Forex News Analysis by LiteForex

Morning Market Review

EUR/USD

EUR declines against USD during today's Asian session, updating local lows of August 3. The instrument loses about 0.2%, preparing to test the level of 1.1700 for a breakdown. USD was again supported by President Donald Trump, who announced the preparation of a bill to reduce the capital gains tax. However, closer to the end of the afternoon session, the market still returned to negative dynamics. The euro, in turn, received support after the publication of the results of the ZEW study. ZEW Economic Sentiment in the euro area in August rose from 59.6 to 64 points, which turned out to be significantly better than market expectations of 59.9 points. ZEW Economic Sentiment in Germany for the same period soared from 59.3 to 71.5 points, while forecasts assumed its decline to 58 points.

GBP/USD

GBP declines against USD in today's Asian session, testing the level of 1.3000 for a breakdown. British investors remain focused on Tuesday's publications from the UK, as well as the data on US producer inflation for July. Claimant Count Change in the UK in July showed a record increase of 94.4K, while in June applications showed negative dynamics at the level of –28.1K. Experts expected the growth by 10K only. Claimant Count Rate fell by 2.2% in July after rising by 7.3% a month earlier. At the same time, the ILO Unemployment Rate in June (for 3 months) remained at the level of 3.9%, despite the projected growth to 4.2%.

AUD/USD

AUD shows negative dynamics paired with USD at trading on Wednesday, developing a corrective impulse formed at the end of the last trading week. The decline in the instrument proceeds against the background of some strengthening of USD, which reacts to the actions of Donald Trump. Earlier, the US president extended the payment of an increased unemployment benefit as a temporary support measure, as Democrats and Republicans have so far failed to reach consensus on negotiations on a new economic aid package. The day before, Trump announced work on a bill that provides for a reduction in the capital gains tax, which also triggered the emergence of a short-term impulse for growth. The pressure on AUD on Wednesday is exerted by weak macroeconomic statistics from Australia. Westpac Consumer Confidence in August showed a sharp decline of 9.5% after falling by 6.1% in the previous month. Wage Price Index in Q2 2020 slowed down from +0.5% QoQ to +0.2% QoQ, which was worse than market expectations at +0.3% QoQ.

USD/JPY

USD is showing moderate growth against JPY during today's Asian session, updating the local highs of July 24. The day before, the instrument rose sharply in response to a number of optimistic news from the US. In particular, investors welcomed Donald Trump's new initiative to reduce some of the taxes for businesses, and also took a lead from the stabilization of the dynamics of the incidence of COVID-19 in the USA. USD was also supported by the data on producer inflation from the USA. Producer Price Index excluding Food & Energy in July increased by 0.5% MoM and 0.3% YoY, which turned out to be significantly better than market expectations of 0.1% MoM and 0.0% YoY. Today American investors await the publication of the July statistics on consumer inflation, as well as the release of Monthly Budget Statement in the USA.

XAU/USD

Gold prices are showing a steady decline, retreating from record highs. The day before, the instrument fell by more than 3.5% in response to the emergence of new legislative initiatives from US President Donald Trump, who proposed to lower the capital gains tax. In addition, expectations of progress in the discussion of a new economic aid package in the US Congress contributed to the decline in the value of the asset. Finally, the markets have widely discussed the statement of President of the Russian Federation Vladimir Putin, who announced the registration of the world's first vaccine against COVID-19, called Sputnik V. It is expected that the mass production of the new vaccine may begin in September, but the drug will enter civilian circulation only closer to the end of all testing stages, that is, in January 2021.

NZD/USD: the pair corrects downward

Current trend

The NZD/USD pair corrects downwards against the global growth of the US dollar, trading near the level of 0.6568.

Yesterday, the Reserve Bank of New Zealand decided to leave the interest rate unchanged at 0.25%. At the same time, the regulator expanded the large-scale asset purchase program (LSAP) to 100 billion New Zealand dollars in order to further reduce retail interest rates to achieve the target volume. The bank noted that New Zealand has contained the local spread of COVID-19 in recent months, easing social constraints and revitalizing economic activity, as seen in earlier figures.

