LiteForex Analytics

[MikhailLF]

Morning Market Review
2019-06-25 08:35 (GMT+2)
EUR/USD

The euro showed moderate growth against the US dollar on Monday, updating local highs of March 21. The strengthening the single currency is caused by the weakness of the dollar, which reacts negatively to the prospects for reducing the interest rate by the Fed. However, the threat of easing monetary policy exists in Europe, too. Some analysts believe that before leaving, the head of the ECB, Mario Draghi, will try to convince the board members of the need for new incentives amid low inflation expectations. The macroeconomic statistics published on Monday showed no significant support for the euro. The German Ifo index of economic expectations in June showed a decline from 95.3 to 94.2 points, with a forecast of a decline to 94.5 points. The business optimism index for the same period decreased from 97.9 to 97.4 points (better than analysts' forecasts of 97.3 points).

GBP/USD

The British pound showed ambiguous dynamics against the US currency on Monday, updating local highs of 21 May. The news background of the beginning of the week remained fairly calm, so investors were focused on the former drivers. The dollar is still pressured by the greatly increased tensions between the US and Iran, as well as the uncertainty in trade relations with China in anticipation of the G20 summit, at which Donald Trump and Xi Jinping can meet. The pound is pressured by uncertainty with Brexit. Investors fear that changing the prime minister will not help the approval process of the current agreement, and the country will be forced to leave the EU without an agreement at all, which threatens another slowdown in the global economy.

AUD/USD

The Australian dollar strengthened against the US one on Monday, rising to new local highs of 10 June. Amid the lack of new drivers in the market, USD is noticeably losing to AUD due to increased tensions. This is due to several factors, including the escalation of the conflict between the United States and Iran, as well as the upcoming meeting of the heads of the United States and China. Despite the optimistic mood of the market, analysts fear that, if the June negotiations of Donald Trump and Xi Jinping come to a standstill, the next chance to normalize trade relations between the countries will not appear soon. Published on Monday, macroeconomic statistics from the United States was ambiguous. The Chicago Fed National Activity Index in May rose from -0.48 to -0.05 points, which turned out to be significantly better than forecasts (-0.37 points). The Dallas Fed Manufacturing Index in June fell from -5.3 to -12.1 points, against the forecasts of growth to 4.8 points.

USD/JPY

At the beginning of the week, the US dollar showed ambiguous and inactive trading dynamic against the Japanese yen. In the absence of significant news factors, investors continued to play on existing drivers. The yen was moderately supported by indices from Japan. The index of leading indicators in April rose from 95.7 to 95.9 points, with a forecast of 95.5 points. The index of coincident indicators for the same period strengthened from 101.1 to 102.1 points, which turned out to be better than market expectations of 101.9 points. Today, the yen is showing aggressive growth, despite the publication of ambiguous statistics from Japan. Prices for corporate services in March showed an increase of 0.8% YoY, slowing down from the previous value of 1.0% YoY. Investors are also focused on the publication of the minutes of the meeting of the Bank of Japan on monetary policy from April 24-25. However, the document did not reflect anything new and reaffirmed the commitment of the regulator to the soft policy. Probably, the rates will remain unchanged at least until the spring of 2020.

Oil

Oil prices returned to decline at the beginning of the week, departing from local highs, updated on Friday. The reason for the decline in quotes was the existing factors of low demand for petroleum products against the background of a slowdown in the global economy and an increase in tensions in certain regions. In particular, the attention is focused on the conflict between the USA and Iran, aggravated after the US drone was shot down in the Persian Gulf. The conflict between the USA and China remains unresolved. However, investors have high hopes for meeting Donald Trump and Xi Jinping meeting at the G20 summit, which will be held at the end of the week in Japan. On Tuesday, investors are focused on the speech of Fed Chairman Jerome Powell and on the publication of the API report on oil reserves for the week of June 21.

 

[MikhailLF]

Morning Market Review
2019-06-26 08:30 (GMT+2)
EUR/USD

The euro showed a decline against the US dollar on Tuesday, departing from the updated local highs of March 21. The decline in the European currency was largely technical in nature since the macroeconomic background from the USA remained ambiguous and there was little interesting data from Europe. Sales of new houses in the United States in May decreased significantly (by 7.8% MoM after falling by 3.7% MoM last month). Analysts had expected growth by 1.9% MoM. At the same time, the housing price index in April rose from 0.1% MoM to 0.4% MoM, which turned out to be better than the forecast of 0.2% MoM. Today, the instrument continues to trade within a downtrend. On Wednesday, investors are focused on the presentation of the ECB representative Yves Mersch, as well as statistics on consumer confidence in Germany. The United States will publish the dynamics of orders for durable goods.

GBP/USD

The pound fell markedly against the US dollar on Tuesday, stopping the uptrend which developed since June 18. Uncertainty around Brexit continues to exert pressure on the British currency. In the light of the forthcoming elections of the Prime Minister, the issue of leaving the UK from the EU without an agreement is being discussed more and more and scares investors with additional risks for the British and world economy. Additional pressure on the pound on Tuesday was put by the published CBI report on retail. In June, sales fell sharply by 42% MoM after falling by 27% MoM last month. Analysts had expected an improvement in the dynamics and a decline in the indicator only by 10% MoM. Today, the pair is trading in both directions, and investors expect new drivers to appear on the market. The focus of attention on Wednesday is the speech of the head of the Bank of England Mark Carney at the hearing of the report on inflation in Parliament.

AUD/USD

The Australian dollar maintains a fairly confident upward trend against the US one in the short term. The demand for safe assets in the market is still increasing, as the factors of growing concern remain in place. Investors are frightened by the aggravation of the geopolitical situation in the Middle East and assess the chances of an armed clash between the United States and Iran. Also, traders are waiting for the start of the G20 summit in Japan, within which US President Donald Trump should hold a meeting with PRC President Xi Jinping. Disruption of the negotiations will put additional pressure on USD.

USD/JPY

The US dollar showed ambiguous dynamics against the Japanese yen on June 25, having managed to update the local minima of the beginning of the year. The reason for the emergence of such dynamics were the publication of the minutes of the BoJ meeting and uncertain statistics on the construction market in the United States. Regulator's protocols have once again confirmed the course for a soft monetary policy, which can remain unchanged at least until spring 2020. Today, the dollar is trading within an uptrend, which is due to investors fixing a short profit in the Japanese currency. On Wednesday, there would be no interesting statistics from Japan, so the US data will be in the spotlight.

Oil

Oil prices showed a moderate increase on June 25, which was caused by a weaker dollar and a published API report on oil reserves. According to the report, over the week of June 21, the volume of oil reserves in US warehouses decreased by a confident 7.550 million barrels, which is significantly stronger than the decline of 0.812 million over the previous period. Quotes are also supported by growing tensions between the USA and Iran after Donald Trump's administration introduced new sanctions against the leadership of Tehran on Monday. On Wednesday, investors are focused on the publication of a report on oil reserves from the US Department of Energy.

 

[MikhailLF]

Morning Market Review
2019-06-27 08:38 (GMT+2)
EUR/USD

The European currency did not change much against the US dollar on June 26 but managed to keep a generally "bearish" mood. Today, the instrument is gradually returning to sales, but market activity remains moderate, and investors expect new drivers to appear. The focus is on a large block of statistics from Europe. Investors, in particular, will be interested in data on consumer inflation in Germany for June. According to preliminary forecasts, the consumer price index may slow down in June from 0.2% MoM to 0.1% MoM and maintain annual growth rates at the previous values of 1.4% YoY. In addition to statistics on inflation, the Eurozone will publish a block of indices on business sentiment for June. With the opening of the American session, attention will be switched to the publication of updated annual data on US GDP for Q1.

GBP/USD

The British currency showed a slight increase against the US dollar on June 26, partially compensating a steady decline the previous day. There were no noticeable reasons for the pound strengthening, so the growth was largely technical. Investors were focused on the speech of the head of the Bank of England, Mark Carney. He noted that recently the risks associated with the "tough" Brexit scenario have increased significantly. At the moment, the regulator's forecasts do not take this scenario into account, so they can be revised as the next Brexit deadline approaches. Published macroeconomic statistics from the UK had no significant support for the pound. The number of approved mortgage loans from BBA in June decreased from 42.898K to 42.384K, which was worse than the average market expectations.

