EUR/USD: analysts' expectations on the EU economy have not been metThe EUR/USD exchange rate is falling against the background of the weakening of the US dollar, reaching the level of 1.0832.Macroeconomic data did not confirm expectations, putting pressure on the euro: in July, the business activity index in the French manufacturing sector fell to 44.1 from the expected 45.4, and in Germany to 42.6 against the forecast of 43.5, which led to a decrease in the EU composite index from 45.8 to 45.6. In the French services sector, the indicator improved from 49.6 to 50.7, while in Germany it decreased from 53.1 to 52.0, which eventually lowered the pan-European index to 51.9.Resistance levels: 1.0870, 1.0950.Support levels: 1.0830, 1.0750.GBP/USD: possible correction of the Bank of England's policy in AugustThe GBP/USD pair has been experiencing downward pressure for the second week, reaching 1.2890 during the Asian session.British investors are analyzing the latest employment data: in May, the unemployment rate was 4.4%, the employment rate increased by 19.0 thousand instead of the expected 18.0 thousand, the average salary with bonuses decreased from 5.9% to 5.7%, and without bonuses — also to 5.7%, which is the lowest since the summer of 2022. Analysts believe that these data are insufficient to convince conservative-minded members of the Bank of England that inflationary pressures are under control. However, monetary policy easing is possible at the August meeting, as inflation reached the target of 2.0%, and core inflation, excluding energy and food, approached 0.3%, well below the maximum of 0.9% at the beginning of last year. Two rate cuts of 25 basis points are forecast this year. Business activity data is published today at 10:30 (GMT+2): an increase in indicators in the manufacturing sector to 50.9 and in the service sector to 52.1 may support the British currency.The attention of American investors turned to political events: on Sunday, the current US President Joe Biden announced his refusal to participate in the elections, supporting Vice President Kamala Harris as the candidate of the Democratic Party, which has already gained the necessary number of votes for her nomination. Despite this, many experts see Donald Trump from the Republican Party as the winner, who, if he wins, can impose duties on Chinese goods and lower taxes, stimulating investment, which can accelerate inflation and slow down monetary policy easing. Today at 15:45 (GMT+2), data on business activity indices in the manufacturing sector and the service sector are expected on the market, which may have an impact on the US dollar.Resistance levels: 1.2939, 1.3061, 1.3183.Support levels: 1.2817, 1.2695, 1.2573.USD/JPY: Japanese Annual Core CPI settled at 2.1%The USD/JPY pair shows a steady decline, reaching the level of 154.58, while the market considers the current growth of the yen as corrective, caused by currency interventions of the Bank of Japan.At the same time, macroeconomic indicators remain disappointing: the core consumer price index remained at 2.1%, rising from 1.8% in May. The index of business activity in the manufacturing sector decreased from 50.0 to 49.2 points in July, while in the services sector it improved from 49.4 to 53.9 points. Analysts point to the growing concern of Japanese politicians about the weakness of the national currency and their desire to influence the regulator in order to raise rates. However, at the July 31 meeting, Bank of Japan officials are expected to keep interest rates at the same level and consider the possibility of adjusting monetary policy only in the fall.Resistance levels: 155.40, 157.70.Support levels: 154.10, 151.80.USD/CAD: awaiting the Bank of Canada's rate decisionsThe USD/CAD pair continues to grow for the second week in a row, currently checking the level of 1.3793 (Murray [8/8]). The Canadian dollar is under pressure on the eve of the Bank of Canada meeting, where an interest rate cut from 4.75% to 4.50% is possible. This decision may be due to the latest inflation data for June, which showed a decrease to 2.7% from 2.9% year-on-year and an increase in unemployment from 6.2% to 6.4%. Given these factors, additional monetary policy easing seems justified, especially after statements by the head of the Bank of Canada, Tiff Macklem, about the possibility of reducing the cost of borrowing with a slowdown in consumer price growth. The regulator's goal is to achieve a "soft landing" of the economy, avoiding a sharp increase in unemployment.As a result, an increase in the USD/CAD exchange rate in the near future looks like the most likely development.Resistance levels: 1.3793, 1.3855, 1.3916.Support levels: 1.3732, 1.3671, ...
