growth by 4.6% YoY. The indicator excluding fuel sales in March increased by 1.2% MoM and 6.2% YoY, while the forecast was –0.3% MoM and + 4.0% YoY. Today, during the Asian session, GBP is trading in different directions, waiting for new drivers in the market. Trading on the last day of the week is likely to be fairly calm, as European markets are closed on the occasion of Good Friday.

AUD/USD

Yesterday, AUD fell against USD within the correction, departing from local highs since April 17. Despite the publication of a moderately optimistic report on the Australian labor market, investors found no reason to buy AUD with the opening of European and American trading sessions. USD was supported by strong data on Retail Sales. In March, it increased by 1.6% MoM after falling by 0.2% MoM last month. Analysts expected a gain of +0.9% MoM. Sales excluding cars for the same period rose by 1.2% MoM with a forecast of +0.7% MoM. The cumulative retail sales from the US Census Bureau increased in March by 1.0% MoM, after falling 0.3% MoM last month. The market expected a much more modest growth of +0.4% MoM.

USD/JPY

USD maintains the same momentum against JPY, remaining close to the local highs since December 20, 2018 and the level of 112.00. Yesterday’s US PMI data did not support USD significantly, however, it grew against the most currencies. Markit Manufacturing PMI in April did not change against the March one, remaining at the level of 52.4 points, with the forecast of growth to 52.8 points. Service PMI significantly declined from 55.3 to 52.9 points against the forecast of 55.0 points. April Composite PMI fell from 54.6 to 52.8 points.

Oil

Yesterday, oil prices rose, supported by the same factors on the market. The report by the US Department of Energy reflected a steady decline in US oil reserves by 1.4 million barrels, and also recorded a slight decrease in the volume of “black gold” production in the country. The decline in supply by OPEC+ is also observed, although the market fears uncertain prospects around the extension of the deal in the current year. The price is positively affected by the news from Libya, where the internal military conflict is going, which threatens to completely stop oil production in the country. On Thursday, one day earlier than usual, Baker Hughes published a report on active oil platforms in the United States. During the reporting week, the number of drilling rigs fell from 833 to 825 units.

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

The European currency has updated local lows against the US dollar last Friday, but managed to finish the afternoon session with growth. The instrument was under pressure from strong macroeconomic statistics on the US GDP for Q1 2019. According to preliminary estimates, the US economy showed an increase of 3.2% YoY against the growth of 2.2% YoY over the past period. Analysts' forecasts were very modest and assumed growth of only 2.0% YoY. On the other hand, the GDP price index for the same period showed an increase of only 0.6% YoY, with a forecast of 1.3% YoY, which indicates that the country's low inflation rates remain. During today's Asian session, the pair shows active growth, developing corrective dynamics. Investors are focused on statistics on business sentiment in the euro area. After American session starts, Personal Income and Personal Spending data for February and March will be published in the US.

GBP/USD

The British pound showed a slight increase against the US dollar on Friday and maintains a weak upward trend during today's Asian session. The growth of the instrument is largely technical in nature, since the factors putting pressure on the British currency are still strong. Theresa May is negotiating with the Labor Party, but so far there has been no noticeable progress. The dialogue will continue this week, but the British Prime Minister has to hurry, as the level of political pressure is growing steadily. Today, investors do not expect the publication of significant data from the UK, so they will focus on statistics from the US and the euro area instead.

AUD/USD

The Australian dollar shows rather active correctional growth, offsetting a strong decline of the pair at the beginning of the last trading week. Last Friday, the growth of the instrument was ambiguous, which was caused by the publication of controversial macroeconomic statistics from Australia. The Export Price Index in Q1 2019 rose by 4.5% QoQ after rising by 4.4% QoQ in the previous quarter. Meanwhile, the Producer Price Index slowed down from 2.0% YoY to 1.9% YoY over the same period. On a quarterly basis, the indicator rose by 0.4% QoQ, while the forecast was 0.6% QoQ. During today's Asian session, the Australian dollar is also traded with an upward trend, despite the fact that there are no new growth drivers at the market. Today, investors expect the publication of statistics on Personal Spending and Income in the US for March.

USD/JPY

The Japanese currency returned to the flat dynamics against the US dollar, noticeably departing from the local highs, updated on April 24. Pressure on the yen was caused by ambiguous macroeconomic statistics from Japan last Friday. The Unemployment Rate in March unexpectedly rose from 2.3% to 2.5%, while analysts expected growth to only 2.4%. The data on industrial production were also disappointing. According to preliminary data, in March, production volumes decreased by 0.9% MoM and 4.6% YoY, which was significantly worse than market expectations (–0.1% MoM and –0.6% YoY). Tokyo Core CPI supported the yen moderately. The index grew by 1.3% YoY in April, although investors did not expect any changes in the previous value of +1.1% YoY.

Oil

Oil prices fell sharply on April 26, retreating from record highs updated the day before. The decrease in the instrument proceeded against the background of interruptions in the oil supply from Russia to Europe via the Druzhba pipeline, which caused an increase in concerns about the shortage of raw materials in the market earlier. Analytical comments helped the instrument, convincing investors that refining companies have enough oil reserves to avoid any distortions. In addition, Russia is set to restore supplies of "black gold" today. Last Friday, the report by Baker Hughes, which reflected a sharp reduction in the number of active oil drilling rigs in the US from 825 to 805, also supported the quotes.

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

EUR rose against USD on Monday, continuing to develop the correctional momentum that was formed at the end of the last trading week. The growth of the euro proceeded against the background of the publication of ambiguous macroeconomic statistics from the euro area. Business and Consumer Survey in April showed the decrease from 105.6 to 104.0 points, with the forecast of a decline only to 105.0 points. Business Climate indicator decreased from 0.54 to 0.42 points for the same period, which also turned out to be worse than forecasts of 0.49 points. Industrial Sentiment indicator decreased from –1.6 to –4.1 points, with the forecast of –2.0 points. Only Services Sentiment exceeded the expectations. In April, the indicator remained at the same level of 11.5 points, contrary to forecasts of a decline to 11.1 points. During today's Asian session, the euro is trading in different directions, feeling the pressure of weak macroeconomic statistics from China and awaiting the publication of preliminary data on euro area's GDP for Q1 2019.