AUD/USD

The Australian dollar showed quite active growth against the US one on Wednesday, updating local highs of June 10. The further development of the upward dynamics is due to the weak positions of USD, as well as some investor enthusiasm regarding the upcoming meeting of Donald Trump and Xi Jinping. Yesterday, the US Treasury Secretary Steven Mnuchin said that the delegations of two countries managed to achieve significant progress on controversial trade issues, therefore, with high probability, the parties will be able to come to some mutually beneficial compromise. Recall that China remains one of the main trading partners for Australia with its export-oriented economy. The Australian economy reacts negatively to the slowdown in China's industrial activity. Analysts also fear new US import duties and trade barriers.

USD/JPY

The US dollar rose strongly against the yen on June 26, departing from local minima updated the day before. The American currency was supported by increased expectations of a favorable outcome of the planned meeting of Donald Trump and Xi Jinping during the G20 summit, which will be held at the end of the week. Minor support for the dollar is also provided by the speech of the Fed Chairman Jerome Powell, who did not focus on the prospects for lowering the interest rate during the July meeting, but noted that the regulator will not react to any political pressure. Today, the instrument continues to develop upward dynamics, despite the publication of optimistic macroeconomic statistics from Japan. Retail sales in May increased by 0.3% MoM and 1.2% YoY after a decline of 0.1% MoM and growth by 0.4% YoY last month. Analysts had expected the negative dynamics to worsen to -0.6% MoM. The indicator of retail sales in large stores in May decreased by 0.5% MoM, having improved from the previous value of -1.8% MoM with a forecast of -1.2% MoM.

Oil

Oil prices rose slightly on Wednesday, marking new local highs since May 30. Quotes were supported by the API report, which reflected a sharp decline in US oil reserves amid an accident at a major refinery. The published data on oil reserves from the US Department of Energy differed noticeably from the API data and reflected a decline in reserves for the week of June 21 by 12.788 million barrels, with a forecast of a decline of only 2.540 million. The report also reflected the growth of oil production in the USA from 12.200 million to 12.100 million barrels per day.

 

[MikhailLF]

Morning Market Review
2019-07-01 08:25 (GMT+2)
EUR/USD

The euro showed ambiguous dynamics against the US dollar on June 28. Investors didn't want to open new positions at the end of the week amid the passing G20 summit, at which, in particular, a meeting between US President Donald Trump and Chinese President Xi Jinping was awaited. The negotiations ended quite positively. Trump noted that they were "better than expected" and encouraged the markets with optimistic forecasts for the final deal between the countries. In the meantime, the United States decided not to introduce new import duties and allowed American companies to deal with Huawei if this does not pose a threat to the security of the USA. Moderate support for the euro on Friday was provided by preliminary data on consumer inflation. In June, the core consumer price index accelerated from 0.8% to 1.1% YoY, with a forecast of growth to 1.0% YoY. At the start of the week, European statistics on consumer lending and unemployment for May is expected.

GBP/USD

The British pound rose significantly against the US dollar on Friday, offsetting a moderate decline in the instrument the day before. Investors were focused on statistics on the dynamics of the UK GDP for Q1. As expected, the indicator showed an increase of 0.5% QoQ and 1.8% YoY. At the same time, the volume of commercial investments in the economy continued to decline. QoQ, the indicator rose by 0.4% after rising by 0.5%. YoY, it decreased by 1.5% after a drop of 1.4% earlier. The UK current account deficit in Q1 reached 30.045 billion pounds, which, however, was better than the forecast of 32.00 billion pounds. Investors today are focused on a block of statistics from the UK on business activity in the manufacturing sector and the dynamics of consumer lending in May.

AUD/USD

The Australian dollar ended the week with steady growth against the US currency, noting new local highs since May 8. The reason for the growth of the instrument on Friday was the positive expectations of a successful outcome of the US-China negotiations at the G20 summit sites, which were partially justified. The parties agreed to continue trade negotiations, but for now, the USA decided not to introduce new import duties and lifted some restrictions for cooperation with the Chinese company Huawei. Published Chinese statistics once again reminded investors of the existing problems. The NBS data on the manufacturing sector in June did not show the expected growth from the level of 49.4 points. In the service sector, the indicator dropped from 54.3 to 54.2 points, while the forecast was 54.5 points. The Caixin Manufacturing PMI declined from 50.2 to 49.4 points, breaking down the level separating growth from stagnation.

USD/JPY

On July 1, the US dollar opened with a positive gap against the Japanese yen. The US currency is supported by the results of the negotiations between Donald Trump and Xi Jinping, who managed to prevent a further escalation of the trade conflict. However, analysts believe that the growth of the US currency will be only short-lived since the final agreement is still far enough from signing. In addition, now the attention of investors will switch to a possible reduction in the interest rate by the Fed during the July meeting. Statistics from Japan released today was ambiguous. The Tankan Services index for Q2 showed a moderate increase from 21 to 23 points with a forecast of a decline to 20 points. At the same time, the Nikkei Manufacturing PMI dropped from 49.5 to 49.3 points.

Oil

Oil prices are rising moderately today, recovering from a noticeable correction at the end of last week. Quotes are supported by the OPEC+ meeting, which will start on Monday. Following the meeting, the cartel is expected to decide to extend the existing agreement on the limitation of supplies. Moreover, the agreement can be expanded and supplemented with new mechanisms for regulating supply on the market. At the G20 summit, which took place last weekend in Osaka, Russia managed to negotiate with Saudi Arabia to extend the deal for 6-9 months. The Russian Minister of Energy, Alexander Novak, commenting on this decision, also noted that Russia in June reduced oil production slightly more than it was required by the OPEC+ deal.

 

[MikhailLF]

Morning Market Review
2019-07-02 08:37 (GMT+2)
EUR/USD

The euro showed a steady decline against the US dollar on Monday, retreating to June 20 levels. EUR was pressured by ambiguous macroeconomic statistics from Europe and China, as well as the general correctional sentiment in favor of the dollar, which remained pressured all last week in view of the start of the G20 summit. The summit ended optimistically. Investors enthusiastically greeted the results of the meeting of Donald Trump and Xi Jinping, who managed to prevent another increase in import duties. In addition, the parties agreed to continue full-format trade negotiations, therefore, there's still a possibility of a final trade deal. Today, the pair is trading in a flat. Investors are focused on the statistics on retail sales in Germany in May and the European producer price indices.

GBP/USD

At the beginning of the week, the British pound fell against the US dollar updating local lows of June 20. Traders returned to active sales of the pound amid the publication of weak macroeconomic statistics from the UK. In addition, as the trade conflict between the USA and China gradually fades, more and more investors are following the uncertain prospects for Brexit. The Markit Manufacturing PMI in June fell from 49.4 to 48.0 points, with a forecast of a decline to 49.2 points. Consumer lending in May slowed from 0.968 billion to 0.822 billion pounds, which turned out to be worse than market expectations of 0.967 billion. The number of approved mortgage applications in May also showed a decline from 66.045 to 65.409 thousand (forecast 65.600K). On Tuesday, investors expect the publication of the Construction PMI, as well as speech by the Bank of England head Mark Carney.

AUD/USD

The Australian dollar fell significantly against the US one on Monday, departing from local highs of May 7. The decline in the instrument was largely technical in nature since it was preceded by a 9-day "bullish" rally of AUD. The instrument was additionally pressured by published macroeconomic statistics from Australia and China. The Australian AiG Manufacturing PMI in June fell from 52.7 to 49.4 points. The Chinese Caixin Manufacturing PMI in June fell from 50.2 to 49.4 points, with a forecast of 50.0 points. Today, the pair is trading in both directions. Investors are focused on the RBA interest rate decision. As expected, the regulator reduced the rate from 1.25% to 1.00%, explaining that by the need to support inflation and the level of employment.

USD/JPY

The US dollar rose against the Japanese yen on Monday, updating local highs of June 19. The instrument was supported by positive results of the meeting between Donald Trump and Xi Jinping, who managed to achieve a temporary truce in a trade conflict. The yen was pressured by published macroeconomic statistics from Japan. Nikkei Manufacturing PMI in June fell from 49.8 to 49.3 points, which turned out to be worse than the expectations of 49.5 points. The consumer confidence index for the same period fell from 39.4 to 38.7 points, against the forecast of growth to 40.4 points.

