Daily Market Analysis From Forexmart

EUR/USD. June 08, 2020 – US dollar gets support from labor market data

EUR/USD is falling at the beginning of a new trading week. The current quote of the instrument is 1.1275. The US dollar was supported by data on the US labor market: the unemployment rate in the country in May was 13.3% compared to 14.7% in April. These statistics turned out to be much better than the forecast suggesting an increase in the indicator to the level of 19.8%.

The number of jobs outside the agricultural sector increased during the reporting period by 2.5 million, the forecast assumed a decline of 8 million. The data for April were simultaneously revised to deteriorate to -20.687 million from -20.537 million. The average hourly wage in May fell by 1% m/m, which turned out to be worse than the forecast suggesting growth by the same amount.

Today is calm in terms of the release of important macroeconomic statistics. Of interest will only be the speech of the ECB President Christine Lagarde.

 

Brent. June 09, 2020 – Oil declines due to several factors

Oil quotes show a decrease from yesterday's highs above the level of $43 to $40 per barrel. The oil market is weakening, despite the extension of the OPEC+ deal until the end of July and the decision to increase production cuts by countries that have not fully fulfilled their obligations in the past months (Iraq, Nigeria, Kazakhstan). Analysts suggest that the pressure on oil prices was caused by doubts of market participants about the success of the new deal.

An additional negative impact on Brent quotes was made by statements by the Minister of Energy of Saudi Arabia that the Persian Gulf countries, which intended to reduce production by another 1.18 million barrels per day, no longer plan to extend this reduction after June.

Moreover, Mexico refused to reduce production in its country and, on the contrary, intends to resume production after five months of downtime due to the civil war in the country.

The current Brent quote is $40.11 per barrel. Analysts note that price reductions will continue in the near future, as the news on the extension of the OPEC+ deal has already been fully taken into account in quotes.

 

GBP/USD. June 10, 2020 – Sterling approaches 1.28

The British currency continues to grow, approaching the level of 1.2800. Sterling was supported by data from BRC, according to which retail sales in May increased by 7.9% year on year against 5.7% a month earlier.

Additional support for the British currency was provided by high demand for risky assets. Investors are increasing long positions in the stock markets, commodity market and the market for high-yield currencies, as the yield on US government bonds is below 1%.

Tonight you should pay attention to the outcome of the meeting of the US Federal Reserve, which is likely to confirm its intention to maintain low interest rates for a long period of time. And for risky assets, this will be another good signal.

Thus, the British currency will continue to grow to an area above 1.28. The RSI indicator rushed up, which confirms this scenario.

 

EUR/USD. June 11, 2020 – Euro weakly declining from 1.14

The EUR/USD pair is consolidating at 1.14. The dollar was supported by the results of the meeting of the Federal Reserve, according to which the regulator kept the rate in the target range of 0-0.25% per annum and gave fairly clear signals about maintaining full-scale stimulation for as long as required.

At the same time, the Fed shared forecasts for US GDP: experts expect a contraction of the economy by 6.5% this year, and the unemployment rate may reach 9.3%, rather than 3.5%, as previously expected. However, these data did not exert any visible pressure on the exchange rate of the American currency.

Today, you should pay attention to the producer price index in the US for May and the number of initial applications for unemployment benefits. Experts predict a gradual decrease in the number of calls – both primary and repeated. If these forecasts are confirmed, then it will be possible to speak not about improving the situation, but at least about the beginning of stabilization in the American labor market. And this can provide significant support to the dollar.

 

EUR/USD. June 15, 2020 – Euro moves away from highs

The euro remains under pressure after falling to 1.12 at the end of last week. The current quotation of the EUR/USD pair is 1.1240. Today, the macroeconomic calendar is almost empty, the main events of the United States and the eurozone will be held later this week.

Today, attention should be paid only to inflation data in Italy: consumer prices in the country in May fell by 0.2% after a zero change in April. This suggests that the third eurozone economy has already faced deflation, which could push the ECB to further soften the parameters of its monetary policy.

The dollar was supported by data on consumer confidence from the University of Michigan: the index rose in June to 78.9 points against the May mark of 72.3. The restoration of the indicator signals that the «bottom» of consumer sentiment has already been passed. However, fears of the second wave of the US epidemic continue to be a risk factor for the US currency.