GBP/USD

The British pound has been trading with a moderate increase, gradually recovering from a downward rally since April 16. The growth of the pair relies mainly on technical factors, while the fundamental reasons for its further weakening remain. Theresa May cannot yet reach a compromise in negotiations with the Labor Party, but the market does not lose optimism. Meanwhile, the media got the information that the majority of Scotland residents can stand for independence if Great Britain has to leave the EU without an agreement. However, "hard" Brexit is still perceived as an extreme measure, and the British Parliament recently approved a bill completely prohibiting the state from leaving the EU without a deal. During today's Asian session, the pair is trading with a moderate growth. The pound reacted negatively to the publication of Gfk Consumer Confidence index and the release of Chinese statistics, but remains fairly stable.

AUD/USD

The Australian dollar finished trading on Monday with moderate growth, which, however, did not lead to an update of the local highs of last Friday. The controversial macroeconomic statistics from the United States contributed to the growth of the instrument, as well as the general correctional sentiment with which investors approached the new week in the market. Today, the pair is trading in different directions, reacting to the publication of weak data from China. Non-Manufacturing PMI in China fell from 54.8 to 54.3 points in April, with the forecast of 54.5 points. Manufacturing PMI of NBS in April decreased from 50.5 to 50.1 points, with the forecast of increase to 50.7 points. Caixin Manufacturing PMI fell in April from 50.8 to 50.2 points, contrary to forecasts of growth to 51.0 points.

USD/JPY

The US dollar showed a slight increase against the Japanese yen on Monday, but returned to a decline during the Asian session on April 30. Yesterday's statistics from the US failed to provide significant support to the USD. Personal Income of US citizens indicator in March increased by only 0.1% MoM, slowing down from the previous 0.2% MoM, while analysts expected growth of 0.4% MoM. Personal Spending for the same period accelerated from 0.1% MoM to 0.9% MoM with the forecast of 0.7% MoM. The increase in spending may have a positive effect on inflationary dynamics; however, investors are not inclined to consider a one-time increase in the indicator as a trend.

Oil

Oil prices rose slightly on Monday, having regained part of the lost positions after a sharp decline last Friday. More confident correction is hampered by the pressure that US President Donald Trump puts on OPEC. On Friday, he said that he personally turned to OPEC with a demand to reduce prices and increase oil supplies to the market. It is not yet clear how the cartel will respond to the repeated demands of the US President, but there are still plans to increase the total production. A number of analysts believe that Saudi Arabia may increase the production of "black gold" in May to compensate for the deficit from Iranian oil. At the same time, the OPEC+ agreement is still in force and allows maintaining an approximate balance of supply and demand in the market.

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

During the Asian session on May 6, the European currency is trading with a rise against the US dollar, trying to develop a "bullish" impulse formed at the end of last week. Euro growth on Friday was facilitated by strong statistics on consumer inflation in the euro area. CPI rose in April by 1.7% YoY against a growth of 1.4% YoY last month. Analysts had expected growth by 1.6% YoY only. Core CPI for the same period strengthened by 1.2% YoY after rising by 0.8% YoY. The indicator was better than expected +1.0% YoY. Minor support for the European currency today is provided by statistics from China. Caixin Non-Manufacturing PMI index rose from 54.4 to 54.5 points in April, while experts expected it to decline to 54.3 points. On Monday, the market is waiting for the publication of a block of macroeconomic statistics on business activity and retail sales in the euro area. Interesting statistics from the US are expected to be few, so investors will follow the development of trade negotiations with China, a new round of which is scheduled for May 8 in Washington.

GBP/USD

GBP grew sharply against USD on Friday updating local highs of April 4. The growth of the British currency was facilitated by the correctional sentiment towards USD against the backdrop of publication of ambiguous macroeconomic statistics from the United States. April report on the labor market, published on May 3, pointed to an unexpected decrease in the unemployment rate from 3.8% to 3.6%. Nonfarm Payrolls were better than expectations as well. Outside of agriculture, the US economy created 263K new jobs after growth of the figure to 189K in March. The forecast assumed growth by only 185K. At the same time, Average Hourly Earnings in April showed an increase of 3.2% YoY against the forecast of +3.3% YoY. Participation Rate declined from 63.0% to 62.8%, with the forecast of 62.9%. ISM Non-Manufacturing PMI in April declined from 56.1 to 55.5 points with the forecast of 57.2 points.

AUD/USD

The Australian dollar is growing moderately during the Asian session on May 6 after the opening with a negative gap. Last Friday, the pair managed to show quite active growth, despite the fact that macroeconomic statistics from Australia remained disappointing. The published data reflected a sharp decline in the number of building approvals issued in March by 15.5% MoM. In annual terms, the index was –27.3% YoY. Today, the Australian dollar receives moderate support from the Chinese statistics on business activity, but again is under pressure from weak data from Australia. TD Securities inflation rate in April increased by 0.2% MoM, slowing down from the previous +0.4% MoM. ANZ Job Advertisements in April fell by 0.1% MoM after declining by 1.7% MoM in March. Investors are focused on tomorrow's RBA meeting on the interest rate, as well as a block of statistics on imports/exports and retail sales in March.

USD/JPY

The US dollar opened with a confident downward gap against the Japanese yen, updating local lows of March 28. Instrument activity remains low due to public holidays in Japan; therefore, the main focus of attention is on data from the United States. A report published on Friday on the US labor market failed to provide significant support to the dollar, despite a number of strong publications that turned out to be better than expected. The alarming news around the US-China trade negotiations, which are currently at the final stage, is contributing to the growth in demand for a "safe" yen. The next round of talks should be held on May 8 in Washington, but investors fear that China may refuse to participate in them because of the harsh remarks of Donald Trump, who promised to increase import duties on a number of Chinese goods from 10 to 25% from May 10.

Oil

Oil prices weaken at the beginning of the new week. Brent crude oil opened with a confident downward gap, updating the local lows of April 4. The negative reaction of the market is associated with growing fears about the progress of the US-China negotiations, which are again under threat after the harsh statements of Donald Trump. Additional pressure on Friday came from the Baker Hughes report on active oil platforms in the USA. During the reporting week, the number of drilling rigs increased from 805 to 807 units, which is especially alarming, given the continued growth in oil production in the United States. Last week, the figure reached a record 12.3 million barrels per day.