EUR/USD: ECB rates will remain high until 2% inflationDuring the Asian trading session, the EUR/USD rate retreated from the upper limit of the ascending channel 1.0960–1.0710, stabilizing near the level of 1.0889.The European Central Bank (ECB) intends to maintain high interest rates until inflation returns to the 2.0% target. This happens after rates were lowered in June for the first time since 2019, while the rate on basic refinancing operations was set at 4.25%, on margin loans — 4.50%, and on deposits — 3.75%. Christine Lagarde, the head of the ECB, said that the economic growth of the region is likely to slow down in the next quarter due to weak investment activity and limited increase in production capacity. She also stressed that monetary policy decisions will depend on current economic statistics, including wage dynamics, corporate profits and the state of the service sector. Lagarde also acknowledged that a possible deterioration in the geopolitical situation could lead to an increase in energy prices and an increase in transportation costs, which would put additional pressure on the consumer price index. However, if current data confirm the deflationary trend, it will strengthen the ECB's confidence in achieving the inflation target of 2.0% by the end of 2025. In this context, analysts expect two more rate adjustments this year, with the first change 80% likely to occur within the next two months.Support levels: 1.0860, 1.0760.Resistance levels: 1.0940, 1.1060.GBP/USD: preliminary expectation of business activity dataAfter a significant rise last week, the GBP/USD exchange rate is declining due to the strengthening of the US dollar, the current level of which is 1.2927.The publication of primary data on business activity indices will take place tomorrow at 10:30 (GMT+2). It is expected that the indicator in the manufacturing sector will increase from 50.9 to 51.1, and in the service sector from 52.1 to 52.5, which will bring the composite index to 52.3. This improvement, following the decline in June, may contribute to the strengthening of the pound.The US dollar is trading at 104.00 on the USDX index. The impact of US President Joe Biden's decision to withdraw from the elections is gradually decreasing, giving way to the importance of economic statistics, which will become the basis for decision-making at the Fed meeting on July 31. Today at 16:00 (GMT+2), investors' attention will be focused on statistics on sales volumes in the secondary housing market — a key indicator for the real estate sector. According to forecasts, volumes may decrease from 4.11 million to 3.99 million after a previous decrease of 0.7%. If this is confirmed, Fed officials will probably rule out easing monetary policy at the upcoming meeting, leaving interest rates at a high level until mid-September.Resistance levels: 1.2960, 1.3070.Support levels: 1.2900, 1.2780.NZD/USD: trade data increases pressure on the New Zealand dollarThe NZD/USD exchange rate continues to decline, approaching the level of 0.5967 against the background of the strengthening of the US dollar and disappointing data from New Zealand.Yesterday, foreign trade indicators were presented, which indicated a decrease in activity: exports in June decreased to 6.17 billion New Zealand dollars compared to 7.00 billion, and imports decreased to 5.47 billion from the previous 6.94 billion New Zealand dollars. The monthly trade balance improved to NZ$699.0 million from NZ$54.0 million, but the annual balance still shows a deficit of NZ$-9.400 billion. Data on credit card spending, an important indicator of consumer demand, is expected tomorrow. The ongoing negative trend may indicate a lack of growth prospects for the New Zealand dollar in the near future.Support levels: 0.5950, 0.5870.Resistance levels: 0.5990, 0.6060.USD/CAD: experts predict a rate cut by the Bank of CanadaThe USD/CAD currency pair continues to grow for the second week in a row, trading within the long-term ascending channel and is currently checking the level of 1.3763 amid expectations of the next actions of the financial authorities of Canada and the United States.Analysts assume that the Bank of Canada will maintain its soft monetary policy at the July meeting, the results of which will be announced tomorrow at 15:45 (GMT+2). The interest rate is expected to decrease from 4.75% to 4.50% amid a decrease in inflation from 2.9% to 2.7% on an annual basis and an increase in unemployment from 6.2% to 6.4% in June. The growth of the labor force and the reduction in the level of hiring influenced the acceleration of unemployment to 1.6% compared with the minimum values of July 2022. The high cost of loans is putting significant pressure on households, as the share of debt service costs has reached its highest level in the last 30 years, contributing only to a modest 1.0% recovery in the Canadian economy this year. These conditions create the prerequisites for a possible reduction in the interest rate by 50 basis points by the end of the year.Resistance levels: 1.3763, 1.3824, 1.3855.Support levels: 1.3671, 1.3610, ...