Oil

Oil prices showed a decline on July 1, although multidirectional dynamics was observed during the day. The quotes are strongly supported by the OPEC decision to extend the existing agreement on limiting oil supplies until March 2020. Thus, Saudi Arabia to some extent ignored the demands of Donald Trump to increase the volume of supplies in order to further reduce prices. On July 2, OPEC will hold talks with non-members that have previously joined the agreement. For example, Russia is also expected to support the cartel, which will provide additional support to quotes. Oon Tuesday, investors are also focused on the publication of the API report on oil reserves. Last week, the report showed a sharp decline in stocks of 7.55 million barrels.

 

[MikhailLF]

Morning Market Review
2019-07-03 08:32 (GMT+2)
EUR/USD

On July 2, the euro traded in both directions, ending the day session with almost zero results. The reason for the emergence of uncertain dynamics was ambiguous macroeconomic data from Germany and the Eurozone, as well as the aggravation in US-European trade relations. Additional pressure on the euro is exerted by the "dovish" rhetoric of the ECB, which is considering the possibility of further reducing negative interest rates and expanding the quantitative easing program. However, the latter factor is balanced by the likelihood of a reduction in the Fed interest rate at the July meeting. Statistics from Germany released on Tuesday showed a decline in retail sales in May by 0.6% MoM after a decrease by 2.0% MoM last month. Analysts expected positive dynamics of 0.5% MoM. The Eurozone data indicated a stronger slowdown in industrial inflation. In May, the producer price index slowed from 2.6% YoY to 1.6% YoY, with a forecast of 1.7% YoY.

GBP/USD

On Tuesday, the British pound showed a steady decline against the US dollar updating local lows of June 19. Negative macroeconomic statistics from the UK contributed to the development of the negative dynamics of the instrument, which continues to strengthen the negative outlook for the economy against the background of the upcoming Brexit. The house prices index from Nationwide in June showed an increase of 0.1% MoM after a decline of 0.2% MoM in May. Analysts were expecting more significant growth of 0.2% MoM. At the same time, the Construction PMI in June fell from 48.6 to 43.1 points, contrary to forecasts of growth to 49.3 points. The negative was added by the speech of the head of the Bank of England Mark Carney, who spoke at the annual local government conference in Bournemouth. The speech was almost entirely devoted to the economic risks of trade wars and the threat of a Brexit without a deal.

AUD/USD

The Australian dollar rose against the US one on July 2, having won back part of the losses suffered at the beginning of the week. It is curious that the growth of the instrument proceeded amid the expected decision of the RBA to reduce the interest rate from 1.25% to 1.00%. Moreover, at the accompanying press conference, the head of the regulator Philip Lowe noted that the Bank may take additional measures of stimulation if the economic situation continues to deteriorate. Today, the pair is trading in both directions. The focus is on a large block of statistics from Australia. The AiG Services PMI in June fell from 52.5 to 52.2 points. The number of issued construction permits in May grew by 0.7% MoM after a decrease of 3.4% MoM last month. Analysts were expecting zero dynamics. Exports in May rose sharply by 4.0% MoM, accelerating from 1.6% MoM in April. In contrast, imports slowed down from 2.3% MoM to 2.0% MoM, which led to a stronger increase in the trade surplus from 4.820 million to 5.745 million AUD.

USD/JPY

The US dollar resumed a steady decline against the yen amid the next increase in demand for safe assets. After reaching some truce in the US-China trade dispute, investor attention shifted to the aggravation of trade relations between the United States and Europe. Yesterday, the administration of Donald Trump has published an updated list of European goods, which may be imposed higher import duties. However, the market is not yet prone to negativity, since no ultimatums have been put forward. Statistics from Japan released today provided moderate support to the yen. In June, the Markit Services PMI rose from 51.7 to 51.9 points, which did not reach the forecast of 52.0 points.

Oil

Oil prices showed a steady decline on Tuesday, responding to the rising risks of a further slowdown in the global economy. In turn, moderate support for the quotes was provided by the outcome of the OPEC+ meeting, following which the cartel was able to agree to extend the current agreement on supplies restriction for another 9 months. The published API report on oil reserves has also contributed to price increases. For the week of June 28, oil reserves in the USA decreased by 5.00 million barrels after a decrease of 7.55 million over the previous period. On July 3, investors are awaiting the publication of a report on oil reserves from the US Department of Energy.

 

[MikhailLF]

Morning Market Review
2019-07-04 08:17 (GMT+2)
EUR/USD

The euro showed ambiguous dynamics against the US dollar on Wednesday, updating local highs of June 20. The support came from good macroeconomic statistics. The Markit Services PMI in June rose from 52.9 to 53.6 points, while the forecast was for growth to 53.4 points. The Composite Manufacturing PMI for the same period strengthened from 51.8 to 52.2 points, which also turned out to be better than forecast (52.1 points). Another factor supporting the euro remains the likelihood of lowering interest rates by the Fed as early as the July meeting. In addition, US President Donald Trump continues to exert strong pressure on the regulator, openly calling for the devaluation of the dollar. Today, EUR is correcting. Investors are focused on a block of European statistics on retail sales for May, as well as a speech by ECB representative Philip Lane and ECB Vice President Luis de Guindos.

GBP/USD

The pound finished Wednesday with a moderate decline against the US dollar, continuing the development of the "bearish" impulse formed at the beginning of the week. The British currency continued to be pressured by weak macroeconomic statistics from the UK. In May, the BRC retail price index showed a decline of 0.1% YoY after rising by 0.8% YoY last month. The Markit Services PMI in June fell from 51.0 to 50.2 points, while investors did not expect any changes. Today, the attention of the market has shifted to data from the USA, which turned out to be ambiguous. Among the negative aspects, one can note the decline in production orders in May by 0.7% MoM after a decrease by 1.2% MoM and a slowdown in the ISM Services PMI in June from 56.9 to 55.1 points with a forecast of 55.9 points.

AUD/USD

The Australian dollar strengthened against the US one since July 2, updating local highs of May 7. The instrument is growing against the background of the publication of a rather uncertain macroeconomic statistics from the USA. Also, it is supported by the prospect of a Fed rate cut in July and the overall pressure that Donald Trump puts on the regulator. The improvement in the US-China trade relations also helps AUD, which counts on the growth of Chinese production. Today, the pair is trading in an uptrend. The published statistics on retail sales from Australia in May provides little support. The indicator rose by 0.1% MoM after falling by 0.1% MoM last month but did not reach the forecast (0.2%). US markets are closed on Thursday to celebrate Independence Day.

USD/JPY

The US dollar remains pressured against the Japanese yen, trading mostly in a downtrend after the update of local maxima at the beginning of the week. The ADP Employment Report published yesterday had a moderate pressure on the dollar. In June, the report reflected the growth of new jobs in the private sector by 102K versus 41K last month. The analysts suggested an increase in employment of 140K. Initial jobless claims for the week of June 28 decreased from 229K to 221K, with a forecast of 223K. Continuous jobless claims also fell, from 1.694 to 1.686 million (forecast 1.675 million). Today, the instrument is traded in both directions. Low investor activity is caused by closed US markets on the occasion of Independence Day. Moderate support for the yen is provided by investment performance. The volume of foreign investment rose by 58.5 billion Japanese yen after a decrease of 313.3 billion over the past period. Investments in foreign bonds rose by 514.3 billion yen after rising by 497.8 billion.

Oil

Oil prices rose moderately on July 3, partially recovering from a sharp decline on Tuesday. Quotes continued to be supported by the positive results of the OPEC+ meeting, at which it was decided to extend the existing agreement to restrict supplies for another 9 months. The growth was also supported by the API report on oil reserves, published on Tuesday, which indicated a reduction by 5 million barrels. On Wednesday, the US Department of Energy published a report, which failed to meet expectations. For the week of June 28, according to EIA, oil reserves fell by only 1.085 million barrels after a decline of a record 12.788 million for the last period. The report also reflected growth in US oil production from 12,100 to 12,200 million barrels per day.

 

[MikhailLF]

Morning Market Review
2019-07-05 08:48 (GMT+2)
EUR/USD

The euro showed a slight increase against the US dollar on July 4, offsetting a decrease in the instrument the day before. The market activity on Thursday remained reduced, as the US exchanges were closed due to the celebration of Independence Day. Investors were focused on retail sales in the Eurozone. In May, sales fell again by 0.3% MoM after falling by 0.1% MoM last month. Analysts had expected growth of 0.3% MoM. YoY, sales slowed from 1.8% to 1.3%, while the forecast was 1.6%. Today, the pair is trading in both directions, and investors expect new drivers to appear on the market. Investors are focused on the June report on the US labor market. The number of new non-farm jobs is expected to increase from 75K to 160K, which should provide substantial support for the dollar.

