Daily Market Analysis from ForexMart

EUR/USD. October 29, 2020 – Euro fell to 1.1700

On Thursday, the EUR/USD pair demonstrates a steady decline to the level of 1.1700. The euro was pressured by news of additional restrictive measures in Germany and France. In France, a nationwide quarantine is introduced from October 30 to December 1, and in Germany – from November 2.

An additional driver of the weakening of the European currency was the news on Brexit. This week, there has been some progress in negotiations between the UK and the European Union, which has led to the strengthening of the EUR/GBP pair. This, in turn, put pressure on EUR/USD through the cross.

Today we should pay attention to the important meeting of the European Central Bank (ECB) and the conference of Christine Lagarde. A softer rhetoric is expected from the regulator amid the threat of a repeated recession in the economy. In addition, the ECB may adjust its economic forecasts downward.

In the US, data will be published on the number of applications for unemployment benefits. Their total number should decrease by 510 thousand. Moreover, a decrease is expected for both initial and repeated calls. Also, attention will be drawn to the report on US GDP for the III quarter and the index of unfinished sales in the real estate market in September.

USD/CAD. October 29, 2020 – The US dollar is growing steadily in tandem with the «Canadian»

The USD/CAD pair has been demonstrating confident strengthening in recent days. The current quote for the pair is 1.3340.

A meeting of the Board of the Bank of Canada took place yesterday, and the regulator, as expected, kept the key interest rate at 0.25%. In addition, it was decided to adjust the asset purchase program: now the bank will buy long-term bonds, which affect the rates on loans needed by households and businesses.

Bank of Canada Governor Tiff Maclem previously said that the central bank is likely to keep the interest rate unchanged at 0.25% for at least two years. These plans put pressure on the Canadian dollar.

An additional negative was brought by the decline in oil prices. Brent quotes fell to $38.30 a barrel for the first time since June 1. The driver of the decline was the data on oil reserves, which showed the strongest weekly growth since July, as well as the continued increase in the number of COVID-19 cases in the world. According to the US Energy Information Administration (EIA), US oil inventories rose by 4.3 million barrels.

Given the current news background, we can expect further growth in the USD/CAD quotes.

EUR/USD. October 30, 2020 – Euro continues to trade below 1.1700

At the end of the week, the euro continues to remain in the area of ​​minimums below the level of 1.17. The current quote for the pair is 1.1670. The European currency was under pressure from the results of yesterday's meeting of the ECB.

The European regulator kept the monetary policy unchanged (rate at 0%), but did not rule out the likelihood of its easing already in December. Additional pressure on the euro is exerted by the widespread withdrawal of investors from risky assets.

At the same time, the dollar was supported by strong data from the US. A preliminary estimate of GDP for the third quarter showed economic growth by 33.1% q/q, with a forecast of an increase of 31.0%. In the second quarter, the country's economy collapsed by 31.4%. In addition, the US recorded a 40.7% rise in consumer spending in the third quarter, and the number of applications for unemployment benefits fell from 791 thousand to 751 thousand this week.

Today, one should pay attention to the data on GDP of the eurozone: the indicator in the third quarter of 2020 increased by 12.7% q/q and decreased by 4.3% y/y, which turned out to be much better than forecasts (an increase of 9.4% q/q and a decrease of 7% y/y). This data will allow the euro to regain its losses somewhat.

EUR/USD. November 2, 2020 – Euro has suspended its decline

November began for the euro with weakening to the level of 1.1615. There are enough pressure factors on the European currency. Here and a decrease in appetite for risky assets, and lockdowns in Germany and France, and the presidential elections in the United States. Additional pressure on the euro rate is exerted by the dollar's popularity as a safe asset.

Tomorrow will be the most significant event of the year – the US presidential election. Strong market volatility is likely from Tuesday to Thursday, as the future monetary policy of the United States is highly dependent on the new figure in the presidency.

In Germany, from today, a soft lockdown is being introduced, which includes restrictive measures to reduce the spread of coronavirus in Europe. France also intends to introduce measures in the coming days. However, both the German and French economies look rather weak and may not withstand the second lockdown.

