LiteForex Analytics

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

In the Asian session, the EUR/USD pair consolidated after a decline and traded mostly in a narrow range of 1.1366–1.1357. The market positively assessed the comments of US Treasury Secretary, Steven Mnuchin, who noted that trade negotiations with representatives of the PRC are going very productively and the parties intend to make every effort to conclude a big trade deal before the beginning of March. Mnuchin will lead the US delegation, which will go to Beijing next week for a new round of trade negotiations. The dollar was under pressure from comments by former Fed Head, Janet Yellen, who supposed that the regulator could lower the interest rate in the event of a weakening global economic growth. Yesterday's speech by Fed Chairman Jerome Powell did not contain new information on monetary policy. He noted only that in the next decade, the United States will face an increase in the gap in the level of citizens' well-being and urged to fight it.

Today, there should be a meeting between British Prime Minister Theresa May and EU officials to discuss changes in the terms of the Brexit deal. Its results can cause significant volatility in the market.

GBP/USD

During the Asian session, the pair GBP/USD was traded within the narrow range 1.2935–1.2925. In addition to negotiations between representatives of the UK and the EU in Brussels, investors are preparing for the meeting of the Bank of England. The rate is expected to remain at the same level of 0.75%. Probably, under conditions of uncertainty with Brexit, the British regulator will not accept any change in monetary policy. However, Mark Carney can share his vision of the economic situation and action plans of the Bank of England in the event of a tough Brexit.

AUD/USD

The AUD/USD pair continued declining at the Asian session and is now trading at 0.7093. Yesterday's comments from the head of the RBA, Philip Lowe, continue to exert pressure on the Australian currency. The official said that he had previously assumed a further increase in interest rates, but now the position of the regulator has become more balanced. Investors interpreted these words as a hint at the possibility of reducing the rate. Currently, trade tensions, slowing global growth and the weakness of the Australian construction market contribute to this.

USD/JPY

In the Asian session, the USD/JPY quotes had ambiguous dynamics. After the decrease to the level of 109.71, the price won back most of the losses and is now at the level of 109.95. Japanese investors follow the news of the US-China trade negotiations and are encouraged by the latest statements by US Treasury Secretary Steven Mnuchin on the parties' desire to conclude a deal before the beginning of March. On the other hand, pressure on the yen is exerted by weak data on the Leading Index. The indicator has been falling for the third month in a row reaching the level of 97.9 points in February, making the lowest indicator since April 2016.

Gold

Quotes of gold in the Asian session continued to decline and are now trading at 1304.75. The weakening of the price is due to the prospects for the US and China to reach a trade deal.

 

[MikhailLF]

LiteForex аналитика. Утренний обзор рынка

EUR/USD

The European currency is relatively stable against the US dollar during trading at the Asian session on February 8. Investors take profits after a confident euro rally throughout the current trading week.

The US currency continues to be in demand among investors, despite the publication of poor macroeconomic data. In addition, the market is actively discussing possible postponing of the planned meeting of US President Donald Trump and Chinese President Xi Jinping from February to the end of March. In general, optimism around the possible completion of the US-Chinese trade conflict has been declining recently, and the White House economic adviser, Larry Kudlow, said that the countries are still far from concluding a deal.

European macroeconomic releases are often weak. The ECB economic bulletin, which had a significant pressure on the euro position, was published the day before. The document notes that growing external negative factors lead to an increase in risks for the European economy. Economic indicators show negative dynamics, therefore, in the near future, the regulator expects a slowdown in economic growth. For 2019, the growth forecast was revised from the previous +1.9% to +1.3%.

GBP/USD

The GBP/USD pair is trading in both directions during the Asian session on February 8. The British currency reacted quite actively to the publication of the minutes of the Bank of England the day before, but managed to show a slight increase in the afternoon session, having corrected after a steady decline throughout the week.

As expected, the Bank of England retained its key interest rate unchanged at 0.75%, and the decision was unanimous. The regulator also did not change other parameters of monetary policy, maintaining the volume of the bond purchase program at 435B pounds. At the same time, the Bank of England lowered forecasts for economic growth for the current year from 1.7% to 1.2%, noting a significant increase in uncertainty, primarily due to Brexit.

The market is waiting for the outcome of negotiations between British Prime Minister Theresa May and EU leaders on additional amendments to the Brexit agreement on the Irish border.

AUD/USD

The Australian dollar shows a negative trend during the Asian session on February 8, approaching strong support at the level of 0.7000. The instrument is under pressure from the RBA meeting minutes. The regulator has revised downward its own forecasts for economic growth for 2019-2020. At the end of this year, the RBA expects Australian economy to grow by 2.75% YoY and does not expect a change in this indicator by 2020.

The regulator also notes a significant reduction in inflation risks. By June 2019, the Consumer Price Index may slow down to +1.25% from the current +1.8%, after which it will gradually recover and reach target level of 2% closer to mid-2020.

USD/JPY

The US dollar continues to trade lower against the Japanese yen, but instrument activity remains quite low. Statistics from Japan published during the Asian session on February 8 did not have a noticeable effect on the dynamics of the pair.

Household Spending in Japan rose by 0.1% YoY in December after declining by 0.6% YoY last month. Analysts had expected a more active growth of 0.8% YoY. Average Cash Earnings indicator, which shows the average pre-tax income of an employee, increased by 1.8% YoY, having accelerated by 0.1% since last month.

Gold

Gold prices are consolidating after an attempt to reduce this week. The day before, prices showed an increase, departing from local lows amid increased uncertainty around the trade conflict between the PRC and the US and the publication of disappointing macroeconomic data. In particular, the market reacted negatively to the slowdown in the German economy and the release of updated forecasts from the ECB.

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

The European currency shows ambiguous dynamics against the US dollar during the Asian session on February 11, still under pressure after a confident "bearish" rally last week. At the end of the week, the pair did not show the expected pullback, because the market received information that was able to support the US currency.

The Administration of US President Donald Trump confirmed his intention to hold official talks with China and announced a meeting in Beijing on February 14-15. Many experts believe that even if the negotiations do not end with the signing of a final agreement, the current import prices will remain at the same levels.

On Monday, the market does not expect the release of a large amount of interesting macroeconomic data from the euro area and the United States. Investors will focus on statistics on consumer inflation from Switzerland, Norway and Denmark. With the opening of the American session, preliminary data on the dynamics of costs per labor unit for the Q4 2018 will come to the market.

GBP/USD

The British pound is trading in both directions, remaining in the area of 1.2900. At the end of the last trading week, the instrument managed to show a "bullish" correction, but no significant growth occurred. During the Asian session on February 11, the trading activity of the British currency remains rather low, as investors expect new drivers to appear in the market.

Today, the publication of interesting statistics from the UK is expected. The focus will be on preliminary data on the dynamics of UK GDP for Q4 2018. The indicators are expected to decrease: +0.3% QoQ and +1.4% YoY against the previous +0.6% QoQ and +1.5% YoY. Investors will also be interested in December statistics on manufacturing production. Here, analysts expect improvements in dynamics: +0.2% MoM after a decline of 0.3% MoM in November.

AUD/USD

The Australian dollar shows moderate growth during the Asian session on February 11, corrected after a slurred decline at the end of last week. More confident correction of the Australian currency is hampered by the strengthening of the US dollar, which received additional support last Friday, after the administration of Donald Trump announced a meeting with the leaders of the PRC in Beijing.