There was not much macroeconomic data from the US this week, and it is worth highlighting only yesterday's data on the Core Consumer Price Index, which reached 0.6% for July against the background of the forecast of 0.2%. The situation inside the country continues to be tense, which does not allow the dollar to finally consolidate in an upward trend. As a result of yesterday's session, the USD Index fell again and is now trading around 93.230.

Support and resistance

On the global chart, the upward movement develops within a wide upward channel, and the price is very close to the support line. Technical indicators start to reverse. Fast EMAs of the Alligator indicator crossed, and the AO oscillator histogram approached the transition level.

Resistance levels: 0.6695, 0.6790.
Support levels: 0.6520, 0.6380.

Brent Crude Oil: the price consolidates

Current trend

Oil prices dropped slightly yesterday and are developing flat dynamics during the first hours of the Friday session. The instrument is still near the level of $45 per barrel but the “bulls” have not yet succeeded in consolidation above this resistance.

This week, some support to the quotes was provided by the data of the report of the US Department of Energy, which recorded another reduction in the stocks of oil and petroleum products in American warehouses. So, for the week of August 7, the figure fell by 4.512 million barrels after falling by 7.373 million barrels in the previous period. Analysts expected a decrease of only 2.875 million barrels.

In turn, pressure on the instrument intensified after OPEC's statements that the cartel expects a decrease in energy demand in 2020 by 9.06 million barrels per day. A month ago, OPEC was counting on a decline of 8.95 million barrels per day.

Support and resistance

On the daily chart, Bollinger bands are moving flat. The price range expands slightly from above, letting the “bulls” renew local highs. The MACD indicator is slightly declining, maintaining a poor sell signal (the histogram is below the signal line). Stochastic, reacting to attempts to grow the instrument in the middle of the week, reversed upwards.

To open new trading positions, it is better to wait until the signals from technical indicators are clarified.

Resistance levels: 45.00, 45.87, 46.49, 47.50.
Support levels: 43.94, 43.00, 41.50, 40.00.

USD/CAD: the instrument is consolidating

Current trend

During the morning session, the USD/CAD pair shows flat dynamics, consolidating near the local lows of January 2020. At the end of last week, USD rose after the publication of positive macroeconomic statistics but the “bullish” momentum quickly lost its strength. Retail sales rose by 1.2% MoM for July after rising by 8.4% MoM for June. Analysts had expected the value to rise by 1.9% MoM. At the same time, the indicator of the "retail control group" for the same period increased by 1.4% MoM, which was much better than the forecasts of +0.8% MoM.

Canada has pleased investors with an increase in the volume of industrial orders. In June, the index rose by 20.7% MoM after rising by 11.6% MoM in the previous month. Analysts expected the volume to grow by only 16.4% MoM.

Support and resistance

On the daily chart, Bollinger bands smoothly reverse into a horizontal plane. The price range is expanding from below, letting the “bears” renew local lows. The MACD indicator is growing, maintaining a poor buy signal (the histogram is above the signal line). Stochastic is showing a similar trend, reversing upwards near the level of 20. The indicator readings signal in favor of the development of the upward trend in the ultra-short term.

The development of corrective growth is possible in the short and/or super short term.

Resistance levels: 1.3250, 1.3300, 1.3350, 1.3400.
Support levels: 1.3200, 1.3150, 1.3100.

Morning Market Review

EUR/USD

EUR is gaining ground against USD during today's Asian session, developing an uptrend in the short term and recovering to its previous record highs updated on August 6. The growth of the instrument is facilitated by technical factors while there are not many new drivers in the market. From the macroeconomic statistics published on Monday, only a nondescript NY Empire State Manufacturing Index can be noted, which in August fell sharply from 17.2 to 3.7 points, while investors expected its correction to 15 points. Today, investors are focused on statistics from the US on the dynamics of retail sales. In addition, with the opening of the US session, traders will pay attention to the data on the housing market for July. Interesting data from the eurozone will appear only on Wednesday, when the July statistics on consumer inflation will be published, as well as a meeting of the Economic and Financial Affairs Council will be held.