USD/CAD: Biden's refusal to participate in the elections strengthened the dollarAmid the active strengthening of the US dollar, the USD/CAD currency pair is experiencing growth, approaching the 1.3730 mark.The Canadian dollar did not find support after the recent publication of retail sales data, which showed a decline of 0.8% to 66.1 billion Canadian dollars in May. Sales fell in eight of the nine industries, with a particularly noticeable decline in the food and beverage sector. The base indicator decreased from 1.2% to -1.4%, with a noticeable decrease in income in all major categories, including food (-1.9%) and alcoholic beverages (-3.3%). There was also a decrease in the e-commerce segment by 3.6% to 3.9 billion Canadian dollars, which is 5.9% of total sales, compared with 6.1% previously.The US dollar maintains its position at 104.00 USDX, having successfully recovered from last week's decline. Joe Biden recently announced his refusal to participate in the next presidential election, explaining this decision in the interests of his party and naming Vice President Kamala Harris as his successor. This event increases the chances of the election of Republican candidate Donald Trump, which may lead to expected changes in economic policy and support the US dollar.Resistance levels: 1.3750, 1.3850.Support levels: 1.3700, 1.3600.USD/JPY: trading data did not support the yenDuring the Asian trading session, the USD/JPY exchange rate strengthened, moving away from the supporting range of 161.70–156.00 and stabilizing at 157.12.The Japanese currency was weakened by the latest data on foreign trade: exports increased by 5.4% in June, falling short of the expected 6.4% and significantly inferior to last month's growth of 13.5%. This is the seventh consecutive month of export growth, but it turned out to be the weakest since the end of the previous year. Imports increased by 3.2%, which is significantly lower than the projected 9.3%. Nevertheless, the trade balance remained in surplus at 224.0 billion yen.At the end of last week, the market reacted to the US labor market data. The number of initial applications for unemployment benefits increased to 243.0 thousand, which exceeded both the projected 229.0 thousand and the previous figure of 223.0 thousand. The total number of recipients of state support also increased from 1.847 million to 1.867 million, which reinforces expectations of rate regulation at the September meeting. According to the estimates of the Chicago Mercantile Exchange (CME Group) instrument FedWatch Tool, the probability of this is 94.0%.Support levels: 156.20, 152.90.Resistance levels: 158.30, 160.70.AUD/USD: the rate retreats from the upper limit of the expanding patternIn the context of the strengthening of the US dollar, the Australian dollar/AUD/USD is experiencing a decline, with the current exchange rate of 0.6664.The Australian currency is weakening after the latest reports on the state of the labor market: the unemployment index, taking into account seasonal fluctuations, increased from 4.0% to 4.1%, excluding seasonal factors, it remained at 4.0%. Labor force participation increased slightly from 66.8% to 66.9%, then stabilized at 66.8%. The number of full-time employees decreased by 43.3 thousand to 9.944 million, while the number of part-time employees decreased by 6.8 thousand to 4.461 million. This trend supports a negative mood in the labor market, which prevents the Reserve Bank of Australia (RBA) from taking decisive action. As a result, investors do not expect a reduction in interest rates in the near future, which further puts pressure on the Australian dollar.Resistance levels: 0.6680, 0.6760.Support levels: 0.6650, 0.6580.Gold market analysisGold quotes have again reached the level of 2400.0, but this week the price is influenced by key economic factors.Changes in the policy of the US Federal Reserve System have a significant impact on the price of gold, which may decide to cut rates as early as September, reducing them by 25 basis points. According to the CME Group FedWatch Tool, the probability that the Fed will switch to a more lenient policy at the September 18 meeting already reaches 91.7%. In addition, the recent decision of US President Joe Biden not to participate in the election campaign also helps to strengthen opinion about a possible reduction in interest rates this year, especially in the context of Donald Trump's possible return to power and his plans to reform the national economy.Support levels: 2385.0, 2290.0.Resistance levels: 2420.0, ...