GBP/USD

The pound slightly strengthened against the US dollar on Thursday, interrupting the development of the "bearish" trend since July 1. The growth of the British currency was facilitated by the closed US markets on the occasion of the national holiday, while the macroeconomic background remained ambiguous. In addition, investors are increasingly worried about the exacerbation of the situation around Brexit. Yesterday, Prime Minister Theresa May said that the current stalemate is a serious problem for the whole kingdom. The solution of the border issue with Northern Ireland was never found, and now, after May’s resignation, her successor will have to deal with its decision. There's little hope that this can be done within the allotted timeframe, therefore, markets are more often discussing the prospects of a "tough" Brexit.

AUD/USD

The Australian dollar showed ambiguous dynamics against the US dollar on July 4. Traders adjusted their positions on the instrument in anticipation of the publication of the US labor market report. In particular, if the report turns out to be weak, this could serve as another powerful signal for the Fed to lower the interest rate at the July meeting. Otherwise, there may be some relaxation from the regulator. Today, the Australian dollar is moderately supported by the published Construction PMI In June, the indicator rose from 40.4 to 43.0 points, which turned out to be better than the average forecast.

USD/JPY

The US dollar shows a flat trend against the Japanese yen, slightly correcting after a noticeable decline on July 2-3. Today, the dollar is trading in an uptrend, awaiting the publication of an important report on the labor market for June. More confident growth is hampered by good macroeconomic statistics from Japan. Household spending increased by 4.0% YoY in May, after rising by 1.3% YoY in April. Investors expected a slightly more modest acceleration of positive dynamics, up to 1.6% YoY. The index of coincident indicators, according to preliminary estimates for May, showed an increase from 102.1 to 103.2 points with a forecast of 95.5 points. However, the leading indicators index was worse than expected. In May, it dropped from 95.9 to 95.2 points, while investors expected a decline only to 95.7 points.

Oil

Oil prices showed a moderate decline on July 4, returning to the negative trend after growth on Wednesday. The "bearish" dynamics was supported by previously published data from the US Department of Energy, which did not meet market expectations about reducing the volume of stocks of petroleum products. In addition, the report reflected a moderate increase in production volumes. Today, in addition to the June report on the US labor market, investors are also awaiting the publication of the Baker Hughes report on active oil platforms.

 

[MikhailLF]

Morning Market Review
2019-07-08 08:24 (GMT+2)
EUR/USD

On Friday, the euro fell significantly against the US dollar updating local lows of June 19. The reason for the emergence of a confident downward dynamics were strong data on the US labor market. The number of nonfarm payrolls in June increased by a record 224K after growth by 72K last month. Analysts had expected an acceleration of positive dynamics only by 160K, which seemed to be a very optimistic estimate. The unemployment rate in June rose from 3.6% to 3.7%, while the average hourly wage did not change from the previous 3.1% YoY. The euro was pressured by German data. The production orders in May decreased by 2.2% MoM and 8.6% YoY, which was significantly worse than the expected values of –0.1% MoM and −5.7% YoY. Today, investors are focused on a block of macroeconomic statistics from Germany on the industrial output and the trade balance for May.

GBP/USD

The British pound closed last week with a confident decline against the US dollar. The growth of "bearish" activity was connected to unexpectedly strong employment data in the June report on the US labor market. Instead of the planned 160K, the US economy added 224K of nonfarm payrolls, which heightened hopes of abandoning the interest rate cut during the July meeting of the Fed. However, in the monetary policy report, the regulator will point out a slowdown in GDP growth, despite rising consumption and some positive trends in the labor market. The wording remains the same and the Fed promises to act "according to the situation". Published on Friday, macroeconomic statistics from the United Kingdom was ambiguous. The Halifax home price index in June fell by 0.3% MoM after growth of 0.4% MoM in May. Analysts were expecting a decline of −0.2% MoM.

AUD/USD

The Australian dollar dropped significantly against the US one at the end of last week, interrupting another growth attempt and returning to the levels of the beginning of the month. This market reaction was caused by the publication of strong data on employment in the US, which strengthened the arguments in favor of maintaining the Fed's current monetary policy. The Australian dollar remains pressured amid the lack of progress in the US-China trade negotiations, but the macroeconomic statistics from Australia provides moderate support to the instrument. On Friday, investors were optimistic about the data on the AiG Construction PMI. In June, the index rose from 40.4 to 43.0 points, above market expectations. Today, the instrument is supported by data on the number of vacancies. In June, the ANZ index showed a steady growth of 4.6% MoM after a decrease of 8.2% MoM last month.

USD/JPY

The US dollar rose against the Japanese yen on Friday, updating local highs of June 18. At the end of the week, confident support for the US currency was provided by data on the US labor market for June, which reflected a sharp increase in nonfarm payrolls by 224K (with a forecast of 160K). At the same time, the report indicated an increase in unemployment and a slowdown in the average hourly wage MoM in June. Published on Friday, macroeconomic statistics from Japan was ambiguous. The index of coincident indicators in May rose from 102.1 to 103.2 points, while the index of leading indicators decreased from 95.9 to 95.2 points. Today, the pair is trading in both directions. The yen is pressured by mixed macroeconomic statistics from Japan. Bank lending slowed in June from 2.6% to 2.3% YoY, while the forecast was 2.8% YoY. The demand for machine-building products in May fell by 7.8% MoM after a growth of 5.2% MoM last month.

Oil

Oil prices rose moderately on July 5, despite the general strengthening of the dollar. Quotes are supported by growing tensions around Iran, as well as by the OPEC+ decision to extend the agreement on limiting oil supplies for another 9 months. In addition, investors are optimistic about the resumption of the US-China trade negotiations this week, counting on signals on the industrial activity increase in China.

 

[MikhailLF]

Morning Market Review
2019-07-09 08:22 (GMT+2)
EUR/USD

The euro showed a moderate decline against the US dollar on July 8, continuing the development of a strong "bearish" impulse formed at the end of last week. The euro reacted by sharp sales after the publication of the report on the US labor market, which indicated a much stronger increase in the number of new jobs than analysts had expected. The report also reflected the growth of the unemployment rate and a slight slowdown in wages growth. The market expects strong labor market data to help the Fed wait. Some analysts believe that the regulator will abandon the idea of lowering the interest rate during the July meeting. On Monday, investors were focused on German data on the industrial output and the trade balance for May. The industrial output showed an increase of 0.3% MoM after a decrease of 2.0% MoM last month. However, YoY, the dynamics deteriorated markedly: −3.7% vs previous −2.3%. Germany’s trade balance in May rose from 16.9 to 18.7 billion euros, which was slightly better than expected.

GBP/USD

The British pound fell against the US dollar on Monday, but it did not lead to an update in local lows. The instrument is still pressured by the publication of the June report on the US labor market. On Monday, the news background remained moderate, so investors continued to play on the same drivers. Today, the instrument is traded in both directions. Published statistics from the UK on retail sales does not allow the pound to show corrective growth, but investors are gradually fixing short positions. The volume of comparable sales from BRC in June fell again by 1.6% YoY after a decrease of 3.0% YoY a month earlier. Analysts were expecting the growth of 0.8% YoY. Market activity will begin to grow noticeably on July 10, when a large block of statistics on industrial output, trade balance, and adjusted GDP dynamics will be released in the UK.

AUD/USD

The Australian dollar tried to show corrective growth against the US one at the beginning of the week but returned to the downward trend and today resumed its active decline. Investors are still focused on the June report on the US labor market, which has noticeably confused the Fed’s plans to ease monetary policy. The instrument is also pressured by the newly launched process of the US-China trade negotiations, which may end with the signing of a final agreement. Today, investors are focused on business sentiment statistics from the National Australia Bank. The NAB index of business confidence in June fell sharply from 7 to 2 points, which, however, was not surprising. The index of business conditions for the same period increased from 1 to 3 points, which also coincided with market expectations.

USD/JPY

The US dollar continued to grow noticeably against the Japanese yen yesterday, updating local highs of May 31. Additional pressure on the yen came from Japanese macroeconomic statistics. Bank lending slowed in June from 2.6% to 2.3% YoY, while the forecast was 2.8% YoY. The demand for machine-building products in May fell by 7.8% MoM after a growth of 5.2% MoM last month. Analysts had expected the decline only by 4.7% MoM. In annual terms, orders decreased by 3.7% in May against an increase of 2.5% in April. The Eco Watchers current index in June fell from 44.1 to 44.0 points, against the forecasts of growth to 45.0 points.