GBP/USD

GBP is trading higher against USD during today's morning session, gradually recovering to its previous local highs since early March. USD is under pressure from not the most confident macroeconomic statistics from the United States, as well as the continuing high incidence of coronavirus in the USA. GBP, in turn, reacts negatively to the attempts of the UK authorities to keep the incidence rate within the current values. Earlier it became known that citizens who return to the UK from overseas travel will be forced to be on lock down.

NZD/USD

NZD is trading negatively against USD during today's Asian session, reversing downwards again after a tentative rally earlier in the week. The instrument loses about 0.25%, testing the level of 0.6540 for a breakdown. Macroeconomic statistics released on Monday in New Zealand and the USA turned out to be mixed, but did not bring any noticeable changes to the market dynamics. Business NZ Performance of Services Index in July fell from 54.1 to 53.2 points. The US disappointed investors with the decline in the NY Empire State Manufacturing Index, which fell sharply in August from 17.2 to 3.7 points (the forecast assumed a slight decline to 15 points). Today traders are awaiting the release of the New Zealand Global Dairy Price Index data for July.

USD/JPY

USD is significantly declining against JPY during today's Asian trading, continuing to develop a strong "bearish" trend that formed at the end of the last trading week. JPY managed to demonstrate growth on Monday, ignoring the publication of weak macroeconomic statistics from Japan. The data reflected a sharp decline in Japan's GDP dynamics in Q2 2020 by 27.8% YoY after a 2.2% YoY contraction in the previous period. Market forecasts turned out to be quite accurate, but still suggested a slightly less active decline by 27.2% YoY. On a quarterly basis, the Japanese economy lost 7.8% QoQ against the forecast of –7.6% QoQ.

XAU/USD

Gold prices are relatively stable during today's Asian session and are consolidating near 1990.00 after the active growth of the instrument the day before. The demand for the metal rose again at the beginning of the week, responding to the weak macroeconomic background in the US and Japan. In addition, investors are still rather skeptical about the new economic aid package being developed by US lawmakers. Additional risks are generated by the upcoming US presidential elections, which, obviously, will be held in a tense atmosphere. In turn, it should be noted that some support for USD on Monday was provided by the news that the US and China decided not to consider the results of the implementation of the first phase of the trade agreement concluded at the beginning of the year. Due to the outbreak of the epidemic, China was unable to fulfill its obligations to purchase agricultural products from the USA, but it had quite objective reasons for that.

Morning Market Review

EUR/USD

EUR has shown slight gains against USD during today's Asian session, trading near record highs, updated the day before, when EUR was supported by USD weakness. Uncertainty around the new package of measures to stimulate the US economy continues to exert powerful pressure on USD. American lawmakers still have not come to a consensus, and investors fear that against this background, the Fed may again begin to soften monetary policy, up to the introduction of negative interest rates. Today, European traders focus on macroeconomic statistics on consumer inflation for July. In addition, a meeting of the EU Economic and Financial Affairs Council will take place today.

GBP/USD

GBP is trading higher against USD this morning, hitting record highs since the start of the year. The instrument showed steady growth the day before, despite the fact that there were practically no interesting macroeconomic statistics on the market. Moreover, USD managed to get tangible support after the publication of data on the US housing market. Building Permits rose by 18.8% MoM in July after rising by 3.5% MoM in June. Housing Starts in the same period increased by 22.6% MoM, accelerating from 17.5% MoM. Today, GBP may be affected by publications from the UK on the dynamics of producer and consumer inflation in July, and the US will release the minutes of the July Fed meeting.

AUD/USD

AUD is trading flat during today's Asian session, staying in the area of record highs since February 2019, updated the day before. AUD showed moderate gains, taking advantage of the weakness in USD. In turn, the published minutes of the RBA meeting almost did not affect the dynamics of the instrument, since, unlike the Fed, the Australian regulator feels some freedom in its actions. The Fed, according to analysts, is in an unenviable situation, since US lawmakers still have not been able to ensure the adoption of a new bill on financial aid to citizens and businesses. Insignificant pressure on the instrument on Wednesday was exerted by macroeconomic statistics from Australia. Westpac Leading Index in July slowed down from +0.5% MoM to +0.05% MoM.

