Daily Market Analysis from ForexMart

EUR/USD. October 14, 2020 – Euro declines amid negative external background

The euro is losing ground on Wednesday, dropping to 1.1715. Demand for the US dollar rose after news of another deadlock in the Brexit negotiations, a new lockdown in the UK and the suspension of coronavirus vaccine testing by two pharmaceutical companies.

At the same time, the dollar is supported by statistics from the United States: the inflation rate increased by 0.2%, increasing for the fourth month in a row. Today you should pay attention to the statistics on the US producer price index in September, as well as on the data on industrial production in the eurozone in August. The latest figures reflected only 0.7% MoM growth in European production, after rising 4.1% in July. Analysts had forecast growth of 0.8%.

However, the strengthening of the American currency is held back by the course of the election race in the United States. The position of Joe Biden, the main rival of the incumbent President Donald Trump, remains strong, and his army of fans is growing every day. Experts point out that Biden's victory in the elections could give the economy more impetus for recovery and create conditions for a rally in the stock and foreign exchange sectors.

USD/CAD. October 15, 2020 – Dollar hits 1.32 amid spread of second wave of coronavirus

On Thursday, the USD/CAD pair continues to trade near local highs just above the 1.3200 level. The US dollar is gaining support amid rising market concerns about the spread of the second wave of coronavirus worldwide.

In addition, investors drew attention to the suspension of trials of the Covid-19 vaccine by two US pharmaceutical companies due to the appearance of side effects.

Today the macroeconomic calendar is almost empty. Only data on the US labor market from ADP and speeches by members of the Board of the Bank of Canada and its head Tim Lane can attract attention.

The United States will provide data on applications for unemployment benefits: it is expected that the number of initial applications can grow from 840 thousand to 845 thousand, and the number of repeated applications should decrease from 10 976 thousand to 10 500 thousand. This means that the duration of unemployment in the United States continues to decline, which is currently the most important factor for the growth of the dollar.

EUR/USD. October 16, 2020 – The euro is growing slightly from the level of 1.17

On Friday, the EUR/USD pair is growing moderately from the level of 1.1700, the current quote is 1.1725. During the current week, the euro showed weakening, responding to a decrease in demand for risky assets due to political and economic uncertainty in the United States and the worsening epidemiological situation in Covid in the world.

Experts note that restrictive measures have been reintroduced in many European cities, since they recorded significant jumps in the incidence of coronavirus.

Additional pressure on the euro is exerted by the complexity of the Brexit negotiations. London and Brussels have failed to move forward on the deal, exacerbating the risks of Britain leaving the EU without a deal.

However, today the euro has started to grow. The pressure on the dollar was exerted by yesterday's data on the labor market, which continues to experience difficulties for the second week in a row. The number of applications for unemployment benefits rose to 898 thousand against the previous level of 845 thousand. The forecast assumed a decrease to 810 thousand.

At the end of the day, the US is to release data on retail sales, which growth is expected to slow from 2.6% to 2.2%. You should also pay attention to the volume of industrial production in the States: experts predict a slowdown in the decline in production from -7.7% to -6.6%.

Brent. October 19, 2020 – Oil fixed at comfortable levels

Brent oil prices have consolidated above $42 per barrel. The current quotation of the asset is $42.77.

Today, markets are focused on the meeting of the OPEC + ministerial monitoring committee. The parties to the agreement will meet to assess the state of the market, and it is unlikely that any decisions will be made regarding the supply. This will most likely happen at a meeting scheduled for November 30 – December 1.

One of the scenarios for the forthcoming report assumes that the oil market in 2021 will be characterized by weak demand and growing supply. For this reason, the participants in the energy pact can discuss easing the restrictions from January 1.

Thus, if a gradual increase in oil production by OPEC + countries against the backdrop of weak demand and an increase in production in Libya is questionable, the initiative on the oil market will finally go to buyers, which will allow Brent quotes to gain a foothold above $43.50 per barrel.

EUR/USD. October 20, 2020 – Euro continues to rise above 1.18

The European currency continues to strengthen, following the dynamics of yesterday. The current quote for the EUR/USD pair is 1.1805. Market participants were actively selling the dollar on expectations of an early agreement on fiscal stimulus in the United States. On Sunday, House speaker Nancy Pelosi announced that if a decision on the issue of incentives is not made within 48 hours, the deal will not take place.

The euro was further supported by the comments of Christine Lagarde. The head of the ECB noted that she considers it necessary to leave the volume of the economic recovery fund in the amount of 750 billion euros. However, the strengthening of the euro above 1.1850 is not yet considered, as the epidemiological situation in Europe remains extremely tense.

Today you should pay attention to the publication of data on construction in the United States. Experts predict an increase in the number of building permits issued from 1.476 million to 1.52 million.

EUR/USD. October 21, 2020 – Euro hits one-month high

The Euro has managed to grow to the level of 1.1870 since the beginning of the week, but on Wednesday it started to decline to the area of 1.1840. The dollar was pressured by expectations of an early agreement on economic stimulus measures in the States: House speaker Nancy Pelosi yesterday forced politicians to speed up the process of discussing the aid package.

An additional factor that puts pressure on the US currency is the growing sympathy of US residents for Joe Biden during the election race in the States. And if Trump's main opponent wins the presidential election, a lot of money will be poured into the US economy, which is obviously not a positive factor for the dollar.

Yesterday, statistics on construction in the United States were published: the number of new home bookmarks for September increased to 1.42 million against the previous figure of 1.39 million. The number of new housing permits issued was 1.55 million after the August figure of 1.48 million. Such data provided support to the dollar, which suspended the Euro rally.

