Daily Market Analysis from ForexMart

EUR/USD. December 23, 2019 – Euro continues to weaken

On past Friday the EUR/USD pair fell to the area of ​​1.1050, reacting to the strengthening of the US dollar in the market and the decline of the EUR/GBP pair (to 0.85). The dollar got support from U.S. GDP data for the III quarter, which showed accelerated growth in the US economy. Gross domestic product increased 2.1% year on year. Additional support was provided by data on income and expenses: in November personal income grew by 0.5% (the forecast was 0.3%). Personal expenses increased by 0.4% (the indicator coincided with the forecast).

At 16:30, you should pay attention to the publication of data on the volume of orders for durable goods in the US in November. Experts expect the figure to drop from 1.5% m/m to 0.6% m/m. Since this indicator is an important leading indicator of production trends and investment activity, these data can put strong pressure on the dollar. At 18:00 no less important publication is expected – a report on the volume of home sales in the primary market in November.

We remind you that tomorrow the exchanges will work on a shortened schedule, and the full-fledged work of the sites will resume on Thursday, after the Christmas holidays. Today, in anticipation of macroeconomic news, the pair will continue to weaken to the area of ​​1.1060.

USD/CAD. December 24, 2019 – Canadian dollar continues to decline

Today the Canadian dollar is showing a decline to the mark 1.3165 after the release of statistics on Canadian GDP. According to recent data, the country's economy slowed down by 0.1% in October.

Over the past few weeks the «canadian» has shown steady growth, having managed to reach the level of 1.31. The looney strengthened, despite the weak data on retail sales (-1.2% versus 0.5%) and employment (-71.2K against the forecast of 10.0K). However, currency growth was stopped by a strong support level of 1.31.

Experts believe that in the near future it will be difficult for the Canadian dollar to continue to strengthen. The Bank of Canada is still satisfied with the current monetary policy, however, in 2020, the regulator may begin to introduce mitigation measures if Canada's economic indexes continues to deteriorate.

Brent/USD. December 25, 2019 – Oil reached $67.20 per barrel

Brent quotes continue to update highs. This morning, the price of «black gold» rose to $67.20 per barrel. The growth factor was positive news from the front of trade negotiations between the US and China: US President D. Trump said, that the sides had finally approved the first phase of the trade deal. And now they are finalizing and translating the necessary documentation to sign the agreement.

In addition, yesterday the American Petroleum Institute (API) published a report according to which US crude oil inventories fell by almost 8 million barrels per week. Analysts expected a decline of 2 million.

Today we should not expect significant dynamics in the oil market, since most of the European and American sites are closed due to the celebration of Christmas.

GBP/USD. December 26, 2019 – Sterling slightly declining from 1.30

The level of 1.3000 managed to restrain the British «bulls», not allowing the pound to gain a foothold above this mark. The current quotation of the GBP/USD pair is 1.2960.

The news background is mixed today. On the one hand, the negative dynamics of the debt market is exerting pressure on sterling, where the yield on UK government bonds is declining relative to its counterparts from the USA and Germany.

On the other hand, the rise of oil prices may provide local support to the pound. Brent climbed to a high of $67.50 per barrel after the release of statistics from the American Petroleum Institute, according to which US oil inventories fell four times more than analysts had expected.

EUR/USD. December 27, 2019 – Euro is growing rapidly

The euro today confidently approached the level 1,1150. The currency began to strengthen yesterday, responding to the continued optimistic mood of market participants regarding the settlement of the US-Chinese trade conflict. The leaders of the USA and China confirmed that the first phase of the trade deal had already been concluded, and in early 2020 the parties will hold a ceremony of signing the agreement.

The US dollar received some support yesterday after the release of data on the number of initial applications for unemployment benefits. The indicator fell to 222K, which turned out to be slightly better than analysts' forecasts (224K). The previous indicator was fixed at 235K. However, this factor was not enough for the dollar to withstand the rapidly growing euro.