 

[MikhailLF]

Morning Market Review

2019-05-07 08:51 (GMT+2)

EUR/USD

EUR showed a moderate increase against USD on Monday, having developed a correctional impetus formed at the end of the previous trading week. Moderately optimistic macroeconomic statistics from Europe supported the instrument. Markit Services PMI in April rose from 52.5 to 52.8 points, although analysts did not expect any changes in the value of the indicator. Manufacturing PMI increased from 47.9 to 52.8 points. Retail sales also turned out better than expected. In March, sales showed zero dynamics on a monthly basis and strengthened by 1.9% in annual terms (with a forecast of –0.1% MoM and +1.8% YoY). On Tuesday, investors are waiting for the publication of statistics on factory orders in Germany for March. In addition, on May 8, the market will closely monitor the US-PRC trade negotiations, which are in jeopardy following the harsh statements by Donald Trump.

GBP/USD

The British pound fell against the US dollar on Monday, having corrected after active growth last Friday. On Monday, the UK markets were closed due to bank holidays, so investors focused on the failure of Theresa May's negotiations with the Labor Party, as well as on the aggravation of the situation in US-China trade relations. Last weekend, Donald Trump threatened to introduce additional import duties on Chinese goods, hoping in this way to speed up the process of concluding a final agreement. Experts believe that being under pressure, China may completely cancel the next stage of negotiations, which threatens a new round of deterioration in the global economy. On Tuesday, two representatives of the Bank of England, Jon Cunliffe and Andy Haldane, are expected to speak in the UK.

AUD/USD

The Australian dollar shows strong growth against the US currency during the Asian session on May 7, updating local highs of the beginning of the month. Macroeconomic statistics published in Australia provides moderate support for the instrument. The volume of retail sales in March increased by 0.3% MoM, which is 0.1% MoM higher than expectations. At the same time, the indicator showed a slowdown, since in February sales growth was +0.9% MoM. Exports and imports in March decreased by the same amount, –2.0% MoM, which led to a higher trade balance surplus than expected. In March, the trade balance surplus was 4.949B Australian dollars, with a forecast of 4.490B. The follow-up RBA statement also supported the Australian dollar. As expected, the regulator left the interest rate unchanged at 1.50%, noting the strong position of the labor market. While maintaining external risks, the RBA expects further economic growth in 2019 and 2020 by 2.75-3.00%.

USD/JPY

The US dollar continues trading ambiguously against the Japanese yen. After opening with the gap down on Monday, the US currency slightly corrected, but again tends to decline during the Asian session on May 7. The yen is supported by Japanese Nikkei Manufacturing PMI. In April, the figure rose from 49.5 to 50.2 points, returning to the February values. Investors today will focus on a block of macroeconomic statistics from the United States, as well as a speech by Fed representative, Randal Quarles. On Wednesday, the market is waiting for the publication of the Bank of Japan Monetary Policy Committee minutes.

Oil

Oil prices rose on Monday, despite the fact that during the day, they traded mainly with a decrease. The quotes were pressured by the disruption of the US-China trade negotiations after the harsh statements by Donald Trump. The market also reacts negatively to new signs of further increase in US oil production. Today, investors are awaiting publication of a report from API on oil reserves for the week as of April 26.

 

[MikhailLF]

Morning Market Review

2019-05-08 08:52 (GMT+2)

EUR/USD

The European currency on Tuesday traded in both directions, closing with a slight decrease. Factory orders data published in Germany put pressure on the euro. In March, the index rose by 0.6% MoM against a decrease of 4.0% MoM last month, but analysts expected a more confident increase of 1.6% MoM. In annual terms, orders showed a negative trend at the level of –6.0% YoY against the expected –6.2% YoY. In February, the decline was –8.1% YoY. An economic report of the European Commission put additional pressure on the instrument. According to published data, GDP growth in the euro area in 2019 is expected to be 1.2% against the previous value of 1.3%. For 2020, the growth rate of the regional economy was also revised downward from 1.6% to 1.5%. In turn, the European Commission has noticeably improved its forecasts for the labor market, which can also have a positive effect on inflation expectations.

GBP/USD

The British pound showed an uncertain decline against the US dollar on Tuesday. The pound continues to correct paired with the US currency after an aggressive growth on May 3. The pressure on the British currency is exerted by the threat of disruption of the US-China trade negotiations, as well as the lack of visible progress in attempts to reach an agreement within the British parliament. The Minister for the Cabinet Office, David Lidington, confirmed that the UK will take part in the elections to the European Parliament, which will be held on May 23. According to the official, the Parliament of Great Britain simply will not have time to agree on a deal. During the Asian session on May 8, the pair is trading in both directions, and trading activity remains extremely low. Moderate support for the pound is provided by BRC data on retail sales in the UK. The indicator grew by 3.7% YoY in April after the decline by 1.1% YoY in the previous month. Analysts expected an increase of 2.4% YoY.

AUD/USD

The Australian dollar increases moderately against the US currency, developing corrective growth since the beginning of the week. The Australian dollar received some support from data on retail sales in Australia. The indicator grew by 0.3% MoM with the forecast for growth of 0.2% MoM In March. The market reaction to the decision of the RBA and the publication of the follow-up minutes was quite restrained. The regulator left the interest rate unchanged at 1.5%, while noting the growing risks of a slowdown in the global economy. However, the RBA noted some improvements in the labor market. During the Asian session on May 8, the pair is trading with a raise. More confident growth of the instrument is hampered by ambiguous macroeconomic statistics from China. Chinese exports unexpectedly went down by 2.7% YoY in April after growth by 14.2% YoY in the previous month. At the same time, imports showed an increase of 4.0% YoY, with a forecast of –3.6% YoY and a decrease of 7.6% YoY last month. The strong divergence of imports and exports led to a noticeable decrease in the trade surplus, which collapsed in April from USD 32.67 billion to USD 13.84 billion.

