Thread: Daily Market Analysis from ForexMart

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

EUR/USD. October 13, 2020 – Dollar grows in anticipation of inflation data

On Monday, the EUR/USD pair started to decline from the level of 1.1830. Today the downward trend continues, the current quote for the pair is 1.1780.

Pressure on risky assets came from yet another unsuccessful congressional negotiation on a new stimulus package. Nancy Pelosi has again rejected proposals from Donald Trump's team, which increases the likelihood that a decision on stimulus will not be made before the presidential elections on November 3.

Moreover, the growing gap in the rating of Joe Biden, the main opponent of Donald Trump in the presidential race, suggests that in the event of his (Biden’s) victory, the Democrats will constitute the majority in all power structures.

Today you should pay attention to the data on inflation in the United States, which should accelerate from 1.3% to 1.5%. In addition to the fact that the rise in inflation itself is a positive factor, it is also important that the indicators are close to the target levels of the Fed. Thus, in anticipation of these data, the pair will continue to decline to the 1.1770 area.

EUR/USD. October 14, 2020 – Euro declines amid negative external background

The euro is losing ground on Wednesday, dropping to 1.1715. Demand for the US dollar rose after news of another deadlock in the Brexit negotiations, a new lockdown in the UK and the suspension of coronavirus vaccine testing by two pharmaceutical companies.

At the same time, the dollar is supported by statistics from the United States: the inflation rate increased by 0.2%, increasing for the fourth month in a row. Today you should pay attention to the statistics on the US producer price index in September, as well as on the data on industrial production in the eurozone in August. The latest figures reflected only 0.7% MoM growth in European production, after rising 4.1% in July. Analysts had forecast growth of 0.8%.

However, the strengthening of the American currency is held back by the course of the election race in the United States. The position of Joe Biden, the main rival of the incumbent President Donald Trump, remains strong, and his army of fans is growing every day. Experts point out that Biden's victory in the elections could give the economy more impetus for recovery and create conditions for a rally in the stock and foreign exchange sectors.

USD/CAD. October 15, 2020 – Dollar hits 1.32 amid spread of second wave of coronavirus

On Thursday, the USD/CAD pair continues to trade near local highs just above the 1.3200 level. The US dollar is gaining support amid rising market concerns about the spread of the second wave of coronavirus worldwide.

In addition, investors drew attention to the suspension of trials of the Covid-19 vaccine by two US pharmaceutical companies due to the appearance of side effects.

Today the macroeconomic calendar is almost empty. Only data on the US labor market from ADP and speeches by members of the Board of the Bank of Canada and its head Tim Lane can attract attention.

The United States will provide data on applications for unemployment benefits: it is expected that the number of initial applications can grow from 840 thousand to 845 thousand, and the number of repeated applications should decrease from 10 976 thousand to 10 500 thousand. This means that the duration of unemployment in the United States continues to decline, which is currently the most important factor for the growth of the dollar.

EUR/USD. October 16, 2020 – The euro is growing slightly from the level of 1.17

On Friday, the EUR/USD pair is growing moderately from the level of 1.1700, the current quote is 1.1725. During the current week, the euro showed weakening, responding to a decrease in demand for risky assets due to political and economic uncertainty in the United States and the worsening epidemiological situation in Covid in the world.

Experts note that restrictive measures have been reintroduced in many European cities, since they recorded significant jumps in the incidence of coronavirus.

Additional pressure on the euro is exerted by the complexity of the Brexit negotiations. London and Brussels have failed to move forward on the deal, exacerbating the risks of Britain leaving the EU without a deal.

However, today the euro has started to grow. The pressure on the dollar was exerted by yesterday's data on the labor market, which continues to experience difficulties for the second week in a row. The number of applications for unemployment benefits rose to 898 thousand against the previous level of 845 thousand. The forecast assumed a decrease to 810 thousand.

At the end of the day, the US is to release data on retail sales, which growth is expected to slow from 2.6% to 2.2%. You should also pay attention to the volume of industrial production in the States: experts predict a slowdown in the decline in production from -7.7% to -6.6%.

Brent. October 19, 2020 – Oil fixed at comfortable levels

Brent oil prices have consolidated above $42 per barrel. The current quotation of the asset is $42.77.

Today, markets are focused on the meeting of the OPEC + ministerial monitoring committee. The parties to the agreement will meet to assess the state of the market, and it is unlikely that any decisions will be made regarding the supply. This will most likely happen at a meeting scheduled for November 30 – December 1.

One of the scenarios for the forthcoming report assumes that the oil market in 2021 will be characterized by weak demand and growing supply. For this reason, the participants in the energy pact can discuss easing the restrictions from January 1.

Thus, if a gradual increase in oil production by OPEC + countries against the backdrop of weak demand and an increase in production in Libya is questionable, the initiative on the oil market will finally go to buyers, which will allow Brent quotes to gain a foothold above $43.50 per barrel.

EUR/USD. October 20, 2020 – Euro continues to rise above 1.18

The European currency continues to strengthen, following the dynamics of yesterday. The current quote for the EUR/USD pair is 1.1805. Market participants were actively selling the dollar on expectations of an early agreement on fiscal stimulus in the United States. On Sunday, House speaker Nancy Pelosi announced that if a decision on the issue of incentives is not made within 48 hours, the deal will not take place.

The euro was further supported by the comments of Christine Lagarde. The head of the ECB noted that she considers it necessary to leave the volume of the economic recovery fund in the amount of 750 billion euros. However, the strengthening of the euro above 1.1850 is not yet considered, as the epidemiological situation in Europe remains extremely tense.

Today you should pay attention to the publication of data on construction in the United States. Experts predict an increase in the number of building permits issued from 1.476 million to 1.52 million.