USD/JPY

USD is strengthening against JPY during today's Asian session, correcting after active decline at the beginning of the week. The instrument adds about 0.17% and is testing the level of 105.50 for a breakout. The growth of USD proceeds against the background of strengthening technical factors, as investors close part of their short positions. In addition, the Japanese macroeconomic statistics released on Wednesday put some pressure on JPY. Machinery Orders in June unexpectedly declined by 7.6% MoM after an increase of 1.7% MoM a month earlier. Analysts had expected further growth by 2% MoM. In annual terms, the decline in Machinery Orders accelerated from the previous –16.3% YoY to –22.5% YoY, which turned out to be worse than the forecasts of –17.6% YoY.

XAU/USD

Gold prices are trading with a downtrend during today's Asian session, retreating from local highs since August 11, updated the day before. Yesterday, the instrument showed moderate growth, briefly having consolidated above 2000.00 again, against the background of a large-scale weakening of USD in the market. Investors are waiting for qualitative changes from the Fed and US lawmakers, but so far there is very little optimistic news. Moreover, against the backdrop of a difficult epidemiological situation and the upcoming elections in the USA in the coming autumn, the risks of uncertainty increase markedly. Today investors are awaiting the publication of the minutes of the July Fed meeting.

Morning Market Review

EUR/USD

EUR is showing slight gains against USD during today's Asian session, recovering from a strong decline the day before, which was triggered by the publication of the last month FOMC Meeting Minutes. The protocols disappointed investors with negative forecasts and the lack of proposals for any specific measures to implement economic and fiscal stimuli. The FOMC members continue to believe that the current epidemic carries long-term risks and can significantly reduce the pace of recovery in certain sectors of the US economy. Wednesday's weak macroeconomic statistics from the euro area put additional pressure on EUR. Consumer Price Index in the euro area fell by 0.4% MoM in July after rising by 0.3% MoM a month earlier. Analysts expected a reduction of 0.3% MoM. Core CPI fell by 0.3% MoM, accelerating the decline from –0.2% MoM.

GBP/USD

GBP is trading with ambiguous dynamics against USD during today's Asian session, located at the level of 1.3100, which was reached against the background of the active decline in GBP the day before. GBP retreated from its all-time highs on Wednesday, in response to the publication of the FOMC Meeting Minutes, which helped strengthen USD amid growing worrisome market sentiment. In turn, the macroeconomic statistics from the UK, published yesterday, provided GBP with quite tangible support, thanks to which the instrument renewed its highs. Consumer Price Index in July rose by 0.4% MoM, accelerating from 0.1% MoM in June. Analysts had expected decline by 0.1% MoM. In annual terms, inflation reached 1% YoY, which also turned out to be better than the neutral forecasts of 0.6% YoY. Retail Price Index in July also increased from 0.2% MoM to 0.5% MoM against the forecast of 0.1% MoM.

AUD/USD

AUD is trading ambiguously against USD during today's Asian session, consolidating after the correctional decline the day before. The instrument has retreated from record highs since February 2019 amid the publication of the FOMC Meeting Minutes from last month. As expected, the minutes did not bring anything concrete to the market, but disappointed investors with negative forecasts and assessments by the Committee members. First of all, there are still risks of a further slowdown in the American economy amid the epidemiological situation. It is not the first time that the protocols have highlighted the need for new economic and fiscal stimulus, but US lawmakers still cannot agree on the amount of potential assistance to the weakened economy. Today, investors are on the publication of data on the dynamics of jobless claims in the USA.

USD/JPY

USD demonstrates flat trading dynamics against JPY during the morning session, consolidating near 106.00. The active growth of USD, provoked by the emergence of the ambiguous FOMC Meeting Minutes, quickly dried up, and now investors are looking for new drivers for growth. Some pressure on JPY is exerted by the nondescript statistics from Japan on Thursday. Foreign Investment in Japan Stocks for the week ending August 14 rose from JPY 165.5 billion to JPY 371 billion. At the same time, Foreign Bond Investment over the same period fell sharply by JPY 182.2 billion after an active growth by JPY 1.442 trillion over the past week. The most interesting macroeconomic statistics from Japan will appear on Friday, when data on the national Consumer Price Index for July, as well as on the PMI in the manufacturing sector from Jibun Bank for August are released.