USD/JPY

The US dollar showed a steady decline against the Japanese yen in trading on Tuesday. "Bearish" activity can also be traced during today's Asian session, against the background of which the instrument updates local lows of March 26. The yen is supported by a sharply increased threat of disrupting the US-China trade negotiations after Donald Trump's statements. However, there is information that the Chinese delegation made a decision to arrive at the talks in Washington, which gives hope for a favorable outcome of the process. Today, the instrument maintains a downward direction. The yen responds to the publication of ambiguous statistics from Japan and China, but interest in the risk remains low, which gives the Japanese currency considerable support.

Oil

Oil prices again showed an aggressive decline on Tuesday, offsetting the results of the growth of quotations at the beginning of the week. The instrument is still under pressure from the potential disruption of the US-China trade negotiations, which could worsen the situation with the balance of supply and demand of oil in the market. More confident reduction of quotes is hampered by US sanctions against Iran and Venezuela. A report published by the American Petroleum Institute on Tuesday pointed to an increase in oil reserves for the week as of May 3 by 2.806 million barrels after rising by 6.810 million barrels over the previous reporting week. Today, investors are waiting for the statistics on crude oil stocks from the US EIA.

 

[MikhailLF]

Morning Market Review

2019-05-13 09:00 (GMT+2)

EUR/USD

The European currency ended last week trading with moderate growth against the US dollar, updating local highs of 1 May. The euro was supported by data from Germany. Exports from the country in March increased by 1.5% MoM after falling by 1.2% MoM in February, with a forecast of a decline of 0.3% MoM. Imports for the same period increased by 0.4% MoM after declining by 1.6% MoM last month. Experts predicted growth by +0.5% MoM. Due to a sharp increase in exports, Germany’s trade balance in March rose from EUR 18.7 billion to EUR 20.0 billion, which turned out to be better than market expectations. More confident growth of the instrument is currently hampered by complications in the US-China trade negotiations. On Friday, the United States raised import duties on Chinese goods, as Donald Trump promised. China responded by raising duties on US goods for USD 110 billion total. At the same time, the parties intend to continue negotiations, the results of which are able to cancel the restrictions imposed.

GBP/USD

The British pound showed a slight decrease against the US dollar last Friday. In the first half of the day, the instrument was trading upwards, supported by strong UK publications. UK GDP showed growth in Q1 2019 by 0.5% QoQ and 1.8% YoY, which fully coincided with expectations. Over the past period, the UK economy showed growth of +0.2% QoQ and +1.4% YoY. The pound was also supported by industrial production data. In March, they showed an increase of 0.7% MoM and 1.3% YoY, which was significantly better than forecasts of +0.1% MoM and +0.5% YoY. During the Asian session on May 13, the instrument is trading upwards, waiting for new drivers to appear at the market. Interesting macroeconomic statistics is not expected to be published today, so the activity in the market will remain restrained.

AUD/USD

The Australian dollar shows flat trading paired with the US currency, consolidating near local lows of January 3, updated last Monday. A certain pressure on the position of the Australian dollar is exerted by the RBA comments on monetary policy published on Friday. Investors are somewhat disappointed with the extremely soft position of the regulator and fear the possible easing of interest rates if the economic situation in the country continues to deteriorate. In particular, the RBA lowered its GDP forecasts for 2020 from +3.00% YoY to +2.75% YoY. During the Asian session on May 13, the instrument is trading downwards. The development of "bearish" sentiment is facilitated by macroeconomic statistics from Australia. Home Loans issued in Australia in March decreased by 2.5% MoM after rising by 2.0% MoM last month. Analysts had expected a growth rate of + 2.3% MoM. The volume of investment loans for home construction in March also decreased by 2.7% MoM after rising by 0.9% MoM in February.

USD/JPY

The US dollar maintains a downward trend paired with the Japanese yen, but the "bearish" activity is gradually weakening. The situation around the US-China trade negotiations is not changing much, despite the fact that the US increased import duties on Chinese goods on Friday. The Bank of Japan, in turn, is still not satisfied with the growth rate of the Japanese economy and inflation. Last week, the head of the regulator, Haruhiko Kuroda, said that the Bank could go for an additional easing of monetary policy, if inflation continues to remain weak. Last Friday's macroeconomic statistics from Japan turned out to be ambiguous. At the end of March, Household Spending increased by 2.1% YoY after rising 1.7% YoY in February. In turn, the indicator of Average Cash Earnings for the same period dropped sharply by 1.9% YoY after falling by 0.8% YoY in February. Experts expected a decrease of only 0.5% YoY.

Oil

Oil prices show moderate growth, recovering after a decline at the beginning of the month. Tensions around the US-China trade negotiations, which escalated after Washington increased import duties on Chinese goods to 25%, continues to put pressure on the instrument. At the same time, both parties intend to continue trade negotiations. Donald Trump argues for the increase in import duties due to the violations from Beijing, so at the moment it is not entirely clear how the parties will be able to come to a consensus. Baker Hughes report on oil rigs number in the United States published last Friday showed a decrease in the number of drilling rigs from 807 to 805 units, which provided moderate support to prices.

 

[MikhailLF]

Morning Market Review

2019-05-14 08:56 (GMT+2)

EUR/USD

The European currency finished Monday's trading with a decrease against the US dollar, despite the fact that during the day the euro updated the local highs of the beginning of the month. Pressure on the instrument is exacerbated by trade relations between the United States and China against the background of ineffective negotiations and the exchange of threats. Last Friday, Donald Trump raised import duties on a number of Chinese goods, accusing Beijing of disrupting negotiations. The Minister of Finance of China also announced introduction of higher tariffs on imports of goods from the United States in the amount of USD 60 billion starting from June 1. The possibility of exacerbation of trade relations between the US and the EU also adds to the negative sentiment at the market. Donald Trump has repeatedly advocated the introduction of import duties on European goods after the case of subsidizing the Boeing Company. On May 18, the United States may announce increased tariffs on the import of European cars, which will force the EU to respond with mirror measures.

GBP/USD

The British pound declined significantly at the beginning of the current trading week, updating local lows of April 30. The aggravation of the trade conflict between the US and the PRC, as well as the possible start of a trade war between the US and the EU, contributes to the development of the "bearish" dynamics of the instrument. During the Asian session on May 14, the instrument is trading ambiguously, waiting for new drivers to appear at the market. On Tuesday, investors are focused on the statistics on the UK labor market in March. It is expected that while maintaining the previous unemployment rate of 3.9%, the average earnings may slow down, which will put pressure on the pound.