Oil

Oil prices showed a moderate increase on July 8, but could not stay at the updated highs and returned to the red zone by the end of the day session. Quotes are supported by the growth of tension around Iran, as well as the lack of progress in the US-China trade negotiations. On Monday, Iran threatened to resume work on the enrichment of uranium, which was suspended under the 2015 agreement. Because of the US sanctions, Iran has actually lost all the benefits that it received as part of the agreement. It is likely that the resumption of nuclear activities will lead to a new deterioration of relations between Washington and Tehran. Today, investors will focus on the API report on oil reserves. The previous report reflected a sharp reduction in reserves by 5 million barrels, which was later not confirmed by the publication of an official report from the US Department of Energy.

 

[MikhailLF]

Morning Market Review
2019-07-10 08:25 (GMT+2)
EUR/USD

The euro continued a decline against the US dollar on Tuesday, updating local lows of June 19. The single currency is pressured by uncertain macroeconomic statistics from Europe, as well as a fairly optimistic mood on the dollar. Yesterday, Fed Chairman Jerome Powell had a speech, which was devoted to the problem of banks reliability and stress tests program. His speech on July 10 will be much more important since it will be devoted to the problems of monetary policy. Some analysts believe that, given the latest report on the US labor market, the Fed will try to take a wait-and-see attitude and refuse to cut rates during the July meeting. In addition, on Wednesday the ECB meeting is expected and the publication of the FOMC minutes.

GBP/USD

The pound declined markedly against the US dollar on Tuesday, updating local lows of January 3. The "bearish" dynamics was facilitated by the uncertain macroeconomic statistics from the UK. In June, the BRC retail price index again showed a decline of 1.6% YoY after declining by 3.0% YoY last month. Analysts had expected positive dynamics of 0.8% YoY. On July 10, the market expects the publication of a large block of statistics from the UK. Among other things, investors are focused on the dynamics of industrial output in May, GDP growth rates in May (and the forecast for June), as well as the trade balance. In the USA, the focus of attention will be the speech of Fed Chairman Jerome Powell in Congress.

AUD/USD

The Australian dollar continues to develop a downward trend against the US one, updating local lows of June 21. "Bearish" sentiment is supported by the strengthening of USD amid a possible refusal of the Fed to reduce interest rates during the July meeting. The last report on the US labor market, which reflected a sharp increase in the level of employment, may be the reason for the regulator to do this, although it also showed an increase in the unemployment and a slowdown in wage growth. Today, the instrument continues to trade within a downtrend. AUD is pressured by weak macroeconomic statistics from Australia. Westpac consumer confidence index in July showed a decline of 4.1% MoM after declining by 0.6% MoM last month.

USD/JPY

The US dollar continues to grow moderately against the Japanese yen, as interest in risk remains on the market. Investors await possible signals from the Fed to maintain a waiting position amid the publication of a strong report on the US labor market. Published macroeconomic statistics from Japan exerts additional pressure on the yen. Yesterday, traders were disappointed with the preliminary data on the demand for machine-building products and equipment. In June, the indicator dropped sharply by 38.0% YoY after a decline of 27.3% YoY a month earlier. Today, the yen is pressured by an index of domestic prices for corporate goods. In June, the indicator decreased by 0.5% MoM and 0.1% YoY, whereas investors expected –0.3% MoM and +0.3% YoY.

Oil

Oil prices showed a moderate increase on July 9, as investors concentrated on growing tensions in the Middle East. Additional support for quotes is still provided by the decision of OPEC+ to extend the agreement to restrict production for another 9 months. A powerful "bullish" signal was the API report on oil reserves published yesterday. For the week of July 5, stocks fell sharply by 8.129 million barrels after declining by 5.000 million over the past period. However, the previous API report was significantly different from the data of the Department of Energy, so investors still prefer to wait for the publication of official data.

 

[MikhailLF]

Morning Market Review
2019-07-11 08:36 (GMT+2)
EUR/USD

The euro showed strong growth against the US dollar on July 10, recovering the losses of the last three trading sessions. The reason for the emergence of a strong "bullish" dynamics was the correction of the dollar in response to the speech of Fed Chairman Jerome Powell. Powell pointed to the growing uncertainty in the prospects for the American economy, which is deteriorating under the influence of internal and external factors. Investment in the business, according to Powell, continues to decline, which poses a threat of a further slowdown in economic growth. The regulator's head did not name any exact dates for further stimulation, but the market believed in a rate cut of 25 basis points during the meeting on July 30-31. Moreover, a number of analysts believe that the Fed may decide on a stronger reduction in the rate, by 50 basis points at once. Today, the pair is also trading in an uptrend. Investors are focused on statistics on consumer inflation in Germany and France, as well as the publication of information about the latest ECB meeting on monetary policy.

GBP/USD

The pound showed the development of correctional dynamics against the US dollar on July 10. The growth of the instrument was facilitated by a decline in the dollar after the speech of Fed Chairman Jerome Powell, who focused on the negative aspects in the American economy, which prompted investors to return to the idea of the Fed lowering the interest rate during the July meeting. Published macroeconomic statistics from the UK was moderately optimistic. Industrial output in May showed an increase of 1.4% MoM after a decline of 2.9% MoM, which was slightly worse than forecasts of 1.5% MoM. YoY, production grew by 0.9% after declining by 1.1% in April. The experts were expecting 1.1% YoY. GDP in May rose by 0.3% MoM after a decrease of 0.4% MoM a month earlier. But the NIESR assessment of GDP in June was negative: −0.1% against 0.3%.

AUD/USD

The Australian dollar returned to a positive trend against the US one, having received support after the speech of Fed Chairman, which increased the risks of a rate cut during the meeting on July 30-31. AUD also ignored weak macroeconomic publications from Australia. Westpac consumer confidence index in July showed a decline of 4.1% MoM after declining by 0.6% MoM last month. Today, the instrument maintains upward dynamics. Moderate support for the "Australian" provides data on the dynamics of mortgage loans. In May, the indicator reached the zero level after a decline of 0.9% MoM in April. Analysts were expecting a decline of 0.6% MoM. Investment loans for the construction of new homes in May declined by 1.7% MoM after declining by 2.2% MoM last month.

USD/JPY

The US dollar fell markedly against the Japanese yen on Wednesday. The reason for the emergence of negative dynamics was a sharp increase in the likelihood of a reduction in the Fed's interest rate during the meeting of July 30-31 amid the "dovish" rhetoric of Fed Chairman Jerome Powell. More active growth of the instrument was hampered by the aggravation of the trade conflict between Japan and South Korea. Today, there is also a negative trend, despite the publication of ambiguous macroeconomic statistics from Japan. Services PMI in Japan fell by 0.2% MoM in June after rising by 0.8% MoM last month. Analysts were expecting a decline of only 0.1% MoM. In turn, the rate of foreign investment in Japanese bonds supported the yen. For the week of July 5, the volume of investment rose from 58.5 to 192.2 billion JPY.

Oil

Oil prices rose sharply on July 10, updating local highs since the beginning of June. The growth of the instrument was facilitated by the large-scale weakening of the dollar after the speech of Fed Chairman Jerome Powell. In addition, the quotes were strongly supported by a published EIA report. For the week of July 5, the oil stocks decreased by 9.5 million barrels, which turned out to be significantly more than the expected reduction of 3.567 million. Meanwhile, oil production in the USA increased again from 12.200 to 12.300 million barrels per day.

 

[MikhailLF]

Morning Market Review
2019-07-12 08:45 (GMT+2)
EUR/USD

The euro showed ambiguous dynamics against the US dollar on Thursday, having managed to update the local maxima of July 5. The European currency was supported by published macroeconomic statistics from Germany. The harmonized consumer price index in June rose by 0.3% MoM after rising by 0.1% in May. The index showed an increase of 1.5% YoY, which also turned out to be better than market expectations of 1.3%. Information about the ECB meeting on monetary policy of 5-6 June, which was also published yesterday, put moderate pressure on the euro. The protocols reflected the revision of the Eurozone GDP for 2019 up to 1.2% YoY. However, for 2020 and 2021, GDP forecasts were revised down to 1.4% YoY. The regulator also expects current interest rates to remain unchanged at least until the first half of 2020. Today, investors are focused on the publication of May statistics on industrial output in the Eurozone.