Statistics on PMIs in the Eurozone and Germany were released today. Both indicators came out better than expected, which gave the euro some support and allowed it to rise to 1.1650.

Brent. November 3, 2020 – Oil rises on US dollar weakness

On Tuesday, Brent quotes are growing, reaching $40 per barrel. Prices are supported by the general weakening of the US dollar ahead of today's US presidential elections.

However, despite the upward momentum, market participants fear that a decrease in demand due to an intensification of the COVID wave amid growing supply will lead to oversupply and a collapse in prices, as was the case in the I-II quarter of this year.

In addition, the growth in oil production in the world continues to act as a factor for the weakening of Brent. The number of operating oil platforms in the US has reached its highest level since May this year, according to a Baker Hughes report. Moreover, in Libya, oil production reached 800 thousand barrels per day, and the figure could reach 1.3 million barrels by early next year.

In such conditions, it will be quite difficult for OPEC+ to maintain a balance in the oil market. The next meeting of the organization is scheduled for the end of November, while the risks of oversupply remain the main driving force of the market.

EUR/USD. November 3, 2020 – Dollar weakens against euro in anticipation of presidential elections

Quotes of the EUR/USD pair on Tuesday are growing steadily, returning to the level of 1.1700. The current quote for the pair is 1.1715.

Today is a very big day for the US dollar as America chooses its new President. And the future policy and economy of the country will depend on who will take the place of the head of the White House. The results of the voting will become known only tomorrow, therefore, during the day, the markets will experience increased trading volatility.

It should be noted that in 2016, when Donald Trump won the presidential election, the euro appreciated by 270 pp. Trump has threatened to appeal the vote if he is defeated this year, putting pressure on the dollar amid political uncertainty.

The American currency is under pressure, even despite strong data on business activity in the US manufacturing sector. Yesterday the business activity index for October was published: the indicator strengthened and amounted to 53.4 points against the previous value of 53.2. Today you should pay attention to the data on the volume of industrial orders in September: growth is expected from 0.7% to 1%.

GBP/USD. November 5, 2020 – Pound rises on general US dollar weakness

On Thursday, the GBP/USD pair is growing steadily, reaching the level of 1.3075. Today, a meeting of the Bank of England took place, following which the regulator kept the rate at 0.1%, and also announced the expansion of the purchase of government bonds by 150 billion pounds, bringing the total volume to 895 billion.

The Monetary Policy Committee of the Central Bank has shared economic forecasts in the IV quarter: the regulator expects a decrease in indicators, since a four-week quarantine begins in the UK from today.

The US dollar against the pound sterling is weakening across the entire spectrum of the market after the publication of the interim results of the US presidential election. Joe Biden got 264 electoral votes and until the final victory he has to gain 6. At the same time, Donald Trump's team did not agree with such results and filed an application with the Georgia State Court to recount the voting results.

Despite the local growth caused by the weakness of the American currency, the general background for the pound remains negative. There are risks of uncertainty about Brexit, a nationwide quarantine, and weak economic indicators. The total business activity index in October fell from 52.3 to 52.1 points. The index of business activity in the service sector fell to 51.4 points.

EUR/USD. November 5, 2020 – Euro has reached the level of 1.18

On Thursday, the EUR/USD pair continues to grow steadily, approaching the 1.1800 level. Markets continue to await the outcome of the US presidential election. The results are still unknown, as the vote goes through the mail and the election committee has not yet collected all the votes.

According to preliminary data, Joe Biden collected 264 electoral votes and he lacks only 6 votes to complete victory. 214 boards voted for Trump. The team of the incumbent president has already filed lawsuits demanding a recount of the voting results in a number of states.

The current quote for the pair is 1.1795. Uncertainty regarding the summing up of the voting results may last until the end of the week, and only then the further direction of the pair will become known.