On Monday, interesting macroeconomic statistics from Australia is not expected, so investors will continue to rely mainly on data from the United States. In the meantime, moderate support for AUD is provided by published data from China. In particular, the rate of new loans issued in January rose sharply from 1080 to 2970 billion yuan.

USD/JPY

The US dollar shows growth during the Asian session on February 11, correcting after the "bearish" end of the week. The instrument is supported by positive news around the US-PRC trade conflict. As it became known at the end of last week, the final meeting of the heads of the United States and China will be held in Beijing on February 14-15.

The development of the "bullish" dynamics of the instrument contributes to the fact that the markets of Japan are closed on Monday due to the celebration of the National Foundation Day.

Oil

Oil quotes continue to trade in both directions, being under pressure from the fairly strong position of the US currency in the market. Previously, an additional growth factor was the uncertainty surrounding the US-China trade conflict, especially after Donald Trump said on Thursday that he did not intend to meet with Xi Jinping before the deadlines for concluding a deal. However, on Friday Trump's administration announced a meeting of heads of the two states in Beijing on February 14-15.

Additional support for prices is provided by OPEC actions and US sanctions against Venezuela. Last week it became known that in January Saudi Arabia reduced oil production by 400 thousand barrels per day. New sanctions against Venezuela could reduce the total export volume by another 300-500 thousand barrels per day.

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

The European currency continues to remain under pressure, updating local lows against the dollar at the beginning of the week. However, at the Asian session on February 12, the instrument once again attempts correction. Investors are quite optimistic about the dollar against the background of the emerging progress on the issue of the US-China trade conflict. In turn, the euro is under pressure from disappointing macroeconomic statistics, reflecting a significant slowdown in the region’s major economies, in particular Germany. In addition, the market remains in suspense before Brexit, which will undoubtedly affect the economic situation. Today, investors will focus on speeches by the heads of the German Federal Bank, the Bank of England and the US Federal Reserve.

GBP/USD

The British pound shows sluggish corrective growth at today's Asian session, correcting after a significant decline in the beginning of the week, which led to an update of the local lows of January 21. The reason for the emergence of negative dynamics in the instrument, in addition to a fairly strong position of the dollar in the market, was the disappointing macroeconomic statistics from the UK. Industrial production in December decreased by 0.5% MoM and 0.9% YoY after a decrease of 0.3% MoM and 1.3% YoY last month. The GDP in December decreased by 0.4% MoM after rising by 0.2% in November. In quarterly terms, the growth rate of the economy fell sharply from +0.6% QoQ to +0.2% QoQ, which, however, coincided with the expectations of analysts.

AUD/USD

The Australian dollar shows moderate growth during today's Asian session, retreating from local lows of 4 January. The growth of AUD takes place against the background of the publication of ambiguous macroeconomic statistics from Australia and is largely technical in nature. NAB Business Confidence rose from 3 to 4 points in January. NAB Business Survey jumped from 2 to 7 points over the same period, while the forecast was 4 points. At the same time, the Home Loans indicator reflected a decline in loans issued in December by 6.1% MoM after a decline of 0.9% MoM in November. Analysts had expected "bearish" trend to strengthen, but counted on only –2.0% MoM decline.

USD/JPY

The US dollar is strengthening against the Japanese yen, updating local highs of December 28, 2018. The markets of Japan were closed on Monday due to a national holiday, so the dynamics of the instrument was subject to external factors. During the Asian session on February 12, investors are awaiting the publication of not the most optimistic macroeconomic statistics from Japan. Among it, Tertiary Industry Activity Index in January and a preliminary estimate of Machine Tool Orders in January can be highlighted.

Oil

Oil prices showed a negative trend at the beginning of the week, but managed to correct closer to the end of the afternoon session on February 11. Quotes are falling due to the growth of drilling activity in the United States, as was recorded in the Baker Hughes report at the end of the last trading week. Additional pressure comes from the process of trade negotiations between the United States and China, despite the preliminary agreements reached on the date of commencement of the official meeting of heads of the two states. If negotiations fail, the United States will raise tariffs on Chinese goods on March 1. Similar responses will be taken by China, which will further complicate the situation. Today, investors are focused on API Weekly Crude Oil Stock for February 8. The previous report reflected the growth of stocks by 2.514 million barrels.

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

In the Asian session, the EUR/USD pair rose to the area of 1.1340 (+0.11%). The US currency is weakening, despite the positive comments by US President Donald Trump and Fed Chairman Jerome Powell, made the day before. Trump said he was ready to postpone the expiration of the trade truce from March 2, if there is a serious chance to sign a trade deal. Speaking in Mississippi on Tuesday, Powell noted that the US economy looks strong, resulting in low unemployment and good economic growth. However, the regulator will continue to look for ways to combat poverty.

During the day the publication of important statistical data is expected. The euro area's December statistics on the volume of industrial production promises to be weak. On an annualized basis, production could be reduced for the second month in a row, by another 3.2%. On a monthly basis, a reduction of 0.4% is possible. In the United States, January inflation data will be released. On an annualized basis, the Consumer Price Index may drop significantly from 1.9% to 1.5%, and the Core Consumer Price Index can decrease from 2.2% to 2.1%. Current forecasts do not contribute to the strengthening of neither the dollar nor the euro.

GBP/USD

The pair GBP/USD rose to the level of 1.2920 (+0.24%). Investors were not scared by the pessimistic comments of the head of the Bank of England, Mark Carney. Speaking on Tuesday, he called on the British parliament to break the impasse over Brexit, warning that withdrawing from the EU without a deal would be an economic shock for the UK, which is especially dangerous against the backdrop of China’s recession and world trade tensions. Currently, investors are curtailing activity, waiting for the resolution of the situation. Carney noted that a 3% decline in the Chinese economy will lead to a reduction in world GDP by 1%, and the introduction of the US additional 10% export tariffs on leading trading partners could reduce world production by 1%.

During the day, the market is waiting for the publication of the January data on inflation in the UK. It is expected that the Consumer Price Index on an annualized basis will continue to decline and for the first time since January 2017 it will fall below the target level, reaching 1.9%. The Core Consumer Price Index can remain at the same level of 1.9%. If the forecast proves right, the pound may fall under pressure.

AUD/USD

In the Asian session, the AUD/USD pair rose to the area of 0.7132 (+0.55%) against the background of the positive February data on the Consumer Sentiment Index in Australia. After a decrease by 4.7% in January, the index rose by 4.3% in February, which is encouraging investors. However, the overall situation with the Australian economy remains alarming, helped by the weakening of the Australian construction market and world trade tensions.

USD/JPY

Quotes of the USD/JPY pair rose in the Asian session, reaching 110.60 (+0.14%). As there is a lack of key economic releases in Japan, the movement of JPY is of technical nature. Investors are waiting for the results of a new round of trade negotiations between the PRC and the United States, held in Beijing.

Gold

Quotes of gold in the Asian session are corrected upwards after a significant fall on Tuesday. Currently, the price has reached the level of 1314.00 (+0.23%) and almost won back the positions lost the day before.

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

During the Asian session, the pair EUR/USD is corrected upwards after a significant decline on Wednesday. The price has reached the level of 1.1282 (gaining 0.24%). Yesterday investors' hopes raised amid the information about the likely meeting of the PRC Chairman Xi Jinping with the leaders of the American trade delegation Steven Mnuchin and Robert Lighthizer since both parties can manage to conclude a deal before the end of the truce on March 2. The latest data on inflation in the United States were also positive. In January, the consumer price index fell less than expected by the market and amounted to 1.6%. Core CPI remained at 2.2%.