Moreover, amid a probable recovery in global economic growth in 2020, the demand for protective assets may decline, which may put some pressure on the US dollar. Today we will observe the recovery of the European currency from the level of 1,1100 to the area above 1,1150.

EUR/USD. December 30, 2019 – Euro recovered to 1.1200

The European currency continues to win back the losses of the last week, reaching the level of 1.1200. The US dollar is under pressure: on Friday, all G10 currencies and most emerging markets currencies showed growth in tandem with the dollar, and today this trend continues.

Optimism at global sites is fueled by expectations of the imminent signing of the first phase of a trade agreement between the US and China. In anticipation of the New Year, market activity is small, and the news background remains neutral, so the topic of trade negotiations between Washington and Beijing will be the main factor influencing the EUR/USD pair in the near future.

The only thing that you should pay attention to is the secondary data on the American economy: in the evening hours the business activity index (PMI) in Chicago and the business activity index from the Federal Reserve Bank of Dallas will be published. Experts suggest a slight increase in indicators. If the forecasts are confirmed, the dollar will receive some support and will not allow the euro to gain a foothold above the level of 1.12.

EUR/USD. December 31, 2019 – Euro is confidently approaching 1.1240

The euro continues to grow, breaking the level of 1.1200. Today, in anticipation of the New Year holidays, trading activity will remain low, since most of the world markets will be closed.

Support for the European currency continues to be provided by positive information on the US and China trade deal. Representatives of China reported that the leaders of two countries took a phone talk, and discussed the details of the first part of the trade agreement. It is noted, that the signing of the deal will most likely take place in the first week of January 2020.

Such a decrease in trade tension has a positive effect on the entire global economy, which, in turn, will increase the demand for risky assets and support the «eurobulls» in the near future.

Brent/USD. January 07, 2020

Brent crude on Tuesday shows a correctional decline from the level of $70 per barrel. The current quote of the asset is $68.40.

The focus of the market is still the escalation of geopolitical tensions in the Middle East, which could turn into the open military confrontation between the US and Iran. This, in turn, may create a shortage of supply on the global oil market due to interruptions in supplies from Iran and Iraq – countries that produce more than 30% of all hydrocarbons in the Middle East region.

Iran’s response to the assassination of Iran’s military leader Qassem Suleimani at Baghdad’s airport will inevitably lead to further intensification of the military conflict, which will allow Brent crude to return to an upward trend above $70 per barrel.

Additional support for oil can be provided by data on changes in oil reserves in the United States from API and the US Department of Energy. Analysts expect a decrease in reserves of 4 million barrels.

USD/CAD. January 08, 2020 – Canadian dollar remains at local highs

Oil continues to trade at local highs ($69 per barrel), supporting all commodity currencies, including the Canadian dollar. At the same time, pressure on currencies is exerted by risk aversion amid escalation of the military conflict between the US and Iran. The current CAD quote is 1.3000.

It should be noted that the Canadian dollar is the least vulnerable to risk aversion, since the Canadian economy mainly has support of the US market. This fact allows looney quotes to stabilize in the area of ​​local maximums.

In addition, a further increase in oil prices can completely neutralize the risk aversion factor, an this will allow the USD/CAD pair to continue to decline to 1.3150.

Fundamental analysis of Brent. January 09, 2020

Brent crude oil failed to stay in the region above $70, and today we see quotes decline to around $65.50 per barrel. Pressure on prices was exerted by easing geopolitical tensions in the Middle East: despite Tehran's attacks on US military bases in Iraq, Donald Trump refrained from further retaliatory measures.

The American president said that he was against further escalation of the military conflict, noting his intention to confine himself to new economic barriers in the form of tougher sanctions against Iran.

In addition to the Middle East conflict, a report from the US Department of Energy on changes in crude oil reserves acted as a factor of pressure on oil prices. According to the latest data, oil reserves rose 1.2 million barrels, after falling for three consecutive weeks. Experts predicted a reduction in reserves of 3.5 million barrels.