GBP/USD

The pound ended Thursday with ambiguous dynamics. Despite the growth during the day, with the opening of the American session, the "bearish" sentiment recovered, which led to the correction and closing of the pair in the red zone. Traders were rather skeptical about the Bank of England financial stability report published on Thursday. However, the document reflected the readiness of the UK financial system to the negative consequences of the "tough" Brexit. But investors were much more interested in the published macroeconomic statistics on consumer inflation in the USA. In June, the consumer price index, excluding food and energy, rose by 0.3% MoM and 2.1% YoY, with a forecast of 0.2% MoM and 2.0% YoY.

AUD/USD

The Australian dollar is steadily strengthening against the US dollar, updating local highs since July 5. Published on Thursday, macroeconomic statistics from Australia turned out to be ambiguous, which, however, did not prevent the AUD from maintaining an uptrend. Moreover, investors partially ignored the strong US data on consumer inflation, which increased the likelihood of the Fed keeping the interest rates unchanged in July. Investment loans for the construction of new homes in May declined by 1.7% MoM after declining by 2.2% MoM last month. The volume of mortgage loans in May showed zero dynamics after a decline of 0.9% MoM in April.

USD/JPY

The US dollar showed a decline against the Japanese yen on July 11 but managed to recover by the closing of the day session, having received support from strong consumer inflation data. Moderate support was also provided by data on applications for unemployment benefits. For the week of July 5, the number of initial jobless claims decreased from 222K to 209K, significantly better than the forecast of 223K. Today the instrument is again trading in a downtrend, despite the publication of ambiguous statistics from Japan. Industrial output in May slowed from 2.3% to 2.2% MoM, which turned out to be worse than analysts' expectations. YoY, the decline deteriorated from −1.8% to −2.1%. However, the use of production capacity increased from 1.6% to 1.7% MoM.

Oil

Oil prices showed a slight increase on July 11 but corrected to the opening marks by the end of the day session. Quotes were supported by the closure of a number of oil rigs in the Gulf of Mexico in anticipation of the storm. In addition, investors are closely watching the development of tensions in the Middle East after the deterioration of US-Iranian relations. On Friday, investors are focused on Baker Hughes report on active oil platforms in the USA.

 

[MikhailLF]

Morning Market Review
2019-07-15 08:22 (GMT+2)
EUR/USD

The euro maintains an upward trend against the US dollar. On July 12, the single currency managed to strengthen amid the publication of good macroeconomic statistics from the Eurozone. Industrial output in May rose by 0.9% MoM after declining by 0.4% MoM last month. Analysts expected growth of only 0.2% MoM. The indicator accelerated the decline from −0.4% YoY to −0.5% YoY, which, however, turned out to be significantly better than forecasts of −1.6% YoY. More confidently strengthening of the instrument was hampered by previously published data from Germany. The wholesale price index in June showed a decline of 0.5% MoM after rising by 0.3% MoM last month. Investors predicted the growth of 0.2% MoM. YoY, the index growth slowed down from 1.6% to 0.3%, which also turned out to be significantly worse than analysts' expectations of 1.3%.

GBP/USD

The pound showed quite an active growth against the US dollar on Friday, updating local highs of July 5. There were none interesting macroeconomic statistics from the USA and the UK, so the focus was on existing factors. However, investors followed the speech of the representative of the Bank of England Gertjan Vlieghe, who allowed the possibility of a sharp reduction in interest rates by the regulator, if the government fails to approve the agreement on Brexit. Today, the instrument is trading with moderate growth, preparing to update the previous local maxima. Strengthening of the pound is not hampered by weak data from the UK. The Rightmove house price index in June showed a decline of 0.2% MoM and 0.2% YoY after rising by 0.3% MoM and 0.0% YoY in May.

AUD/USD

The Australian dollar showed strong growth against the US one on Friday, rising to the highs of July 5. The reason for the strengthening of the instrument was the correctional dynamics of the US currency. Ambiguous macroeconomic statistics from China and the United States hampered a more confident growth of the “Australian”. Today, the instrument is supported by strong data from China. Retail sales in June rose by 9.8% YoY after rising by 8.6% YoY last month. Analysts were expecting a slowdown to 8.3% YoY. The industrial output for the same period increased by 6.3% YoY after rising by 5.0% YoY in May. In Q2, China's GDP accelerated from 1.4% QoQ to 1.6% QoQ (with a forecast of 1.5% QoQ).

USD/JPY

The US dollar showed a steady decline against the Japanese yen on Friday, updating local lows of July 5. It is curious that this happened amid the publication of weak macroeconomic statistics from Japan. In May, industrial output in Japan slowed down from 2.3% MoM to 2.0% MoM. YoY, the decline in production increased from −1.8% to −2.1%, which turned out to be worse than market expectations. Today, the pair is trading in an uptrend. Japan's markets are closed on Monday to celebrate the Marine Day, so statistics from China and the United States remain in the spotlight. Chinese data on GDP, retail sales, and industrial output were stronger than forecasts, which contributed to the growth of investor interest in risk. With the opening of the American session, investors are awaiting the publication of the index of the July Manufacturing PMI from the New York FRB.

Oil

Oil prices are consolidating near local highs, updated at the end of the week. Quotes are supported by a reduction in the production of some US manufacturers in the Gulf of Mexico due to a tropical storm. On the other hand, investors were disappointed with the published report of the International Energy Agency. According to it, further growth in production in the USA will contribute to the growing imbalance of supply and demand in the market. The IEA expects a decline in oil demand by 2020 to a record level since 2003. Additional support for quotes was provided by Baker Hughes report on active oil platforms in the USA published on Friday. During the week, the number of drilling rigs decreased from 788 to 784 units.

 

[MikhailLF]

Morning Market Review
2019-07-16 08:31 (GMT+2)
EUR/USD

The euro showed a negative trend against the US dollar on July 15, departing from local highs, updated on Thursday. On Monday, there were no interesting macroeconomic statistics from the Eurozone, so investors concentrated on existing data and releases from China. In the US, only the New York Fed Manufacturing PMI has been published. In July, the figure rose by 4.3 points after falling by 8.6 points in June and with the forecast of growth by only 2.0 points. Today the pair is trading ambiguously, waiting for the appearance of new drivers. Investors are focused on a block of statistics on business sentiment in Germany and the Eurozone from the ZEW Institute. Also, investors are awaiting the publication of data on consumer prices in Italy for June and the Eurozone trade balance for May. The USA will respond by releases on retail sales and industrial output for June. By the end of the daily session, the market expects the speech of Fed Chairman Jerome Powell.

GBP/USD

The pound fell markedly against the US dollar on Monday. A certain pressure on the British currency was caused by weak statistics on the dynamics of housing prices. The Rightmove house price index in June showed a decline of 0.2% MoM and 0.2% YoY after rising by 0.3% MoM and 0.0% YoY in May. An additional negative factor is growing uncertainty around Brexit. In the near future, elections will be held for the new prime minister, who will have to resolve issues of coordinating a deal with the EU. The current deadline implies the Brexit by October 31, and some candidates, for example, Boris Johnson, insist on a "tough" Brexit, if parliament re-blocks the agreement. Today, investors are focused on statistics on the labor market. Also, the speech of the Bank of England's head Mark Carney is expected.

AUD/USD

The Australian dollar continues to grow steadily against the US one, updating local highs since July 4. Monday's macroeconomic statistics from China provided strong support to AUD. The data indicated a sharp increase in industrial output in June from 5.0% to 6.3% YoY, with a forecast of 5.2% YoY. China's quarterly GDP accelerated from 1.4% to 1.6% (forecast 1.5% QoQ). YoY, as analysts had expected, GDP slowed down from 6.4% to 6.2%. Today, the pair is trading in both directions, waiting for the appearance of new drivers on the market. Investors are focused on the protocol of the RBA meeting of July 2, at which the regulator decided to reduce the interest rate by 25 basis points to 1.00%.

USD/JPY

The US dollar showed a flat dynamics against the Japanese yen on Monday and today shows a slight growth. There were no data from Japan, as the markets were closed on the occasion of the Marine Day. On Tuesday, there would be also no publications from Japan, so investors will focus on releases from the USA. The focus is on statistics on retail sales and industrial output for June. Fed Chairman Jerome Powell is expected to speak, as well as a number of other Fed representatives, among whom are Raphael Bostic, Michelle Bowman, and Charles Evans.