During the day, the market awaits the publication of data on the Eurozone GDP in 4Q2018. The indicator is expected to remain at 0.2% QoQ and at 1.2% YoY. In the United States, statistics on sales will be published. According to forecasts, the indicator may reduce from 0.2% to 0.1%, which may cause pressure on USD.

GBP/USD

During the Asian session, the pair GBP/USD was rising after a significant decline on Wednesday. Quotes have reached the level of 1.2870 (gaining 0.22%). Investors are waiting for the situation around Brexit to develop. Yesterday, there was the information that the European Commission may agree to postpone the withdrawal of Britain from the EU from March 29 this year. However, later, Prime Minister Theresa May said in the Parliament that she intends to complete Brexit by the due date. Today, a new debate on the further steps of the UK regarding the deal with the EU should be held in the House of Commons.

AUD/USD

The pair AUD/USD was growing at the Asian session and has now reached the level of 0.7123 (adding 0.29%). Investors are hoping for a possible conclusion of the US-China trade deal, the likelihood of which is indicated by the upcoming meeting of PRC President Xi Jinping and the American representatives Steven Mnuchin and Robert Lighthizer. In the evening, the market is waiting for the speech of the assistant to the head of the RBA, Christopher Kent, with the report "Financial Conditions and the Australian Dollar", which may contain hints on the regulator's further policy.

USD/JPY

The pair USD/JPY had ambiguous dynamics during the Asian session. The decline to the level of 110.85 was replaced by growth and now the instrument is at 111.10. Statistics released today showed Japanese GDP growth in 4Q2018 by 0.3% QoQ and 1.4% YoY, which can be considered a good result after the economic contraction in Q3. GDP growth was provided by an increase in capital expenditures of companies by 2.4%. However, further economic growth may be hindered by a new sales tax, which the Japanese government is going to impose this year.

Gold

During the Asian session, gold quotes are corrected upwards after a significant decline on Wednesday. Now, the price is at the level of 1309.00 (having added 0.31%).

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

During the Asian session, the pair EUR/USD was correcting down after Thursday growth. Currently, the price is at the level of 1.1282, having lost 0.1%. Yesterday, the dollar was pressured by a number of negative factors. Statistics on US retail sales for December was weak. The sales volume unexpectedly fell by 1.2%, and it was even 3.9% in the e-commerce sector. This decline was the biggest in 9 years, it could put pressure on GDP. Fed spokeswoman Lael Brainard said she was concerned about the state of the American economy, as the risks to its growth are increasing. But most of all, the market was alarmed by information that President Donald Trump could sign a draft security agreement between Democrats and Republicans, while simultaneously imposing a state of emergency in several states. Thus, the government will not be closed, but the administration will be able to finance the border wall, bypassing Congress.

During the day, data on retail sales in the United States will be published. In December, the figure may remain at 0.2%.

GBP/USD

During the Asian session, the pair GBP/USD traded within the lateral range of 1280.00-1.2788. Yesterday, the pound was pressured due to another defeat of Teresa May in parliament. Deputies of the House of Commons rejected a proposal that would confirm the government’s mandate for further negotiations on Brexit. 258 voted for the proposal, and 303 parliamentarians opposed it. Some representatives of the Conservative Party abstained, which predetermined the defeat of May. This vote did not have legal force, but it showed the instability of positions and raised doubts that the Prime Minister would be able to persuade the parliament to approve the deal with the EU.

During the day, data on retail sales in the United Kingdom will be published. In January, the figure may grow by 0.2%, and YoY, from 3.0% to 3.4%. If the forecast proves to be true, this may render support to GBP.

AUD/USD

During the Asian session, the pair AUD/USD had an ambiguous dynamic. The decline to 0.7078 was replaced by a corrective growth, as a result of which part of the losses was won back. Now the instrument is at the level of 0.7090, having lost about 0.15%. AUD is pressured by weak Chinese inflation data. In January, the consumer price index in China slowed growth and amounted to 1.7%. In Melbourne, RBA Assistant Governor, Christopher Kent, noted that one should not be surprised at some weakening of AUD in view of a reduction in global economic activity and forecasts of deterioration of trade in Australia itself.

USD/JPY

The pair USD/JPY had ambiguous dynamics during the Asian session. The decline to 110.25 was replaced by growth to the level of 110.36. As a result, the pair lost 0.1%. JPY is generally pressured by weak data on the volume of industrial production in Japan. In December, it declined for the second consecutive month, this time by 0.1%.

Gold

During the Asian session, quotes of gold rose, reaching 1314.00 and adding about 0.6%.

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

The euro is trading in a downtrend during the Asian session on February 19, after a slight rise yesterday. Monday’s growth was largely technical in nature, as US markets were closed on the occasion of a national holiday, and there was no interesting macroeconomic statistics from the Eurozone. Investors' are focused on the US-Chinese trade negotiations, as well as the Brexit deal. This week, the second round of negotiations will take place in Washington, and investors are still hoping for a favorable outcome. The situation around Brexit is somewhat more complicated. Given the reluctance of the parties to make additional compromises, and the limited time to resolve these issues, the chances of a "tough" Brexit are very high.

GBP/USD

The British pound returns to decline during the Asian session, after updating local highs yesterday. Investors are extremely concerned about the prospects for Brexit and fear the worst scenario. The week, the negotiations of the British Prime Minister Theresa May with the head of the European Commission Jean-Claude Juncker and the heads of particular EU countries will be held. May will try again to make changes to the final agreement regarding the Irish border, despite the fact that the EU has previously stated a tough position on this issue. On February 19, investors expect the publication of a block of statistics on the labor market. In particular, analysts expect some increase in average wages in December from 3.3% 3MoY to 3.4% 3MoY. The unemployment rate in December should remain at 4%.

AUD/USD

The Australian dollar is trading in a downtrend against the US one, declining as the market becomes saturated with the news. USD is in demand amid a noticeable improvement in the prospects for trade negotiations with China, which inspire hope that an agreement will be reached before the scheduled deadline on March 1. Published today, the minutes of the RBA meeting on February 5 meeting did not provide any support to the instrument. The regulator noted an improvement in the labor market but also pointed to a sharp increase in external risks in the past few months. By the end of 2019, the RBA expects the economy to grow by about 3%; later, the GDP dynamics may slow down to an average of 2.75% by mid-2020.

USD/JPY

On Monday, the US dollar showed a slight increase against the Japanese yen and shows ambiguous dynamics during the Asian session on February 19. There are quite a few new growth drivers on the market, so investors rely on previous signals. In particular, the dollar is supported by good prospects for a trade deal between the United States and China. In turn, the pressure comes from internal political conflicts and the soft position on the Fed, which took a pause in the interest rate increase cycle. Trading activity will begin to grow by Wednesday when Japan publishes January import and export data, and the FOMC meeting minutes would be released in the US.

Oil

Oil prices continue to trade in an upward trend, updating local highs amid a noticeable improvement in the prospects for further reductions in oil production among OPEC countries. Earlier, Russia and Saudi Arabia declared a possibility to reduce production volumes substantially more than was expected by the cartel agreement signed earlier. The quotes are also supported by US sanctions against Iran and Venezuela. In turn, concerns about the slowdown in China’s economy serve as a strong deterrent. The growth of drilling activity in the US also continues to have a negative impact on prices.