Today, the macroeconomic calendar is almost empty, in the evening hours you should pay attention to the report on the Beige book in the United States.

EUR/USD. October 22, 2020 – Euro declines towards 1.1800

On Thursday, the EUR/USD pair is declining moderately, continuing the dynamics of the previous day. The current quote for the asset is 1.1817. The macroeconomic calendar is practically empty today, all the market's attention is directed to what is happening in the US Congress.

A week and a half before the presidential election, the White House came close to concluding an agreement on a new stimulus package for the American economy. D. Trump said yesterday that he was ready to allocate $2.2 trillion to support the economic system, contrary to the intentions of his own Republican Party.

Thus, the fiscal support of the United States will definitely be carried out regardless of whether Trump or Biden takes the presidency in November.

Today we should pay attention to the publication of data on the consumer confidence index in the euro zone for October, where there may be a slight deterioration in the indicator from 13.9 points to 15 points. The US is to release September data on home sales in the secondary real estate market and statistics on the number of initial claims for unemployment benefits. Experts predict a slight decrease in the indicator.

USD / JPY. 23.10 | "Inside bar" below the level of 105.00

On Wednesday, the price of USD / JPY bounced from 105.50, after which it fell by almost 1000 points, the head and shoulders pattern worked out, reaching the previously indicated target at the resistance level of 104.50.

We have not managed to update the lows yet, however, in the medium term we would like to see further development of the downward trend. Trades based on the “inside bar” pattern are risky, as there is also a high probability of a rebound from a strong level. In the near future I expect to consolidate above 104.50 and retest this resistance.

GBP/USD. October 27, 2020 – Pound sterling recovers moderately

The GBP/USD pair is moderately strengthening on Tuesday, recovering from yesterday's decline to 1.2990. The current sterling quote is 1.3037.

Investors reacted positively to the news of the extension of the Brexit negotiations even before Wednesday. If earlier the UK was already ready to leave the EU without a deal, now there are hopes that an agreement between London and Brussels will still be reached by the end of December.

Experts note that the new round of negotiations, which started on October 22, is proceeding in an optimistic manner, and at the moment the parties have managed to agree on more than 90% of the controversial issues.

Today the macroeconomic calendar is almost empty. Attention can only be attracted by data on orders for durable goods in the US for September, as well as statistics on the consumer confidence index. Orders should rise by 0.1%, while the second indicator should rise from 101.8 points to 102.5 points. If the forecasts come true, the dollar will start strengthening to the area below 1.30.

GBP/USD. October 26, 2020 – Pound recovers after last week's fall

GBP/USD resumed gains earlier in the week, climbing from 1.3000 to 1.3075. Last week, the pair moved mainly within the downtrend from the 1.3170 level.

All the attention of investors today is riveted to any news on Brexit. It became known over the weekend that London and Brussels have decided to extend the talks until Wednesday. Last week, the British authorities already announced their readiness to leave the EU without an agreement at all, if Brussels does not compromise. In response, the European Union stated its desire to continue negotiations and reach an agreement, but «not at any cost.»

Interesting statistics were released last Friday. Retail sales in the UK unexpectedly rose 1.6% against the forecast for growth of 0.5%. At the same time, the business activity indices in the country came out worse than forecasted: the total PMI fell from 55.7 to 52.9 points, while the activity in the manufacturing sector fell from 54.1 to 53.3 points.

Important statistics from Britain are not planned today. In the US, data on new home sales will be published in September. Sales are expected to decline from 4.8% to 2.8%, which will put pressure on the dollar in the evening hours.

EUR/USD. October 26, 2020 – The dollar strengthened to the level of 1.18

The EUR/USD pair has returned to the 1.18 level again, falling from the 1.1860 area. The euro was pressured by the data on the IFO business climate index in Germany in September: the indicator came out worse than forecast, falling to 92.7 points against expectations of a reduction to 93.0. Otherwise, today the economic calendar is practically empty, and all the attention of the market will be shifted from statistics to politics.

As you know, the US presidential elections will be held on November 3. All pre-election debates have already ended and it remains only to wait for the event itself. And depending on the results, the path of the country's development and its monetary policy will be diametrically opposite. At the end of the debate, Democratic challenger Joe Biden takes the lead in the race.

In the evening hours, you should pay attention to the sales of new homes in the United States in September. Sales are expected to decline from 4.8% to 2.8%, which could somewhat halt the dollar's strengthening today.

EUR/USD. October 28, 2020 – Euro fell sharply to 1.1740

The EUR/USD pair began to decline sharply amid growing investor appetite for safe assets. The current quote for the pair is 1.1740.

The pressure on risky assets is exerted by the widespread development of the second wave of Covid-19 and the approaching date of the US presidential election (November 3). At the same time, the dollar was supported by yesterday's data on the volume of new orders for durable goods in the United States: in September, the indicator increased by 1.9% m/m after gaining 0.4% a month earlier. Analysts had forecast an increase of 0.5% m/m.

The indicator, excluding orders for transport and utility equipment, expanded 0.8% m/m after strengthening earlier by 1% m/m. The actual data exceeded the expectations of specialists twice.

The euro was directly pressured by rumors that Germany plans to introduce a two-week quarantine with a stop to everything except important social facilities. In France, they are discussing the strengthening of restrictive measures for a month, and in the UK, options for a second lockdown are on the agenda.

The economic calendar is empty for today, so the dynamics of the pair will continue to depend on the situation around the second wave of coronavirus and the expectations of tomorrow's ECB meeting.