AUD/USD

The Australian dollar fell significantly paired with the US currency on Monday, updating the local lows of the beginning of the year. The pressure on the Australian currency was put by exacerbated trade relations between the US and China, which threatens with a new round of slowdown in the global economy. Experts fear that the introduction of new import duties by the conflict parties will have a negative impact on the dynamics of Australian exports, which have recently been experiencing certain difficulties. During the Asian session on May 14, the Australian dollar is under moderate pressure from weak macroeconomic statistics from Australia. Thus, the NAB Business Survey in April collapsed from 7 to 3 points, which turned out to be worse than expected decline to 4 points. NAB Business Confidence index for the same period showed a moderate increase from –1 to 0 points, which, however, also turned out to be worse than market expectations of an increase to 1 point.

USD/JPY

The US dollar dropped significantly against the Japanese yen on Monday, updating local lows of February 1. The market still shows an increased demand for the Japanese currency against the background of the aggravation of the trade conflict between the United States and China, which are ready to mutually increase import duties. In turn, Japanese macroeconomic statistics released on Monday failed to provide any support to the yen. The Leading Index in March fell from 97.1 to 96.3 points, with the forecast of 96.4 points.

Oil

Oil prices rose moderately on Monday, supported by reports of a sabotage attack on ships near Fujairah. According to preliminary information, 4 vessels including two Saudi tankers were damaged, which could cause disruptions in oil supplies. Anyway, by the end of yesterday's trading session, the prices for the instrument had been noticeably corrected, and the focus of investor attention shifted to the development of the trade conflict between the United States and China. Today, investors are awaiting publication of a report from API on oil reserves for the week as of May 10.

 

[MikhailLF]

Morning Market Review

2019-05-15 09:13 (GMT+2)

EUR/USD

EUR showed a decline against USD on Tuesday, continuing the development of a correctional impetus formed the day before. The euro is still under pressure from the prospect of an open trade conflict between the US and the EU after the introduction of US import duties on European cars planned for May 18. In addition, investors monitor the development of the US-China trade negotiations. Yesterday, the euro was supported by data from Germany. CPI in April increased by 1% MoM and 2% YoY, which coincided with the last month data and the forecast. Wholesale Price Index for the same period accelerated from +0.3% MoM to +0.6% MoM with the forecast of growth to +0.4% MoM. YoY, the growth of the index accelerated from +1.8% to +2.1%. In turn, published statistics on industrial production in the euro area failed to support the euro. Industrial production in March decreased by 0.3% MoM and 0.6% YoY after a decrease of 0.2% MoM and 0.3% YoY in February. Today, European investors focus on GDP statistics from Germany and the euro area for Q1 2019.

GBP/USD

GBP weakens against USD, updating local lows of April 26. The development of the "bearish" dynamics of the instrument is facilitated by the uncertain macroeconomic statistics from the UK, as well as the risks associated with the US-China trade negotiations, and the difficulty in forming a coalition within the British parliament. Statistics released in the UK on Tuesday showed a slowdown in Average Earnings + Bonus in March from +3.5% 3MoY to +3.2% 3MoY, while the forecast was +3.4% 3MoY. Claimant Count Change in April rose from 22.6K to 24.7K, with a forecast of 24.2K. At the same time, the overall unemployment rate unexpectedly dropped from 3.9% to 3.8%.

AUD/USD

The Australian dollar remains under pressure and is developing a downward trend against the US currency, updating local lows of the beginning of the year. The weakening of the instrument is facilitated by the tense situation around the US-China trade negotiations, which has noticeably deteriorated after the parties entered import duties against each other. The export-oriented Australian economy is very sensitive to changes in the dynamics of China's imports, so the risks for the Australian dollar also increased. During the Asian session on May 15, the pair is under pressure from the published macroeconomic statistics of Australia and China. Westpac Consumer Sentiment in May slowed from +1.9% MoM to +0.6% MoM. Wage Price Index in Q1 2019 remained at the previous level of +0.5% QoQ, contrary to forecasts of growth to +0.6% QoQ. China reported a sharp slowdown in industrial production in April from +8.5 YoY to +5.4% YoY, while the forecast was +6.5% YoY.

USD/JPY

The US dollar showed moderate growth against the Japanese yen on Tuesday, interrupting the five-day "bearish" rally and departing from local lows of early February. The emergence of an upward trend in the instrument is due to the development of corrective sentiment on the dollar in the market. At the same time, the demand for yen remains quite high, since the former risks associated with the aggravation of trade relations between the United States and China are still in force. Tuesday's macroeconomic statistics from Japan turned out to be ambiguous. Eco Watchers Survey Outlook in April fell from 48.6 to 48.4 points, with a forecast of growth to 49.4 points.

Oil

Oil prices continue to grow moderately, despite the aggravation of the situation in the Middle East. The day before, Saudi Arabia reported on the armed drone attack on oil production facilities owned by the state oil company Aramco. Previously, oil tankers off the coast of the UAE were also attacked, which heightened concerns about possible supply disruptions. However, Saudi Arabia claims that production and export volumes remain at the same levels. Additional pressure on prices on Tuesday was put by the API Weekly Crude Oil Stock report. For the week as of May 10, US Crude Oil Stock increased sharply by 8.600M barrels after an increase of 2.806M barrels in the previous period.

 

[MikhailLF]

Morning Market Review

2019-05-16 08:53 (GMT+2)

EUR/USD

The European currency showed ambiguous trading against the US dollar on Wednesday. The euro was under pressure from weak macroeconomic statistics from China, as well as ambiguous data from Europe. Industrial production in China in April slowed from +8.5% YoY to +5.4% YoY, which turned out to be worse than market expectations of +6.5% YoY. Retail sales for the same period increased by 7.2% YoY after rising by 8.7% YoY last month. Data from the euro area indicated GDP growth in Q1 2019 by 0.4% QoQ and 1.2% YoY, which coincided with expectations. Employment index for the same period remained unchanged. With the opening of the US session, the euro was supported by news that Donald Trump might postpone the decision to raise import duties on European cars.