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

The European currency is trading in an upward trend against the US dollar, updating local highs since February 7. On February 19, the euro managed to show good growth, despite the publication of weak macroeconomic statistics from the Eurozone. In particular, investors have reacted negatively to Italian data on industrial orders and production. In December, the volume of orders decreased by 1.8% MoM with a decrease in sales dynamics by 3.5% MoM (significantly below than analysts' forecasts). The US currency is still vulnerable, as the market is waiting for the outcome of the US-China trade negotiations. However, since President Donald Trump yesterday announced his readiness to give an additional 60 days to negotiate, this process can be fairly long.

GBP/USD

The British pound showed a sharp rise against the US dollar on Tuesday, marking a new local maximum since February 4. The pound was strongly supported by data from the labor market, which inspired confidence in the stability of the economy in front of Brexit. The average salary (with premiums) in December increased by 3,4% 3MoY, which coincided with the data of last month and is the most powerful positive dynamics over the past 10 years. Still, analysts expected a slightly stronger growth (3.5% 3MoY). In December, The number employed increased by 167K, which turned out to be better than analysts' forecasts of 140K. The employment rate was the best since the beginning of 2018. Today, investors are focused on the meeting of British Prime Minister Theresa May with the head of the European Commission, Jean-Claude Juncker.

AUD/USD

The Australian dollar shows ambiguous trading dynamics during the Asian session on February 20, being close to its two-week highs. Investors play the publication of macroeconomic statistics from Australia, but these data do not provide any significant support to the instrument. Thus, the Westpac index of leading economic indicators in January showed zero dynamics after a decline of 0.3% MoM in December. The level of wages for 4Q2018 showed an increase of 0.5% QoQ and 2.3% YoY, which was slightly worse than analysts' forecasts (0.6% QoQ and 2.3% YoY). It is likely that the trading will be rather sluggish today, as investors await the publication of the January report on the Australian labor market on Thursday.

USD/JPY

The US dollar shows moderate growth against the Japanese currency, gradually recovering to local highs of February 14. During the Asian session, the yen is pressured by weak data on the dynamics of imports and exports from Japan. In January, imports declined by 0.6% YoY after rising by 1.9% YoY in December. Analysts were expecting a decline of 2.8% YoY. Exports for the same period collapsed by 8.4% YoY after falling by 3.9% YoY last month. Experts were expecting a decline of 5.5% YoY. Due to the strong discrepancies in the dynamics of imports and exports, the total trade balance in January reached a mark of -1415.2 billion Japanese yen, which is significantly worse than analysts' forecasts of -1011.0 billion.

Oil

Oil prices are consolidating after updating local highs at the beginning of this week. The dynamics of the instrument is largely due to technical factors, as investors continue to monitor the situation with the US-China trade negotiations. Despite the steady decline in production by OPEC countries, the market is concerned about a possible decline in demand, especially from China. On Wednesday, investors await the publication of the API report on oil reserves by February 15. The last report reflected a reduction of 0.998 million barrels.

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

The euro showed a decline against the US dollar on Wednesday, retreating from local highs of February 6. The reason for the depreciation was the strengthening of USD amid a rather optimistic process of trade negotiations between the United States and China. The minutes of the last Fed meeting also had a noticeable effect. On February 21, the round of talks should end with a summit meeting, after which it will become clear whether additional time is needed, or the parties will be able to find a compromise before the current deadline of March 1. On Thursday, investors are focused on European statistics on the dynamics of business activity. The composite Markit Manufacturing PMI may increase in February from 51.0 to 51.1 points.

GBP/USD

Yesterday, the pound has corrected against the US dollar and is again trying to grow during the Asian session on February 21. Investors are playing out ambiguous macroeconomic statistics from the United States and are following the outcome of the negotiations of the British Prime Minister Theresa May with the head of the European Commission, Jean-Claude Juncker, which took place yesterday. Despite the optimistic tone of the final communiqué, analysts are still afraid of delaying the process, as the postponement of the Brexit deadlines does not seem to be impossible. Anyway, the document reflected the consent of the parties to further work aimed at finding opportunities for the most comfortable implementation of Brexit process for all participants. Both parties also confirmed once again that they would not accept the appearance of a “hard border” on the island of Ireland.

AUD/USD

The Australian dollar showed strong growth during the Asian session on February 21, responding to the appearance of a strong report on the labor market. At the same time, investors very quickly lost their “bullish” sentiments, which led to a correction of the instrument to the opening levels. According to the report, in January, employment rose by 39.1K jobs after rising by 21.6K last month. Analysts expected a much more modest growth of 15.0K. The share of the employed population increased slightly and amounted to 65.7% in January, with an expected level of 65.6%. The unemployment remained unchanged at 5%.

USD/JPY

The US dollar rose significantly against the Japanese yen on Wednesday, updating local highs since February 14. During the Asian session on February 21, the instrument is trading in both directions due to the publication of ambiguous macroeconomic statistics from Japan and the expectation of new drivers in the market. Nikkei manufacturing sector activity index in February showed a decline from 50.3 to 48.5 points, breaking down the psychological level of 50 points for the first time since September 2016. With the opening of the American session, the publication of similar indicators is expected in the United States.

Oil

Oil prices resumed growth after some consolidation, receiving support from increased optimism about the US-China negotiation process. On Thursday, there should be a final meeting, which may mark the parties reaching a compromise. Otherwise, Trump's administration will probably try to push the March deadline, as previously noted in the president's speeches. A certain pressure on the quotes was exerted by the yesterday report of the American Petroleum Institute (API), which reflected the growth of stocks as of February 15 by 1.260 million barrels (after a decrease of 0.998 million over the previous period). On Thursday, investors are awaiting the publication of the report on oil reserves from the US Department of Energy.

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

On Thursday, the euro showed ambiguous dynamics against the US dollar. Investors are focused on European business activity statistics and published minutes of the ECB meeting held on January 24th. in February, the Composite Markit Manufacturing PMI in the Eurozone showed an increase from 51.0 to 51.4 points, above the analysts' expectations of 51.1 points. Manufacturing PMI for the same period decreased from 50.5 to 49.2 points while the forecast was 50.3 points. Germany made a significant contribution to the weakening of the index. In February, the German index fell from 49.7 to 47.6 points, once again recalling the problems in the country's economy. The published ECB protocols also were ambiguous: on the one hand, the regulator is preparing measures for additional support of banks; on the other, it is seriously considering the possibility of raising the interest rate in early autumn. On February 22, investors expect the speech of the ECB President Mario Draghi.

GBP/USD

The British pound is being corrected against the US dollar after active growth at the beginning of the week. The market is still focused on the Brexit negotiations, but since the Tuesday meeting of Theresa May and Jean-Claude Juncker, there were no new drivers on the market. The US macroeconomic statistics published lately does not dive appreciable support to USD. The data released on Thursday reflected a decline in Manufacturing PMI from 54.9 to 53.7 points, while the forecast was 54.7 points. The data on the dynamics of sales in the secondary housing market was an additional disappointment. In January, the index fell by 1.2% MoM after a sharp decline by 4.0% MoM last month. Experts expected to see a positive trend of +0.8% MoM.

AUD/USD

The Australian dollar dropped significantly against the US dollar on Thursday, offsetting all growth results over the week. At the beginning of the Asian session, AUD was trading positively, receiving support from the strong report on the Australian labor market. However, the growth was short-lived, and after a few hours, investors began to fix their profits, pushing quotes down. In part, this happened due to the updated Westpac forecasts. But the main factor of the decline was the ban on imports of Australian coal for an indefinite period in the northern Chinese port of Dalian. Experts call the potential losses of the economy from the ban on imports very serious since Australia exported to China about 22% of all coal mined in 2018.