 

EUR/USD. June 16, 2020 – Dollar resumes its growth

Yesterday, the EUR/USD pair appreciably strengthened, reaching the level of 1.1350. However, on Tuesday, the euro began to decline to 1.1300. Before the US dollar was under pressure amid a fall in the levels of ten-year government bond yields and a general improvement in investor risk appetite.

However, the decline was replaced by strengthening after the publication of data on business activity in the manufacturing sector of New York in June: the index was -0.2 points against the May value of -48.5. This means that business and production are gradually returning to life.

Today you should pay attention to the statistics block from Europe. Germany and the eurozone will present reports on the business sentiment index from ZEW in June, experts predict a noticeable improvement in both cases. The day will end, most likely, with a weakening dollar after the publication of the report on retail sales: the rate of decline should accelerate from -21.6% to -32.6%.

 

Fundamental GBP/USD analysis for June 17

Today, the British sterling does not show visible price fluctuations paired with the US dollar, as market participants are still analyzing the released statistics. In particular, the May consumer price index in the country was 0.5% year on year versus the April value of 0.8% y/y. The producer price index in May rose 0.3% mom after a 5.5% decline in April.

Core inflation in the UK was recorded at 1.2% y/y – lower than it was a month earlier, and weaker than expected. At the same time, the retail price index in the country amounted to only 1.0% y/y in May against the April level of 1.5%.

Such dynamics fully corresponds to the conditions when neither business nor consumers are active in the country. Fresh statistics did not reflect either a positive or a clear negative, so the pair GBP/USD will continue to fluctuate near the level of 1.2560 during the day.

 

GBP/USD. June 18, 2020 – Sterling continues to decline in anticipation of the Bank of England meeting

On Thursday, the GBP/USD pair continues to decline, following the dynamics of yesterday. The current quotation of the pair is 1.2475. The pressure on the sterling was exerted by weak macroeconomic data from the UK: the consumer price index (CPI) in May rose by only 0.5% after rising by 0.8% in April. At the same time, the target level of the Bank of England is at around 2%.

Such a sharp decline in inflation may force the British Central Bank to introduce additional monetary incentives, which will negatively affect the exchange rate of the national currency. Today, a meeting of the Board of the Bank of England will take place, from which market participants expect the interest rate to remain at 0.1% and increase the QE program.

An additional source of pressure on the pound remains uncertainty around Brexit. And if today the regulator decides on a new round of monetary easing, the British currency could fall to the level of 1.2400.

 

EUR/USD. June 19, 2020 – The euro is growing slightly from the level of 1.12

Yesterday's trading ended with a decrease in the euro to around 1.1180. The dollar rose in price to its main currency competitors amid sales of the euro and the pound, as well as amid growing investor appetite for defensive assets. The probability of the potential occurrence of the second wave of the coronavirus epidemic puts pressure on the entire spectrum of risky assets.

However, today the EU summit took place, during which the head of the European Parliament, David Sassoli, called on the heads of state to approve a plan for the restoration of the EU economy by €750 billion and a draft next seven-year budget for 2021-2027. At the same time, he recognized the presence of many disagreements on important issues and the need for another summit in the future. Such news provided some support to the European currency, and today we will see a weak growth of the euro from the level of 1.12.

 

EUR/USD. June 22, 2020 – Euro fluctuates slightly near the level of 1.12

The EUR/USD pair continues to trade near the level of 1.12, fluctuating slightly on both sides of it. Today, the macroeconomic calendar is almost empty, so the dynamics of the instrument will not differ in activity.

At the end of last week, market participants drew attention to the speech of US Federal Reserve Chairman J. Powell, who noted that economic recovery would be long and difficult. These comments put pressure on the dollar, which led to the pair growing to the level of 1.1230.

Today, you should pay attention to data on home sales in the US secondary market. The indicator may show growth of 1.6%, which will provide some support to the US dollar. On Thursday, important statistics on the final estimate of GDP will be released: experts predict confirmation of a preliminary estimate of the economic decline by 5%.