GBP/USD

GBP declined significantly against USD on Wednesday, updating local lows of February 15. There was no interesting macroeconomic statistics in the UK yesterday, so investors focused on the prospects for the development of a trade conflict between the US and China, as well as on the situation around Brexit. Teresa May has not yet managed to reach a compromise with the Labor Party, so there is no hope for an early approval of the agreement on leaving the EU. However, it became known that the British Prime Minister is preparing to submit the existing version of the agreement to a vote in Parliament around the beginning of June.

AUD/USD

The Australian dollar is developing a downtrend against the US currency, updating local lows of the beginning of the year. The day before, instrument was pressured by the weak macroeconomic statistics from China, which once again reminded of the difficulties in the Chinese economy. During the Asian session on May 16, the instrument shows ambiguous dynamic in response to the publication of the April report on the Australian labor market on Thursday. Employment in April rose from 27.7K to 28.4K, which turned out to be noticeably better than market expectations of 14.0K. Unemployment Rate grew from 5.1% to 5.2%. The Employment rate rose due to a significant increase in private employment, while Full time employment in April showed a decline of 6.3K, after rising by 49.2K last month.

USD/JPY

The US dollar is trading in both directions against the Japanese yen, staying close to the local lows updated at the beginning of the week. The demand for yen is supported by the low interest in risk-taking, but overall trading activity remains low. Pressure on the Japanese currency yesterday was put by data on the Machine tool orders. According to preliminary estimates, in April, the figure fell by 33.4% after declining by 28.5% in March. During the Asian session, the yen is trading in both directions again. Investors are focused on a block of statistics from Japan. Stock investments by foreigners for the week as of May 10 reduced from 640.1B to 282.5B yen. Foreign bond investments increased from –257.0B to 20.8B yen.

Oil

Oil prices are rising moderately, recovering to local highs of the end of April. The quotes are supported by tensions in the Middle East after Saudi Arabia’s statements about the attacks on their oil production sites and tankers off the coast of the United Arab Emirates. A more confident increase in prices on Wednesday was hampered by the report of the US Department of Energy on oil reserves. For a week as of May 10, oil stocks in US warehouses increased by 5.431M barrels, after a decrease of 3.963M barrels over the past period. Analysts had expected negative dynamics to remain at –0.800M barrels. At the same time, the report again reflected a decline in oil production from 12.200M to 12.100M barrels per day.

 

[MikhailLF]

Brent Crude Oil: general review

2019-05-21 09:04 (GMT+2) Brent

Current trend

Brent crude oil is traded in an upward channel with a resistance level at 73.60 and support level at 70.30.

Significant demand for "black gold" is provided by the possibility of new attacks on oil facilities in Saudi Arabia. The second positive moment for the energy market is the decision of OPEC to adhere to a balanced market and not to increase current production. At the same time, representatives of the organization said they would focus on demand and monitor global reserves in order to be able to influence the situation in a timely manner. Under the current agreement, the countries of the oil cartel have agreed to reduce total production by 1.2M barrels per day. It is also worth noting that last week a report on drilling activity in the United States was published, showing that the number of active oil rigs fell from 805 to 802 units in a week. The slowdown of this indicator indicates a possible decrease in production growth in the United States: over the past two weeks, the rate of oil refining fell by 100K barrels per day. At the same time, in Canada the activity indicator remained at the same level: the number of drilling rigs was 22 units.

Support and resistance

Stochastic is at 35 points and does not provide any signals for the opening of transactions.
Resistance levels: 73.60, 74.50.
Support levels: 72.00, 71.20.

Trading tips

Open long positions after the breakout of 73.60 with take profit at 74.50 and stop loss at 73.25.

 

[MikhailLF]

Bitcoin Cash: technical analysis

2019-05-23 10:00 (GMT+2) Bitcoin Cash

Current trend

BCH quotes failed to consolidate above 437.50 (Murrey [7/8]), although over the past two weeks they have made such attempts several times. Currently, the price stepped back to the level of 375.00 (Murrey [6/8]). The correction to the levels of 312.50 (Murrey [5/8]) and 250.00 (Murrey [4/8]) will be possible after the consolidation below the middle line of Bollinger bands around 350.00. The key “bullish” level is 437.50 (Murrey [7/8]). Fixing above it will give the prospect of growth to the upper border of the Murrey trading range around 500.00 (Murrey [8/8]) and to the level of 562.50 (Murrey [+1/8]).

Technical indicators do not give clear signals. Bollinger bands reversed upwards, confirming the preservation of the uptrend. Stochastic reverses downwards. The MACD histogram is decreasing in the positive zone and maintains a divergence with the price chart.

Support and resistance

Resistance levels: 437.50, 500.00, 562.50.
Support levels: 375.00, 312.50, 250.00.

Trading tips

Short positions can be opened from the level of 350.00 with the targets at 312.50, 250.00 and stop loss 385.00.
Long positions can be opened above the level of 437.50 with the targets at 500.00, 562.50 and stop loss 400.00.
Implementation period: 3–4 days.

 

[MikhailLF]

EUR/USD: general review

2019-05-28 08:33 (GMT+2) EUR/USD

Current trend

At the end of last week, EUR strengthened against USD amid weak macroeconomic releases from the US. Negative data heightened investor concerns about the growing tensions between the US and China, which threaten the growth of the American economy.

At the same time, EUR is still holding back from falling, despite the fact that the European Commission may in the near future fine Italy by 0.2% of GDP (about EUR 3.5 billion) due to the exceeded level of public debt. At the same time, EUR received moderate support from the results of European Parliament elections, where pro-European parties retained a majority.

Today at 10:00 (GMT+2), statistics on Private Sector Loans in the euro area is expected to be published, and at 11:00 (GMT+2), the results of the Business and Consumer Survey in the euro area will be published. In the afternoon, statistics on House Price Index (15:00 GMT+2) and CB Consumer Confidence in the US (16:00 GMT+2) are scheduled to be released. The recent fall in the stock market may adversely affect the confidence of American consumers, which will help strengthen the pair.

Support and resistance

On the H4 chart, the instrument is trading below the center line of Bollinger Bands. The indicator is directed upwards and the price range is reduced, which indicates the change of the downtrend. MACD histogram is in the positive zone keeping a weak buy signal. Stochastic is leaving the oversold zone having formed a buy signal.