USD/JPY

The US dollar is correcting against the Japanese yen, retreating from local highs, updated in the middle of the week. The "bearish" dynamics is promoted by not so strong macroeconomic publications from the United States, as well as by the general decline in risk investors. The market still fears that the negotiations between the United States and the PRC on a trade dispute may end in failure, which will lead to new aggravations from March 1. However, yesterday it was reported that countries are preparing six memorandums on major issues affecting the topics of forced technology transfer, the cybercrime, and others.

Oil

Oil prices are again prone to decline and retreat from the local highs of the beginning of the year. At the end of the week, the reason for the appearance of the "bearish" dynamics, in addition to a number of technical factors, was published data on oil reserves from the US Department of Energy and growing concerns about the slowdown of the global economy. The report of the Ministry reflected the growth of oil reserves as of February 15 by 3.672 million barrels after an increase of 3.633 million over the previous period. Real growth turned out to be stronger than analysts' forecasts (3.080 million barrels). The position of OPEC countries, which confidently reduce production volumes, as well as US sanctions on Iranian and Venezuelan oil, are currently hindering a more confident decline. On Friday, the market is waiting for the data about the number of active platforms in the US by Baker Hughes

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

EUR shows ambiguous dynamics against the US dollar, remaining close to the local highs, updated in the middle of last week. Macroeconomic statistics from Europe, published on Friday, failed to support the euro, so investors retained their correction attitude. Investors were focused on data on consumer inflation in the Eurozone in January, as well as on statistics from Germany, which recently shows a weakening of economic growth. The Eurozone consumer price index in January fell by 1.0% MoM after zero dynamics last month. Analysts were expecting a decline of 1.1% MoM. German statistics reflected the preservation of the previous GDP growth rates in 4Q2018: by 0.0% QoQ and 0.6% YoY. Investors were disappointed by the Ifo business data. The February index of business optimism fell from 99.3 to 98.5 points, below the market expectations of 99.0 points. The index of economic expectations for the same period fell from 94.2 to 93.8 points, with a constant forecast.

GBP/USD

The pound is trading in different directions, being close to local maxima, updated on February 20. Moods in the market remain extremely changeable, as investors await the resolution of the Brexit issue. There's little more than a month until the UK should leave the EU, and there is still no noticeable progress in the negotiations between British Prime Minister Theresa May and Brussels. May’s failure to negotiate only heightens internal tensions in the Parliament, which can adversely affect later. However, May's team is still optimistic. She intends to return to Brussels again on Tuesday, which will shift the date of the next voting in the Parliament by March 12. On February 25, investors will follow the speech of the head of the Bank of England Mark Carney.

AUD/USD

During the Asian session, the Australian dollar is trading within an uptrend against the US one. The instrument is moderately supported by corrective sentiment on the US dollar since investors have no intention to open new positions before the meeting of US President Donald Trump and Chinese President Xi Jinping. Earlier, Trump has already met with the leader of the PRC and noted the productivity of the negotiations, which has improved market sentiment. Also, the market is waiting for Trump to meet with DPRK leader Kim Jong-un. The main issue of the meeting is the further denuclearization of North Korea.

USD/JPY

The US dollar continues to trade against the yen without a clear trend, playing out the contradictory news. The Japanese currency is in demand due to low investor interest in risk, while the dollar is awaiting resolution of the US-China trade dispute. Moderate support for USD is provided by the further growth of US government bonds, but the macroeconomic background remains generally ambiguous. On Monday, investors expect the publication of the Chicago Fed national activity index and Manufacturing business index from the Dallas Fed. In Japan, December statistics on leading and coincident indices will be released.

Oil

Oil prices once again demonstrate a tendency to grow, but market activity remains low. The main support factors for quotes remain hopes for a resolution of the US-China trade conflict and the continued decline in oil supplies from OPEC. On Friday, additional support for quotes was provided by Baker Hughes report on active oil platforms in the USA. For the week of January 18, the number of active oil rigs in the United States decreased from 857 to 853 units, which was the third decline in a row. Despite the reduction, the overall crude oil production in the United States continues to grow. Last week, the US Department of Energy reported an increase in production to 12 million barrels per day, which is a new recor

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

At the beginning of the week, the euro showed growth against the US dollar returning to the local maxima of February 6. The reason for the emergence of positive dynamics was the general growth of optimism in the market after US President Donald Trump announced the postponement of the introduction of new duties on Chinese goods on March 1. Trump explained his decision with notable progress in the negotiations, and also declared his readiness to meet again with PRC leader Xi Jinping. The upward trend is also supported by the expectation of a large two-day speech by Fed Chairman Jerome Powell in the US Congress with the regular semi-annual monetary policy report. Powell's speech may clarify the planned timing of reducing the balance of the Fed, as well as the resumption of the policy of gradual rate increases. On February 26, investors are also waiting for a speech of the ECB representative Yves Mersch.

GBP/USD

The British pound showed strong growth on Monday, updating local highs of February 20. Active "bullish" dynamics is also observed during the Asian session today, which brings the pound to the highest levels since January 31. The instrument was supported by Donald Trump’s intention to postpone the deadline for concluding a trade agreement with China. The market confidence in the deal has noticeably increased, so the risk appetite has also increased. In addition, investors are optimistic about the news that the European Union is considering the possibility of postponing the Brexit date for another 21 months. This will adversely affect the internal political situation in the UK and may undermine the confidence in Teresa May in Parliament, but it will help develop a more detailed plan, which ultimately will avoid the "tough" Brexit.

AUD/USD

The Australian dollar rose against the US one on Monday but returned to ambiguous dynamics during the Asian session today. Progress in the US-China trade negotiations provided some support for the instrument, but very quickly investor sentiment began to deteriorate, and they returned to profit taking. The growth of AUD was largely caused by the non-confirmation of the fact that China introduced any bans on the import of Australian coal. According to updated data, delays in the trading ports of China were caused only by legal problems after the adjustment of the legislation.

USD/JPY

The US dollar rose against the Japanese yen on Monday, updating local highs of December 27. The growth of the instrument was facilitated by a noticeable decrease in investors' interest in "safe haven" currencies after Donald Trump announced the postponement of the introduction of new import duties on Chinese goods. Additional pressure on the yen on Monday was caused by published data from Japan. Thus, the index of leading indicators in December fell from 97.9 to 97.5 points, with a constant forecast. The index of coincident indicators dropped from 102.3 to 101.8 points.

Oil

Oil prices declined significantly on February 25, responding to Donald Trump’s statements regarding OPEC. The US president noted that prices are gradually becoming "too high" and urged the cartel to "calm down". This is not the first accusation of OPEC by Trump, while the US continues to steadily increase its own production volumes, reaching new record levels. In addition to the efforts of OPEC, the US sanctions on Iran and Venezuela also contribute to higher prices. Also, according to the latest data, the largest Lybian oil field, El Sharara, is still closed due to the presence of militants.

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

Yesterday, EUR against USD rose steadily, renewing local highs since February 6. The macroeconomic background remains controversial. Investors are focused on the protracted Brexit negotiation process and fear that the UK release date will still be rescheduled. Yesterday’s speech of the ECB representative Yves Mersch also did not have a significant impact on EUR position. Mersch confirmed that the regulator, as before, intends to promote its own instant payment system TIPS, which allows Europeans and legal entities to make instant transfers regardless of the mode of operation of their local banks.