USD/CAD analysis on July 22, 2024Against the background of a sharp rise in the US dollar, the USD/CAD pair is strengthening, and it is trading around 1.3730 in the Asian session on Monday.The Canadian currency weakened after the publication of retail sales data. In May, the indicator decreased by 0.8% to 66.1 billion CAD, showing negative dynamics in eight of the nine industries. The trade in food and beverages fell the most. The base value decreased from 1.2% to -1.4%, and revenue decreased in all key sectors, especially in food products (-1.9%) and alcohol (-3.3%). The e-commerce indicator also decreased by 3.6% to 3.9 billion CAD, now accounting for 5.9% of total sales against 6.1% previously.The US dollar index is trading at 104.00, having almost completely recovered last week's losses. Yesterday, US President Joe Biden officially refused to participate in the election race, citing the interests of the Democratic Party. Vice President Kamala Harris was named his successor. This increases Donald Trump's chances of winning, which supports the dollar amid expectations of his economic reforms.On the daily chart, the pair corrects above the support line of the ascending channel with the boundaries of 1.3900–1.3600.Technical indicators give an unstable buy signal. The alligator averages begin to open up, and the awesome oscillator indicator forms ascending bars above the transition level.It is recommended to open long positions when USD/CAD is fixed above the 1.3750 level. The target is the 1.3850 level. We put the stop loss at 1.3680.We consider sales with a decrease and consolidation of the pair below the level of 1.3700. The nearest target is at 1.3600. We will set the stop loss at ...
The dollar fell against the Canadian dollar and hovered near multi-month lows against European currencies on Tuesday as Treasury bond yields were little moved amid expectations the US Federal Reserve will not raise interest rates in the near future.Dallas Fed President Robert Kaplan reiterated on Monday that he does not expect interest rates to rise until next year, lowering expectations that inflationary pressures could force the Fed to change policy sooner than stated.Read more: Causes of inflation and scientific approaches to their studyThe yield on 10-year US Treasury bonds stood at 1.6454%, continuing a decline from last week's five-week high.The dollar index to a basket of six major currencies was down 0.19% to 89.991 by 09:34. The euro rose 0.25% to $1.2181, close to its lowest level since February 26. At the same time, the pound rose 0.31% to $1.4178. The British currency was supported by the lifting of coronavirus restrictions in the UK.The Canadian dollar rose 0.31% against the US dollar to $1.2029, almost hitting a six-year high, thanks to higher oil prices. "The Aussie rose 0.46% to $0.7799. The New Zealand dollar rose 0.58% to $0.7242.The mainland yuan rose 0.2% to 6.4257. The Japanese yen rose 0.1 per cent paired with the dollar, to 109.08 yen.In the cryptocurrency market, bitcoin rose 3.81% to $45.255 but remained near a three-month low following tweet from Tesla CEO Elon Musk. Etherium rose 7.58% to $3,529.95, recovering from a two-week low hit on Monday.Read more: The history of Federal Reserve (Fed) and its ...