XAU/USD

Gold prices are recovering during today's Asian session, partially offsetting the sharp drop the day before. By the end of Wednesday, the instrument showed a confident decline in response to the growth of USD after the publication of the controversial FOMC Meeting Minutes. Investors were disappointed with the published minutes, as they again did not contain any specific measures to stabilize the economic situation in the country. Committee members agreed on the need for more aggressive fiscal stimuli, but US lawmakers have yet to overcome existing differences. The question of the possibility of introducing negative interest rates, judging by the protocols, was not raised at all.

EUR/USD: EUR is recovering

Current trend

EUR is strengthening against USD today, developing the correctional dynamics of Thursday, which replaced the active decline in the instrument on Wednesday amid the publication of the FOMC Meeting Minutes. The recovery of EUR is facilitated not only by technical factors, but also by the macroeconomic statistics from the USA published on Thursday. Initial Jobless Claims for the week ending August 14 increased sharply again from 971K to 1.106M, while analysts expected a further decline in the figure to 925K. At the same time, Continuing Jobless Claims for the week ending August 7 fell from 15.48M to 14.844M, which was better than the projected 15M.

Today, European investors are focused on the data on business activity in the euro area for August. Manufacturing PMI is expected to continue moderate growth, while Services PMI is still characterized by negative forecasts.

Support and resistance

In the D1 chart, Bollinger Bands are reversing horizontally. The price range is narrowing from below, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD preserves a moderate downtrend and a previous weak sell signal (located below the signal line). Stochastic demonstrates much more confident dynamics and does not react to the resumption of growth of EUR at the end of the week.

To open new trading positions, it is necessary to wait for the signals from technical indicators to be clarified.

Resistance levels: 1.1914, 1.1964, 1.2000.
Support levels: 1.1850, 1.1780, 1.1700, 1.1657.

GBP/USD: the pair declines

Current trend

The GBP/USD pair declines after the explosive growth of USD against a basket of world currencies.

Even a significant block of positive macroeconomic information released by the UK Bureau of Statistics on Friday failed to reverse the downward trend. The July Core Retail Sales was 2.0%, better than the 0.2% expected. Retail Sales were 3.6%, which is better than the forecasted 2.0%. August Composite PMI rose to 60.3 points from 57.0 points for July. Manufacturing PMI reached 55.3 points from 53.3 points a month earlier. Service PMI remained at 60.1 points, which is better than the forecast of 57.0 points.

USD rose significantly, causing the pair to fall. USD Index rose from 92.400 to 93.200 in one trading session after August US Manufacturing PMI data release. It amounted to 53.6 points against the forecast of 51.9 points. Existing Home Sales also increased significantly for July, reaching 5.86 million against 4.70 million for June.

Support and resistance

The instrument moves within a broad ascending channel, and after four days of volatile dynamics, it is in a downward wave. The readings of the indicators reflect further decline and on the global chart, they reflect the possibility of a reversal. Fluctuation range of the EMA indicator Alligator narrows and the histogram of the AO oscillator approaches the zero line.

Resistance levels: 1.3240, 1.3350.
Support levels: 1.3030, 1.2620.

USD/JPY: the growth continues

Current trend

The pair is showing gains amid negative news from Japan, trading at 106.00.

JPY continues to be under pressure from domestic fundamental factors. It became known recently that the two largest airlines, All Nippon Airways and Japan Airlines, will significantly reduce the number of domestic flights due to the introduction of additional quarantine measures in connection with the second wave of the COVID-19 pandemic. All Nippon Airways will cut up to 45% of all its flights, while Japan Airlines will cut its number of flights by 43%.

USD began to fall in price against the basket of major currencies again today dropping to the level of 93.150, but this had practically no effect on the pair's rate, as it continues to grow against the background of yesterday's active upward momentum.

Support and resistance

The global descending channel continues to form. At the local interval, the price has reached the resistance line of the inner channel and is ready to form a downward reversal. Technical indicators give a new sell signal. The fast EMAs of the Alligator indicator are below the signal line, and the histogram of the AO oscillator is in the negative zone.

Resistance levels: 106.50, 107.90.
Support levels: 105.40, 104.00.