GBP/USD

GBP against USD rose significantly, renewing its record highs since September 20, 2018. Such a significant increase was due to the speech of British Prime Minister Theresa May, which gave the British parliament the right to postpone Brexit if the necessary changes to the final agreement are not made. Until March 12, which is scheduled for the next parliamentary vote, May will try to hold a series of meetings with European Commission and to achieve a solution to controversial issues on the Irish border. In case of failure, on March 13, a vote to leave the country according to a “hard” scenario will be held. If the parliamentarians will again be against it, then on March 14, there will be the third vote for the postponement of the final UK exit from the EU.

AUD/USD

Today, during the Asian session, AUD is slightly rising, trading around weekly highs with moderate support from poor US dollar positions. In addition, investors expect a positive resolution of the trade conflict between the United States and China. Meanwhile, the macroeconomic background of Australia remains ambiguous. Wednesday’s 2018 Q4 Construction Work Done release declined by 3.1% QoQ after a decline by 2.8% QoQ in the previous period. Investors were counting on a positive trend of +0.4% QoQ.

USD/JPY

Yesterday, USD fell against the JPY, departing from local highs, renewed at the beginning of the week. The emergence of negative dynamics on the dollar was due to the ambiguous macroeconomic statistics from the United States. Thus, December Housing Starts index decreased from 1.214 million to 1.078 million houses, which was significantly lower than analysts' forecasts of 1.250 million. In percentage terms, the decline was more than 11%. At the same time, the December housing price index from S&P/CaseShiller increased by 4.2% YoY, slowing down against the previous +4.6% YoY. Analysts predicted a growth rate of +4.5% YoY.

Oil

Yesterday, oil prices resumed their growth and rebounded slightly after a significant decline the day before, caused by Donald Trump's appeal to OPEC, in which he asked not to hurry with price increases. Growth was due to API the report on energy reserves, reflecting a sharp decline in stocks by 4.20 million barrels by February 22. Last time, the figure increased by 1.26 million barrels. In turn, the risks of resuming the operation of El-Sharara, the largest oil field in Libya, prevented further strengthening.

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

The euro is consolidating against the US dollar, remaining close to its local highs, updated on February 27. Yesterday, EUR showed a decline in view of the generally negative mood of investors. However, macroeconomic indicators from the Eurozone turned out to be quite good. The services sentiment index in February rose from 11.0 to 12.1 points, which turned out to be above market expectations. The business climate indicator for the same period remained at 0.69 points, against the forecasts of a decline to 0.60 points. The updated comments of the European Commission were also positive, although investors left them without proper attention. The analysis revealed that the level of employment continues to be at record levels, while unemployment rates are steadily declining. The EC called on the countries to increase investment activity and implement the necessary budgetary reforms.

GBP/USD

The British pound once again showed strong growth against the US dollar on Wednesday, updating record highs of July 9. The pound continues to be supported by improved prospects for Brexit after British Prime Minister Theresa May promised the voting on the extension of the country's withdrawal from the EU if the parliament won't approve withdrawal without a deal. However, the postponement may have a number of negative aspects related primarily to the growth of political tensions within the country. However, in the situation of the current impasse, such a scenario is perhaps more preferable. It is not excluded that, in the case of postponement, a second referendum may be held, following which the country may not leave the EU.

AUD/USD

The Australian dollar fell remarkably against the US dollar on February 27, partially offsetting the results of the moderate growth at the beginning of the week. Some pressure was exerted on the instrument by weak macroeconomic indicators from Australia. The volume of completed construction in 4Q2018 collapsed by 3.1% QoQ after declining by 2.8% QoQ in the previous period. Analysts expected positive trends of 0.4% QoQ. Today, the pair is trading again in an upward trend, ignoring weak statistics from China. Australian data, in turn, provide moderate support. The volume of private capital expenditures for 4Q2018 increased by 2.0% QoQ after zero growth last quarter. Analysts expected a growth rate of 0.5% QoQ. Private sector lending in January remained at 0.2% MoM and 4.3% YoY, which turned out to be somewhat worse than market expectations.

USD/JPY

The US dollar rose against the Japanese yen on February 27, recovering fully from a decline on Tuesday. The US currency was supported by good data from the US on the dynamics of unfinished housing sales, as well as a number of positive comments from the speech of Fed Chairman Jerome Powell in Congress. In January, the number of sales increased by 4.6% MoM after declining by 2.3% MoM in December. Investors predicted a growth of 0.4% MoM. During the Asian session today, the pair is trading in both directions. Investors are playing on ambiguous macroeconomic statistics from Japan. According to preliminary estimates, industrial production in January decreased by 3.7% MoM after declining by 0.1% MoM in December. Investors counted on -2.5% MoM. Retail sales in January showed a decline of 2.3% MoM after rising by 0.9% MoM last month. YoY, the index slowed down from 1.3% to 0.6%.

Oil

Oil prices continued to rise on Wednesday and reached the same local highs, updated at the beginning of the week. Quotes were strongly supported by the report of the US Department of Energy on the dynamics of oil reserves. According to the report, as of February 18, oil and petroleum products in US warehouses decreased by 8.647 million barrels, after rising by 3.672 million over the previous period. Analysts expected growth of 2.842 million barrels. In addition, investors were optimistic about the statements of Saudi Minister of Energy Khalid Al-Falih, who, commenting on the recent tweet of US President Donald Trump, noted that OPEC is primarily interested in the stability of the market.

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

On Thursday, the euro showed ambiguous dynamics against the US dollar. In the first half of the day, EUR was trading in an upward trend and managed to update local highs since February 5. With the opening of the European session, quotes went down actively, which was a market reaction to the publication of ambiguous macroeconomic statistics and a sharp deterioration in the prospects for resolving the US-China trade conflict. Yesterday, US Trade Representative Robert Lighthizer said that the differences are still very serious and promises and positive intentions are not enough for their resolution. It also became known that the negotiations between the United States and the DPRK also ended in vain, which only increased the overall level of uncertainty.

GBP/USD

On Thursday, the British pound showed a decline against the US dollar, departing from its local highs, updated on Wednesday. The overall decline in investor sentiment contributed to a decrease in the instrument. In particular, the market negatively met the news about the failure of the US-DPRK negotiations since, as many analysts believe, this could be an additional negative signal for the process of trade negotiations between the US and China. The pound is also pressured by ambiguous macroeconomic statistics from the UK. Published yesterday, the consumer confidence indicator showed a slight increase in February from -14 to -13 points, still reflecting the predominance of negative sentiment among British consumers. On March 1, investors will focus on the statistics on consumer lending and the Markit Manufacturing PMI in February.

AUD/USD

The Australian dollar is developing a downward trend against the US one, retreating to the last week lows. The instrument is pressured by deteriorating prospects for resolving the US-China trade dispute after the US trade representative once again highlighted the seriousness of the existing differences. Published yesterday, the statistics from the United States also contributed to the development of "bearish" dynamics in the instrument. According to preliminary estimates, the US GDP in 4Q2018 grew by 2.6% YoY after rising by 3.4% YoY in Q3. Despite a significant slowdown in economic growth, the figure was still significantly above the forecasts of 2.3% YoY.

USD/JPY

The US dollar is noticeably strengthening against the Japanese yen, updating local highs since December 20. The reason for the "bullish" dynamics is ambiguous macroeconomic statistics from Japan, as well as the continuing uncertainty of the US-China trade negotiations. Statistics released on Friday showed a rise in the consumer price index in the Tokyo region in February by 0.6% YoY, after the growth of 0.4% YoY last month. The consumer inflation excluding fresh food rose by 1.1% YoY in February, which coincided with January data. At the same time, the January unemployment rate unexpectedly strengthened from 2.4% to 2.5%. In turn, Nikkei Manufacturing PMI in February showed steady growth from 48.5 to 48.9 points, which turned out to be better than analysts' forecasts. However, the figure is still below the psychological level of 50 points.