Resistance levels: 1.1201, 1.1223, 1.1247, 1.1264.
Support levels: 1.1180, 1.1160, 1.1143, 1.1127, 1.1111.

Trading tips

Long positions may be opened from the current level with target at 1.1225 and stop loss at 1.1165.
Short positions may be opened below 1.1165 with target at 1.1110 and stop loss at 1.1185.
Implementation time: 1-2 days.

 

[MikhailLF]

EUR/USD: general review

2019-05-29 08:33 (GMT+2) EUR/USD

Current trend

EUR continues trading in a downtrend. Pressure on the euro is exerted by the news that the European Commission may begin the procedure for the imposition of disciplinary sanctions in Italy because of the exceeded level of public debt, which reached 132% of GDP. The Commission believes that the Italian government is not making enough effort to reduce this value. The fine may be about EUR 3.5 billion. If monetary penalties are really applied to Italy, this may increase discontent among the population and cause protest sentiments aimed at leaving the EU.

In turn, USD also remains under pressure due to the intensification of the trade war between the United States and China, which keeps the euro from a stronger fall. Against this background, one can hardly expect a change in monetary policy by the Fed, and this is a negative point for USD.

Today, data on French GDP will be published, and the speech of the head of the German Bundesbank, Jens Weidmann, is also expected. On Thursday, US GDP data will be published.

Support and resistance

Stochastic is at 38 points and does not provide any signals for the opening of transactions.
Resistance levels: 1.1179, 1.1214.
Support levels: 1.1141, 1.1100.

Trading tips

Short positions may be opened from the resistance level of 1.1214 with take profit at 1.1100 and stop loss at 1.1250.

 

[MikhailLF]

2019-05-30 07:34 EUR/JPY

EUR/JPY: Ichimoku clouds

Let's look at the four-hour chart. Tenkan-sen line is below Kijun-sen, the red line is directed downwards, while the blue one remains horizontal. Confirmative line Chikou Span is below the price chart, current cloud is descending. The instrument is trading between Tenkan-sen and Kijun-sen lines. One of the previous minimums of Chikou Span line is expected to be a support level (121.76). The closest resistance level is the upper border of the cloud (122.69).

On the daily chart Tenkan-sen line is below Kijun-sen, the blue line is directed downwards, while the red one remains horizontal. Confirmative line Chikou Span is below the price chart, current cloud is descending. The instrument is trading below Tenkan-sen and Kijun-sen lines; the Bearish trend is still strong. One of the previous minimums of Chikou Span line is expected to be a support level (121.76). The closest resistance level is Tenkan-sen line (122.63).

Recommendation

On the four-hour chart we can see a correction of the downward movement. On the daily chart the Bearish trend is still strong. It is recommended to open short positions at current price with Take Profit at the level of previous minimum of Chikou Span line (121.76) and Stop Loss at the level of Kijun-sen line (122.63).

 

[MikhailLF]

Cryptocurrency Market Review

2019-05-31 11:32 (GMT+2)

This week, cryptocurrencies showed ambiguous dynamics. The initial price increase is now replaced by a significant correction. Now Bitcoin is trading around 8215.00 (–3.9%), Ethereum — at 250.00 (–4.7%), Ripple — at the level of 0.4160 (+3.2%), Bitcoin Cash — at around 415.00 (–1.4%). EOS took the fifth place in terms of capitalization, displacing Litecoin from this position. Currently, EOS is trading at 7.360 (+5.7%). The total market capitalization during the week decreased from 270 to 261 billion dollars. Bitcoin's market share rose to 56.2%.

Despite the downward correction of the market in the second half of this week, most experts are confident that the uptrend will continue. The rise in the value of cryptocurrency assets will continue to be supported by the confrontation between China and the United States. Recently, it has moved from the tariff to the technological sphere, and if the bond market is also affected, this will entail a significant surge in demand for the largest cryptocurrencies. According to CNBC analysts, there is an inverse correlation between the yuan and Bitcoin on the market, with the latter acting as a safe haven. Also, the growth of Bitcoin is supported by the approximation of the date of a two-time reduction in the reward for miners (May 2020), which can provoke a sharp reduction in the supply of coins.

Cryptocurrency sites important releases include Coinbase preparation for the launch of margin trading. For now, it is discussed, in what form and how to provide this service to customers. Also, representatives of the exchange announced the addition of the ability to trade EOS coins to the Coinbase application on Android and iOS. Binance Cryptocurrency Exchange is preparing to release a new version of the Binance 2.0 platform, which will also contain the function of margin trading. Now this option is available in test mode. Also, the update will enhance the security of transactions in order to further eliminate the possibility of hacker attacks, such as the one that occurred in early May and cost the company's customers BTC 7000.

From other news, it is worth noting the publication of a new cryptocurrency rating from the China Center for Information Industry Development (CCID). It assesses coins in terms of technology base application, innovation and practical benefits. The first three places are occupied by EOS, TRON and Ethereum. Bitcoin takes only 12th place, and Ripple is at the 17th. The US Congressional Research Service published a report this week, in which it called Bitcoin not a payment, but a speculative tool. According to the research, cryptocurrency ultimately will not be able to compete with traditional means for storing capital and paying for goods and services. The ECB Research Group on the Study of Cryptocurrency Assets also released a report according to which cryptocurrencies currently do not pose a threat to the EU financial system, since their capitalization is only about 1% of euro area GDP. However, the group members called for a unified regulation of cryptocurrencies in the EU.

Next week, the beginning of a new growth in the cryptocurrency market is possible after the end of the current correction.

 

[MikhailLF]

Morning Market Review
2019-06-03 08:52 (GMT+2)

EUR/USD

EUR is actively recovering against USD after updating local lows on May 30. Technical factors contribute to the development of "bullish" dynamics, while the fundamental background for the euro remains very ambiguous. Investors fear the development of a political crisis in Italy, as well as watching the development of trade relations between the EU and the US, which have worsened after the harsh statements by Donald Trump. Published on Friday, macroeconomic indicators from Europe failed to provide significant support to the euro. Retail Sales in Germany in April decreased by 2.0% MoM, but unexpectedly increased strongly in annual terms (+4.0% YoY). German CPI in May slowed from +1.0% MoM to +0.2% MoM, which turned out to be worse than the average market expectations. Meanwhile, HCPI slowed down from +2.1% YoY to 1.3% YoY over the same period.

