Thread: Daily Market Analysis from ForexMart

GBP/USD. September 08, 2020 – The pound continues to weaken against the dollar

The British pound sterling continues to decline against the dollar, approaching the 1.3100 level. Pressure on the GBP/USD pair is exerted by difficulties in the Brexit negotiations between London and Brussels. A new round of debate starts today, but yesterday it became known that the British Parliament intends to cancel the amendment on the customs space of Northern Ireland, which could violate all preliminary agreements with the European Union.

Earlier, the pound was under pressure from the statements of the representative of the Bank of England Michael Saunders on the need for further easing of the monetary policy. As a result, the market increased expectations of an expansion in the volume of the quantitative easing program at the next meeting of the British Central Bank.

Additional support for the «bears» is provided by the strengthening of the US dollar after the release of strong data on the US labor market.

Today the pair's downward dynamics will continue. However, the RSI indicator is directed towards the support area, which signals a likely trend change in the near future.

EUR/USD. September 9, 2020 – Euro dipped to the level of 1.1750

The EUR/USD pair continues to retreat amid risk aversion of investors. The current quote for the pair is 1.1750. Market participants are watching with dismay the rise in the number of new cases of coronavirus, as no economy in the world is ready for new quarantine restrictions.

The euro was also under pressure from the statistics released earlier: the next calculation of the eurozone's GDP for the second quarter reflected a fall of 11.8% q/q against the initial estimate of -12.1% q/q. In annual terms, the eurozone economy fell by 14.7% in April-June. The data turned out to be better than forecasted, but the decline still looks very sharp and strong.

The statistics on the level of employment in the region in the second quarter reflected a decrease of 2.9%, which was slightly worse than the initial estimate. In the first quarter, the same indicator decreased by 0.3%. Experts note that the current state of affairs is the most negative since the start of statistics collection in 1995.

Tonight you should pay attention to the data on the number of open vacancies in the labor market JOLTS for July. Experts predict an increase in the number of vacancies to 6 million.

EUR/USD. September 10, 2020 – Euro rises in anticipation of ECB meeting

On Thursday, the euro demonstrates growth to the level of 1.1890 amid expectations of the results of the meeting of the European Central Bank and the speech of Christine Lagarde. Before there were rumors that the regulator's management plans to revise the economic forecast for 2020 towards improvement, which caused the sudden growth of the euro.

Today, traders are most interested in the ECB's position on the euro exchange rate and its impact on the volume of eurozone exports. Earlier, the chief economist of the central bank Philip Lane said that the euro is too high, which could have an impact on future monetary policy. Whether the head of the ECB will develop this idea during his speech will become known a little later.

Market participants doubt the regulator's transition to a strategy of targeting the average inflation rate following the example of the US Federal Reserve System. If Lagarde reports that the eurozone economy is recovering rapidly, the regulator will not expand the QE program or apply additional mitigation measures, which will be an excellent factor for further strengthening of the European currency.

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.

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.

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.

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.

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.

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.

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.