Oil

On Thursday, oil prices consolidated after moderate growth the day before, which was triggered by a sharp decline in stocks of petroleum products in the US warehouses. The development of corrective sentiment was caused by the weak macroeconomic indicators from China, which once again reminded the market of the risks of slowing global economy. The instrument is also pressured by continued tensions between the United States and China. On March 1, investors are awaiting the publication of the Baker Hughes report on active oil platforms in the United States. The last reports have indicated a reduction in their number, which, however, does not prevent the United States from increasing production rates to record levels.

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

The European currency ended the week ambiguously, correcting from local highs of February 5, updated on Thursday. On Friday, a large amount of interesting macroeconomic statistics from Europe and the USA was published. However, most of the data turned out to be below analysts' expectations, so there were no particular records. According to preliminary estimates, the core consumer price index in the Eurozone in February slowed from 1.1% YoY to 1.0% YoY. The consumer price index for the same period expectedly to accelerated from 1.4 to 1.5% YoY, which is still significantly below the target level of the ECB. Slightly pleasing were data on unemployment, which remained unchanged at 7.8% in January, and the Manufacturing PMI, which showed a decline from 50.5 to 49.3 points (0.1 points above the market expectations). On March 4, the euro is trading in a downward direction. Investors play on Friday statistics and expect the appearance of new drivers. On Monday, the March Sentix indicator of the Eurozone investor confidence is to be released, as well as February statistics on the manufacturers' price index.

GBP/USD

The pound fell markedly against the US dollar on Friday, continuing the development of the correction impulse formed the day before. Technical factors contributed to the development of the "bearish" dynamics, while the published macroeconomic statistics from the UK turned out to be ambiguous. Investors welcomed the increase in consumer lending in January from 0.683 billion to 1.095 billion pounds, which significantly exceeded analysts' forecasts of 0.800 billion. The number of approved mortgage applications in January also increased from 64.468 to 66.766K. Analysts expected to see a decrease to 63.400K. American statistics, published on Friday, was very weak. Only data on personal income in December was positive (1.0% MoM against the previous 0.3% MoM), while the rest of the figures were significantly worse than experts' forecasts. The ISM Manufacturing index in February fell from 56.6 to 54.2 points, while the forecast was 55.5 points.

AUD/USD

The Australian dollar ended the past week with a confident decline, which led to an update of the local minima of February 12. On March 1, a downward trend was still observed, despite the publication of a large block of weak statistics from the United States. However, in the first half of the day, the Australian dollar was trading in an upward channel, helped by strong data from Australia and China. Thus, the RBA raw materials prices index in February showed a steady growth of 9.1% YoY after rising 6.5% YoY last month. Analysts were expecting the growth of 7.4% YoY. Chinese data reflected a steady growth in the Caixin Manufacturing PMI. In February, the figure rose from 48.3 to 49.9 points, while experts predicted 48.5 points. On March 4, the pair is also trading in downwards, despite the positive gap at the opening. Moderate support for the instrument is provided by published data on the dynamics of building permits. In January, the figure rose by 2.5% MoM after falling by 8.4% MoM in the previous month. In annual terms, the growth was an impressive 28.6% after a decline of 22.5% YoY last month. At the same time, traders reacted negatively to a slowdown in the growth of profits from the main activities of Australian companies. In 4Q2018, profits rose only by 0.8% QoQ after rising by 1.9% QoQ and expected dynamics of 3.0% QoQ.

USD/JPY

The US dollar rose against the Japanese yen on Friday, updating local highs of December 20. Macroeconomic statistics published on March 1 turned out to be ambiguous, however, investors trusted the dollar more, and interest in risk practically did not decline. The Japanese data indicated a moderate increase in the consumer price index in the Tokyo region, but also signaled a decrease in the consumer confidence index in February from 41.9 to 41.5 points, while the forecast was 41.6 points. The Manufacturing PMI in February rose from 48.3 to 49.9 points, which was significantly better than the forecast of 48.5 points.

Oil

Oil prices dropped markedly on March 1, retreating to local minima of February 26. The decline was due to continued growth in US production, as well as increased risks of global economic growth, which directly affects demand. OPEC’s efforts to reduce production, and new US sanctions against Venezuela, which is also a member of OPEC, are hindering a more confident decline in prices. Additional support on Friday was provided by the Baker Hughes report, which again indicated a reduction in active drilling rigs from 853 to 843 units per week.

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

On Monday, the European currency showed a significant decline against the US dollar, returning to local minima of February 19. The reason for the strengthening of the negative dynamics was the news that the US and China are close to concluding a trade agreement after China offered to remove part of its import duties. The final agreement may be signed at the end of March at a special summit. On Monday, moderately optimistic macroeconomic statistics from the Eurozone hampered a more confident decline in the euro. Sentix indicator of investor confidence in March rose from -3.7 to -2.2 points with a forecast of -3.1 points. In February, the producer price index rose by 0.4% MoM and by 3.0% YoY after falling by 0.8% MoM and rising by 3.0% YoY last month. On Tuesday, investors are focused on the statistics on business activity in Europe and the United States, January data on retail sales in the Eurozone, as well as a monthly report on the state of the US budget for January.

GBP/USD

The British pound began a new week with an active decline, continuing the development of the “bearish” impulse formed at the end of last week. The negative dynamics of the instrument was due to the strengthening of the US currency against the background of improved prospects for resolving the US-China trade conflict in late March. In turn, the pound was weakened by the macroeconomic statistics from the UK published on Monday. Construction PMI in the UK in February fell from 50.6 to 49.5 points, with a forecast of 50.3 points. The index dropped below the psychological level of 50 points for the first time since April 2018. Today, the pound is also trading in a downtrend. Investors have reacted negatively to the publication of the report on retail sales in the UK. In February, the BRC index showed a decline of 0.1% YoY after rising by 1.8% YoY last month. Analysts were expecting the growth of 0.1% YoY.

AUD/USD

The Australian dollar shows a bearish trend, trading near local minima since February 12. Despite a number of good publications from Australia, investors have little interest in buying AUD, especially in view of improved prospects for resolving the US-China trade conflict. Moderate support for the Australian currency on Tuesday is provided by data on the activity index in the service sector, which rose in February from 44.3 to 44.5 points, as well as the trade balance deficit, which fell in Q4 from 10.8 billion to 7.2 billion Australian dollars. The focus of the Asian session is the RBA interest rate decision with the publication of related comments. As expected, the regulator left the rate at 1.5%, noting that current policies continue to support the Australian economy. RBA also kept the previous forecasts. By the end of the year, the Australian economy is expected to grow by 3%. The level of consumer inflation in the current year will be slightly below the target level of 2% and will be able to overcome it only by 2020.

USD/JPY

The US dollar continues to grow moderately against the Japanese yen, trading near local highs updated on March 1. Investors are optimistic about the progress in the US-China trade negotiations and are awaiting the signing of final documents at the end of March. Against this background, there is a growing interest in risk in the market, which, of course, does not contribute to the strengthening of the Japanese currency. In turn, on Tuesday, the published Markit Services PMI supports the yen. In February, the figure rose from 51.6 to 52.3 points, which turned out to be better than analysts' forecasts of an increase to 52.1 points.