Oil

Oil prices declined slightly on July 15, responding to the publication of controversial macroeconomic statistics from China. Quotes are still supported by a high degree of tension in the Middle East, as well as the lack of progress in the US-China trade negotiations. Chinese data pointed to weak economic growth in annual terms, but also reflected a sharp increase in industrial output, which correlates well with the increase in crude oil imports. Import volumes rose to a record high of 13.07 million barrels per day (by 7.7% YoY). Growth was promoted by the launch of new refineries in China. On Tuesday, investors are focused on the publication of the API report on oil reserves for the week of July 12.

 

[MikhailLF]

Morning Market Review
2019-07-18 08:45 (GMT+2)
EUR/USD

The euro rose against the US dollar on July 17, recovering from a steady decline the day before, when investors were inspired by strong data on US retail sales. On Wednesday, the macroeconomic background changed noticeably. Traders are optimistic about the data on consumer inflation in the Eurozone. In June, the consumer price index rose by 0.2% MoM and 1.3% YoY, accelerating from the previous values of 0.1% MoM and 1.2% YoY. In June, the base CPI rose from 0.3% to 0.4% MoM, which turned out to be better than market expectations 0.3% MoM. YoY, the index accelerated from 0.8% to 1.1%, which coincided with analysts' forecasts. The pressure on the dollar is provided by a weak statistics on the US housing market. The change in the number of new living buildings in June fell by 0.9% MoM after a decrease of 0.4% MoM last month. The number of building permits in June decreased by 6.1% MoM after rising by 0.7% MoM in May.

GBP/USD

The pound showed a slight increase against the US dollar on July 17, interrupting the development of a strong "bearish" impulse formed the day before. The growth of the instrument was largely technical, while the macroeconomic background from the UK remained moderately negative. On Wednesday, investors were focused on a report on consumer and industrial inflation. In June, the consumer price index showed zero dynamics, slowing down from the previous growth of 0.3% MoM. YoY, the inflation continues to remain at the target level of 2%. The producer price index for the same period decreased by 0.1% MoM and grew by 1.6% YoY, which was worse than analysts' expectations of growth by 0.1% MoM and 1.7% YoY. Today, statistics on retail sales, as well as the Bank of England report on the terms of lending for Q2 2019 will be published.

AUD/USD

The Australian dollar closed Wednesday trading with ambiguous dynamics against the US currency. The growth of the instrument was due to the publication of weak data on the US housing market, but the generated momentum was not enough for AUD to enter the green zone. In addition, investors were in no hurry to open new positions awaiting the publication of the Australian labor market report for June. Today, the pair shows moderate growth, despite the fact that the report data were ambiguous. The employment rate in June rose by only 0.5K after rising by 45.3K last month. Analysts had expected growth of 10.0K. Full employment rose by 21.1K after rising by 2.4K last month. Part-time employment fell by 20.6K after rising by 39.8K in May. Unemployment, as expected, remained unchanged at 5.2%.

USD/JPY

The US dollar returned to decline against the Japanese yen on July 17, leveling off the results of Tuesday's correctional growth. The development of negative dynamics was supported by the publication of weak statistics on the housing market. In addition, investors are concerned about the possible exacerbation of the US-China trade relations since the ongoing negotiations have not yet led to positive results. The rate of houses construction started in the US in June decreased by 0.9% MoM after a decrease of 0.4% MoM last month. Analysts had expected growth of 1.9% MoM. The changes in the number of building permits issued was also negative. In June, it collapsed by 6.1% MoM after rising by 0.7% MoM last month. Today, the pair is developing a downward trend. The import and export statistics published in Japan exert certain pressure on the yen. Exports in June fell by 6.7% YoY after falling by 7.8% YoY last month. Analysts had expected a decline of 5.6% YoY. Import volumes collapsed by 5.2% YoY after falling by 1.5% YoY in May.

Oil

Oil prices showed a moderate decline on July 17, pressured by an ambiguous EIA report. The report reflected a decline in oil reserves for the week of July 12 by 3.11 million barrels, which turned out to be better than the expected decline by 2.69 million barrels. At the same time, the data indicated an increase in the stock of gasoline and distillates, which offset the positive effect of the decrease in crude oil reserves. US production fell from 12,300 to 12,000 million barrels, which, however, was due to the closure of some of the oil rigs in the Gulf of Mexico because of the storm.

 

[MikhailLF]

Morning Market Review
2019-07-19 08:24 (GMT+2)
EUR/USD

The euro rose significantly against the US dollar on Thursday, returning to the local highs of July 15. The single currency was still supported by moderately optimistic data on consumer inflation in the Eurozone in June. In addition, investors were noticeably disappointed with the US statistics on the housing market, which turned out to be below market expectations. There was no new data from the Eurozone on Thursday, so the euro developed a correctional dynamics amid the lack of progress in the US-China negotiations. Today, the instrument again trades in both directions with a noticeable predominance of "bearish" sentiment. Investors expect the publication of data on industrial inflation in Germany for June and the statistics on the balance of the current account in the Eurozone in May.

GBP/USD

The British pound strengthened against the US dollar on July 18, returning to the levels of the week's beginning. The pound was strongly supported by data on retail sales in the UK, which lowered concerns about a further slowdown in the British economy (especially in view of a possible "tough" Brexit). In June, retail sales increased by 1.0% MoM after a decline of 0.6% MoM in May. YoY, sales accelerated from 2.2% to 3.8%, which was significantly better than the forecast of 2.6%. Today, investors are noticeably cautious, fearing to develop an upward trend in the instrument. The focus is on data on the dynamics of public sector borrowing in June, as well as the publication of statistics on the University of Michigan consumer confidence index for July.

AUD/USD

The Australian dollar rose substantially against the US one on Thursday, updating local highs of April 24. It is curious that AUD has managed to show quite active growth, despite the ambiguous report on the Australian labor market for June. It reflected employment growth for mere 0.5K jobs, while in May the growth was 45.3K. Analysts were expecting growth of 10.0K jobs. Macroeconomic statistics from the USA published on Thursday was moderately optimistic. The secondary jobless for the week on July 5 decreased from 1.728 to 1.686 million, with an expected decrease only to 1.700 million. Initial jobless claims expectedly increased from 208K to 216K. Most of the support for USD currency was provided by the Philadelphia Fed Manufacturing PMI, which rose from 0.3 to 21.8 points in July against the forecast of growth to 5 points.

USD/JPY

The US dollar showed a steady decline against the Japanese yen on Thursday, updating local lows of June 26. Today, the pair is trading with quite active growth, being influenced by technical factors. Investors are focused on a block of macroeconomic statistics from Japan on consumer inflation, which, however, does not have a noticeable effect on the instrument. The national consumer price index in June showed an increase of 0.7% YoY, which coincided with the previous data and forecasts of experts. In turn, the activity index in all industries in May rose by 0.3% MoM after rising by 0.9% MoM last month, while investors expected negative dynamics of −0.2% MoM.

Oil

Oil prices showed ambiguous trend on July 18, updating monthly local minima. Quotes began to fall amid a sharp decline in US stock exchanges, as well as due to expectations of a quick recovery in production in the Gulf of Mexico after the hurricane last week. The instrument is also pressured by a previously published report from the EIA, which indicated a decrease in crude oil reserves, but also reflected a sharp increase in gasoline and distillate stocks. Investors are also reacting negatively to deadlocked US-China trade negotiations. Apparently, the situation will not change as long as the US authorities do not ease the sanctions on the Chinese company Huawei. On Friday, a Baker Hughes report on active oil rigs in the US is expected.

 

[MikhailLF]

Morning Market Review
2019-07-22 08:23 (GMT+2)
EUR/USD

The euro fell markedly against the US dollar on July 19, leveling off growth the day before. Technical factors contributed to the weakening of the instrument, while the macroeconomic background remained controversial. On Friday, the euro was pressured by a weak data on production inflation in Germany. In June, the producer price index fell by 0.4% MoM after falling by 0.1% MoM last month. YoY, the index slowed down from 1.9% to 1.2%, below market expectations of 1.4%. In turn, the dollar reacted negatively to the speech of Fed representative James Bullard, who spoke in favor of a strategy of rapidly lowering interest rates, which would allow avoiding the development of another economic crisis. Investors saw in these words hints of a possible reduction in the interest rate at the end of July. Today, the instrument shows ambiguous dynamic, awaiting the appearance of new drivers in the market. Investors are focused on the Bundesbank monthly report, as well as the publication of the Chicago Fed National Activity Index for June.

