Thread: Daily Market Analysis from ForexMart

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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