Oil

Oil prices showed moderate growth at the beginning of the week, receiving support from the continued decline in production from OPEC, as well as positive comments on the US-China trade negotiations. It became known that China is ready to start a number of structural economic reforms, as well as to cancel the response import tariffs for a number of American goods. The data on the dynamics of active drilling rigs in the USA last week, which fell to the lowest level in the last 9 months, provide moderate support to oil. On Tuesday, investors will focus on the report of the American Petroleum Institute (API) on oil reserves for the week of February 25.

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

The European currency continues to develop a downtrend against the US dollar, having updated local minima of February 19. Analysts still note a decline in demand for risk amid concerns about global economic growth. Yesterday, the Chinese Prime Minister Li Keqiang, speaking at the annual parliamentary meeting, noted that for the country's economy there are serious risks. The GDP forecast for 2019 was reduced from the previous 6.6% to 6-6.5%. At the same time, the government announced a tax cut, as well as an increase in investment in infrastructure. In turn, support for the euro on Tuesday was provided by strong macroeconomic statistics from the Eurozone. Markit Services PMI in February increased from 51.2 to 52.8 points with a forecast of growth to only 52.3 points. The similar indicator for the manufacturing sector rose from 51.0 to 51.9 points, which also turned out to be better than the forecast of 51.4 points. Retail sales in January increased by 1.3% MoM and by 2.2% YoY, with analysts' forecasts of 1.2% MoM and 1.9% YoY.

GBP/USD

The British pound showed ambiguous dynamics on Tuesday, ending the day with almost zero results but updating the local minima of February 26. Moderate support for the pound was provided by good macroeconomic statistics from the UK. In particular, the Markit Services PMI in February rose from 50.1 to 51.3 points, while the forecast was for a decline to 49.9 points. At the same time, investors were cautious about the publication of the report of the Committee on Financial Policy, which reflected the increased risks for the British economy. The report also noted that the country's financial institutions are preparing for the toughest scenario of Brexit. During the Asian session on March 6, the pound again shows a negative trend. On Wednesday, investors will be focused on presentations by representatives of the Bank of England, Jon Cunliffe and Michael Saunders.

AUD/USD

The Australian dollar is showing a steady downward trend during the Asian session on March 6, updating local lows of January 4. The reason for the emergence of "bearish" dynamics was the publication of disappointing macroeconomic statistics from Australia. In 4Q2018, GDP grew by 0.2% QoQ and 2.3% YoY, which was worse than analysts' expectations of 0.3% QoQ and 2.5% YoY. In Q3, the Australian economy grew by 0.3% QoQ and 2.8% YoY. The speech of the RBA head Philip Lowe, which took place a little earlier than the publication on GDP, did not have a significant impact on the Australian currency since it was mostly devoted to the situation in the housing and construction markets. On Thursday, investors are awaiting the publication of Australian statistics on retail sales, as well as on the dynamics of imports and exports in January.

USD/JPY

The US dollar showed a slight increase against the Japanese yen on Tuesday, updating local highs of December 20. The dollar was supported by good macroeconomic statistics. ISM services PMI in February rose from 56.7 to 59.7 points, while the growth forecast was only 57.3 points. The similar indicator from Markit in February rose from 54.2 to 56.0 points, slightly worse than the forecast of 56.2 points. The IBD/TIPP index of economic optimism in March rose from 50.3 to 55.7 points, against the expectations of growth to 51.2 points. Sales of new houses in the USA in December increased by 3.7% MoM after rising by 9.1% MoM last month. Experts expected to see a negative trend of -8.7% MoM.

Oil

Oil prices have changed little on March 5, as market sentiment temporarily ended up in equilibrium. Quotes are supported by OPEC efforts to limit the supply. Earlier, it became known that Russia will try to accelerate the reduction of oil production in March, as reported by Energy Minister Alexander Novak. In turn, pressure factors are growing US output and fears of a slowdown in the global economy. Published yesterday, the report of the American Petroleum Institute (API) on oil reserves also contributed to the development of negative dynamics. As of February 25, oil reserves rose by 7.29 million barrels, after a decrease of 4.20 million barrels in the previous period.

 

[MikhailLF]

LiteForex analitics. Morning Market Review

EUR/USD

The European currency is consolidating against the US dollar after a steady decline at the beginning of the week, which led to the renewal of local lows of February 19. On Wednesday, the euro was supported by technical correction factors, as well as by weak macroeconomic statistics from the United States. The ADP Employment Change showed growth by 183K in February after rising by 300K in January (however, the forecast was 189K). The US trade balance deficit increased in December and reached USD -59.8 billion, while analysts counted on USD -57.9 billion. Last month, the deficit was just over USD -50 billion. During the Asian session today, the instrument is trading in both directions, and investors are waiting for new drivers to appear on the market. The focus is on statistics for the Eurozone's GDP for 4Q2018, as well as the ECB decision on the interest rate with the accompanying press conference.

GBP/USD

The British pound shows an ambiguous trend against the US dollar, trying to reverse up after a steady decline, dropping the instrument to its lows of February 26. Uncertain prospects around Brexit continue to pressure the pound, while corrective moods are largely related to the technical factors. Also, investors reacted negatively to the publication of a weak ADP report on employment in the US, suggesting that Friday statistics on the US labor market may be worse than expected. There's no progress on Brexit negotiations. EU negotiator Michel Barnier reported yesterday the "constructive atmosphere", but it does not lead to any decisions.

AUD/USD

The Australian dollar develops a slight increase during the Asian session, correcting after a significant decline yesterday. On Wednesday, the Australian currency was pressured by disappointing data on Australian GDP. The growth of the Australian economy slowed from the previous 2.8% YoY to 2.3% YoY, which turned out to be worse than analysts' expectations of 2.5% YoY. Today, the "Australian" is supported by new statistics, in addition to technical factors. The AiG Construction PMI in February rose from 43.1 to 43.8 points. Retail sales rose 0.1% MoM in January, after declining by 0.4% MoM last month. The trade surplus in January rose sharply from 3.7 billion to 4.5 billion Australian dollars, while analysts expected it to decline to 3 billion. The reason for such rapid growth was the steady increase in exports in January by 5.0% after a decline of 1.2% in December.

USD/JPY

The US dollar is correcting against the Japanese currency, retreating from the updated local maximums of December 20. The development of the “bearish” dynamics of the instrument is largely supported by the corrective sentiment on the dollar amid the publication of not very impressive statistics. In addition, the market expects progress in the US-China trade negotiations, which are close to concluding a final deal. On Wednesday, a certain pressure on the yen was made by the representative of the Bank of Japan, Yutaka Harada, who complained about the growing external risks and urged the regulator to additional policy easing if inflation does not reach the target level of 2%. Investors are preparing for Friday when there will be a large amount of interesting macroeconomic releases. In particular, Japan will publish annual GDP data for 4Q2018, the changes in wages, and household spending in January.

Oil

Oil prices continue to show ambiguous dynamics, remaining close to the highs of the beginning of the year. Yesterday, the instrument was pressured by published forecasts from major producers in the United States, reflecting the increase in the dynamics of shale oil. In addition, investors reacted negatively to the report of the US Department of Energy, which confirmed the dynamics of the previously published ADP report, and reflected a sharp increase in oil reserves on February 25 at 7.069 million barrels after declining by 8.647 million barrels over the past reporting week. The overall rate of oil production in the United States remained unchanged at 12.100 million barrels per day.