GBP/USD

The pound showed a corrective decline against the US dollar on Friday, departing from the local highs updated on July 15. On Friday, the British currency was pressured by disappointing data on the dynamics of public sector borrowing. In June, net borrowing increased from 3.822 to 6.500 billion pounds, which was significantly worse than market expectations of 3.200 billion. The June budget deficit was the most significant in the last 4 years, which is very alarming, considering that the country is on the threshold of Brexit. Investors continue to follow the election of the Prime Minister. According to available data, Boris Johnson is still the leader of the race. The results of the election of the new leader of the Conservative Party and the Prime Minister of Great Britain will be known this week.

AUD/USD

The Australian dollar retreated from local highs against the US dollar on July 19. The decline of the instrument was technical in nature, while the macroeconomic and news background remained ambiguous. Further growth of the Australian currency is hampered by the lack of progress in the US-China trade negotiations. Despite the optimistic start, at present, the parties have not been able to achieve any progress, and the market does not seem to really believe in a favorable outcome of the event. Today, the pair is trading in both directions, and AUD expects new drivers to appear on the market.

USD/JPY

The US dollar showed growth against the Japanese yen on July 19, departing from local minima updated the day before. The development of upward dynamics in the instrument was facilitated by relatively weak macroeconomic publications from Japan. Investors were disappointed with data that indicated a slowdown in consumer inflation. The Tokyo consumer price index excluding the price of fresh food in June expectedly slowed down from 0.8% YoY to 0.6% YoY. The indicator excluding energy prices, increased by 0.5% YoY, which turned out to be weaker than the forecast of 0.6% YoY. The activity index in all industries in May slowed down from 0.8% MoM to 0.3% MoM, which, however, turned out to be better than expectations of −0.2% MoM. Today, the pair continues to develop upward dynamics. At the beginning of the week, investors are focused on the speech of the head of the Bank of Japan Haruhiko Kuroda.

Oil

Oil prices rose slightly on July 19, corrected from local minima, updated the day before. Moderate support for quotes was provided by the US reports on the destruction of the Iranian drone in the Gulf of Mexico, which again heightened tensions in the Middle East. Additional support for the prices was provided by speeches of Fed representatives who favored a rapid reduction in interest rates. Finally, the published Baker Hughes report on active oil platforms in the United States reflected a reduction in the number of drilling rigs from 784 to 779 units.

 

[MikhailLF]

Morning Market Review
2019-07-23 08:26 (GMT+2)
EUR/USD

The euro showed a moderate decline against the US dollar on July 22, continuing the development of a strong "bearish" impulse formed on Friday. Monday's macroeconomic background remained insignificant; therefore, investors were still focused on the upcoming meetings of the world central banks. On Thursday, the ECB will publish the minutes of its meeting. Given the negative macroeconomic statistics and rather gloomy prospects for the world economy, it is likely that the European regulator is announcing a new interest rate cut. However, the likelihood of such an outcome just exceeded 50%, so the intrigue remains. On Tuesday, the market expects the publication of data on bank lending in the Eurozone and preliminary statistics on the level of consumer confidence.

GBP/USD

The British pound is trading in a downward trend against the US dollar, developing a correction formed at the end of last week. The pound remains pressured amid uncertain prospects around Brexit. Today we will know the name of the new prime minister, who, following Theresa May, will have to deal with the issue of concluding an agreement with the EU. Chances are high that the new prime minister will be former foreign minister, Boris Johnson, who has previously actively advocated a "tough" Brexit if the EU does not make concessions on the Irish border. On Tuesday, investors are also awaiting the publication of the minutes of the Financial Policy Committee meeting and the CBI report on changes in the volume of industrial orders in July.

AUD/USD

The Australian dollar showed ambiguous dynamics against the US dollar on Monday, retaining the "bearish" impulse formed at the end of last week. AUD is pressured by a tense situation around the US-China trade negotiations, which again come to a standstill. Investors are also awaiting a Fed meeting at the end of July, which could result in interest rates lowering. The speeches of the official representatives of the regulator at the end of the week provoked a fairly strong correction in favor of USD, and now conversations are about the scale of the upcoming easing, rather than about the fact of the rate cut.

USD/JPY

The US dollar has been rising against the Japanese yen since the end of last week, recovering from local lows of June 26, updated last Thursday. On Monday, investors were focused on the speech of the head of the Bank of Japan, Haruhiko Kuroda, who reaffirmed his readiness to resume economic stimulation in the event of further growth in global uncertainty. In addition, Kuroda is ready for additional monetary easing to achieve a target inflation rate of 2%. Today, the pair is trading in an uptrend. Market participants are waiting for the publication of US macroeconomic statistics. The focus will be on Redbook statistics on retail sales, as well as the dynamics of sales in the secondary housing market.

Oil

Oil prices showed ambiguous dynamics on July 22, closing with almost zero results. Quotes are still supported by growing tensions in the Persian Gulf. Last week, investors reacted violently to the seizure of a British tanker by Iran in response to similar actions by Britain in early July. In turn, the pressure on prices is exerted by a further decline in demand for petroleum products amid a slowdown in global economic growth. Today, in addition to the publication of macroeconomic statistics from the United States, the API report on oil reserves for the week of July 19 is expected. The previous report reflected a decline in stocks by 1.401 million barrels.

 

[MikhailLF]

Morning Market Review
2019-07-24 08:24 (GMT+2)
EUR/USD

The euro showed a noticeable decline against the US dollar on Tuesday, updating local lows of May 31. The pressure on EUR was exerted by the negative prospects of Brexit, as well as the statements of US President Donald Trump, who noted that "in trade matters, the EU is worse than China." Investors fear the escalation of the US-EU trade conflict since it is not the first time when Trump is trying to impose additional duties on European goods. Published macroeconomic statistics was ambiguous. Sales in the US secondary housing market in June fell by 1.7% after rising by 2.9% MoM last month. Analysts were expecting a decline of only 0.2% MoM. Richmond Fed Manufacturing Index in July dropped sharply from 3 to −12 points, with the forecast for growth to 5 points. European statistics reflected a slight increase in consumer confidence from −7.2 to −6.6 points, with a constant forecast.

GBP/USD

The pound showed a decline against the US dollar on July 23. The focus was on voting on the candidacy of the leader of the Conservative Party. As expected, former Foreign Minister Boris Johnson won a landslide victory and is now to take the post of prime minister. Markets reacted rather pessimistically since Johnson is known for his tough position on Brexit, which increases the risk of a country leaving the EU without an agreement. Today the pair is trading ambiguously, waiting for the appearance of new drivers. On Wednesday, data on business activity in the US in July, as well as statistics on the dynamics of approved mortgage loans in the UK in June will be published.

AUD/USD

The Australian dollar showed a steady decline against the US dollar on Tuesday and today maintains an active negative trend. Yesterday, AUD was pressured despite the publication of weak macroeconomic statistics on the US secondary housing market sales. Investors are frightened by the prospects for the development of a new trade conflict involving the USA, this time with the EU. This can negatively affect the world economy, given that the US-China negotiations have not yet led to a positive result. Donald Trump’s statements that he was able to hold a series of successful negotiations with congressmen on the sovereign debt ceiling also provided moderate support to the US dollar. If the decision is approved in Congress, it will allow the US government to work until 2021.

USD/JPY

The US dollar showed a moderate increase against the Japanese yen on Tuesday, updating local highs of July 17. It is curious that the growth of USD proceeded against the background of the publication of rather weak statistics on the housing market. The yen is still pressured by the uncertain situation around the prospects of monetary policy easing by the Bank of Japan. Today, the pair is trading in both directions. Minor support for the yen provides Japanese data on Manufacturing PMI. In July, according to preliminary estimates, the figure rose from 49.3 to 49.6 points, which was only 0.1 points worse than expected.

Oil

Oil prices showed a moderate increase on July 23, despite the fact that "bearish" sentiment prevailed during the day. Quotes were strongly supported by the API report on oil reserves published on Tuesday. For the week of July 19, stocks fell sharply by 10.961 million barrels after declining by 1.401 million over the past period. On Wednesday, investors are awaiting the publication of an official report on oil reserves from the US Department of Energy.