GBP/USD

GBP is trading higher against USD at the beginning of the new week, developing a correctional impulse formed at the end of the last trading week. On Friday, macroeconomic statistics on consumer lending published in the UK provided moderate support for the instrument. Net Lending to Individuals in April rose from 4.7B to 5.2B pounds, while the forecast predicted its decline to 4.6B. Mortgage Approvals in April rose from 62.56K to 66.26K, which also exceeded the market expectations (63.25K). Investors are focused on statistics on May PMI in the UK. The current forecast of analysts suggests a decrease in Markit Manufacturing PMI from 53.1 to 52.0 points.

AUD/USD

AUD is strengthening against USD during today's Asian session, updating local highs of May 13. Corrective sentiment on the US currency contributes to the development of upward dynamics on the instrument, while the macroeconomic background from Australia remains ambiguous. AiG Manufacturing index went down from 54.8 to 52.7 points in May. Company Gross Operating Profits in Q1 2019 grew by 1.7% QoQ only, which is almost twice as bad as market expectations. ANZ Job Advertisements in May showed a sharp decline of 8.4% MoM after rising by 0.2% MoM last month. On Tuesday, investors are waiting for the RBA decision on the interest rate, which is expected to be reduced from 1.50% to 1.25%. In the case of the implementation of forecasts, AUD may fall under pressure.

USD/JPY

USD fell sharply against JPY on May 31, updating local lows of mid-January. The reason for the emergence of negative dynamics in the instrument was the statements by US President Donald Trump's about his intention to sharply increase import duties on Mexican goods, if Mexico does not take measures aimed at restricting the flow of migrants. Investors fear that the implementation of Trump’s threats could have a significant impact on the US economy and exacerbate the threat of a recession, given the large trade turnover between the countries. Meanwhile, JPY is under pressure from a not too optimistic macroeconomic background from Japan. Friday statistics reflected a slowdown in growth in Retail Sales in April from +0.2% MoM to 0.0% MoM. YoY, the indicator slowed from +1.0% to +0.5%. May data released today on the Nikkei Manufacturing PMI in Japan showed an increase from 49.6 to 49.8 points, while analysts did not predict a change in this indicator.

Oil

Oil prices dropped markedly at the end of last week, updating local lows of mid-February. The reason for such a sharp decline of the instrument was the growing fears about global demand after statements by US President Donald Trump about the intention to increase import duties on all Mexican goods, if Mexico does not restrict the flow of illegal migrants. The opening of the new front in the US trade war serves as a source of uncertainty and threatens with the negative consequences for the world economy. Moreover, the American economy may also be significantly affected, since the trade turnover between the United States and Mexico is still very high. In addition to imports of agricultural products, the United States is actively importing oil from Mexico, so the current situation threatens with an additional decrease in demand.

 

[MikhailLF]

Morning Market Review
2019-06-04 08:49 (GMT+2)

EUR/USD

EUR grew significantly against USD on Monday updating a new local high of May 13. Macroeconomic statistics on business activity in the US, which turned out to be worse than forecasts, contributed to the development of "bullish" dynamics on the instrument at the beginning of the week. ISM Manufacturing PMI in May declined from 52.8 to 52.1 points with the forecast of 53.0 points. Markit Manufacturing PMI in May declined from 52.6 to 50.5 points. In turn, ISM Manufacturing Prices in May rose from 50.0 to 53.2 points, which turned out to be better than the average market expectations of 52.0 points. European statistics on business activity was contradictory, but came close to forecasts, so it did not have a noticeable effect on the dynamics of the instrument. Euro area's Manufacturing PMI went down from 47.9 to 47.7 points in May.

GBP/USD

GBP continued to rise against USD during the Asian session on June 3, rising to local highs of May 28. The pound was under pressure from weak data on business activity from the UK at the beginning of the week. According to the data from Markit, Manufacturing PMI in May fell from 53.1 to 49.4 points, while investors expected a decline only to 52.0 points. Investors are focused on the state visit of US President Donald Trump to the UK in addition to a marked increase in trade tensions in the market. Trump intends to discuss issues regarding the Chinese company Huawei, against which the United States recently imposed sanctions. It is planned that the Chinese corporation will be involved in the construction of fifth-generation communication networks in the UK. In addition, on the agenda of the visit are questions about a free trade agreement between countries, which is planned to be concluded after Brexit, in order to level losses from the process.

AUD/USD

AUD rose against USD on Monday, noting local highs of May 13. The Australian currency was supported by quite positive data on China's business activity, which did not demonstrate the expected decline. The growth of the instrument was also supported by the uncertain statistics on business activity from the US, which heightened tensions around the possible onset of a recession in the US economy. During the Asian session, the pair shows ambiguous trading. AUD is under pressure from the RBA decision to lower the interest rate to 1.25%.

USD/JPY

USD continues to weaken against JPY against the background of a further decline in investor interest in risk. The focus of the market is on US trade conflicts that threaten with a slowdown in global economic growth. Earlier, Donald Trump put forward a new ultimatum to Mexico. The US will increase import duties on all Mexican goods from June 10, unless the Mexican government takes measures to reduce the flow of migrants across the southern borders of the United States. Monday's macroeconomic statistics from Japan provided little support to the yen. Nikkei Manufacturing PMI grew from 49.6 to 49.8 points which was better than expected (49.6 points). Capital Spending in Q1 2019 grew from 5.7% to 6.1% with the forecast of +11.6%.

Oil

Oil prices continue to show negative dynamics. The main downward factor for the instrument remains the decline in global demand for raw materials amid worsening trade conflicts. Donald Trump’s statements about the intention to introduce import duties on Mexican goods from June 10, which were likely to have a negative impact on Mexican oil imports, hit the quotes hard. The former threats of weakening demand against the background of the US-Chinese trade war still remain. Protracted negotiations between the parties have not yet led to consensus, and Washington has only aggravated the situation, imposing tough sanctions against the Chinese Huawei. In turn, quotes are supported by positive statements by Saudi Arabia that the OPEC+ deal will continue to be implemented by all members of the cartel.