In addition to the election results, the meeting of the US Federal System and the subsequent comments of the regulator's representatives will be of interest. It is expected that until the passions around the elections subside and the White House does not decide on its further policy, the Fed will refrain from harsh statements and decisions. And under the current conditions, this can act as a positive factor for the dollar exchange rate. However, while the pair is growing steadily and during the day it can consolidate above the level of 1.18.

EUR/USD. November 6, 2020 – Euro confidently moves towards 1.19

EUR/USD maintains its upward momentum, approaching the 1.1850 level. Markets continue to monitor the US presidential elections, and the vote count is still in progress. So far, 264 electors have voted for Joe Biden, while 214 have voted for Donald Trump.

Biden's headquarters have already announced their victory, but Trump considers himself «the winner by legal vote» and is demanding a recount in some states. Market participants expect that if Joe Biden wins, the Democrats will quickly approve a package of fiscal stimulus measures, which supports risky assets today.

During the day, you should pay attention to the publication of the US Department of Labor report on the state of the labor market. The unemployment rate may fall from 7.9% to 7.7%. In addition, another 510 thousand new jobs can be created. If the data is confirmed, the dollar will receive some support.

EUR/USD. November 9, 2020 – Euro consolidates near the level of 1.19

The euro continues to strengthen against the dollar, close to the 1.1900 level. The US presidential election was won by Democratic representative Joe Biden, which put strong pressure on the dollar. The reason is that investors now expect more stimulus for the US economy, despite continuing divisions in Congress.

Last Friday, the United States presented a block of interesting economic statistics that went unnoticed amid the elections. In particular, the unemployment rate in the country in October fell to 6.9% against the forecast of 7.7%. The number of jobs outside the agricultural sector increased by 638 thousand, while an increase of only 600 thousand was expected.

The only thing that turned out to be worse than expected was the increase in wages. The indicator on the average hourly wages in October increased by only 0.1% against the expectation of growth by 0.2%. In general, we can say that the US labor market still maintains a positive momentum.

The current quote for the EUR/USD pair is 1.1870. The RSI indicator moves horizontally, which signals the formation of a flat below the level of 1.19.

Brent. November 10, 2020 – Oil shows strong upward momentum

On Tuesday, Brent crude oil continues to rise, following the dynamics of yesterday. The current quotation of the asset is $42.88 per barrel. Experts note that such an upward trend has become the best over the past 6 months.

The growth driver was the news from the pharmaceutical company Pfizer that the vaccine it has developed is capable of protecting in 90% of cases of COVID-19 infection. The company said that they plan to obtain permission to sell the new drug by the end of November.

A cure for the coronavirus could significantly revive and revitalize the tourism industry, which has driven oil prices up.

Additional support for Brent was provided by the comments of the Minister of Energy of Saudi Arabia on the readiness of OPEC + to postpone the decision to revise the restrictions on oil production. According to the latest data, the total production of OPEC + countries in October increased by 210 thousand barrels per day and reached 32.27 million barrels per day. The increase in oil production was mainly due to the restoration of work in the fields of Libya.

EUR/USD. November 10, 2020 – Euro declines after yesterday's highs

The EUR/USD pair is showing a correctional decline today after yesterday's rise to 1.1920. The current quote is 1.1775. Yesterday was full of news that contributed to increased volatility.

First, Joe Biden's victory in the US presidential election offers hopes for improving and strengthening America's international relations. However, buyers began to fix longs on the announcement by the head of the US General Services Administration of the refusal to recognize Joe Biden's victory, which increased political uncertainty in the country.

On the other hand, investors were optimistic about news from pharmaceutical company Pfizer about the success of a new vaccine capable of preventing 90% of coronavirus infections.

At the same time, the European currency was under pressure from the previously published statistics from the eurozone. Sentix investor confidence index for November deteriorated to -10.0 points against the previous value of -8.3. The data, however, turned out to be better than expected, implying a decline to -15.0 points. Additional negativity was brought by the news that the EU decided to impose reciprocal customs duties on US goods in the amount of $ 4 billion.

Today during the day the pair will adhere to the flat dynamics in the 1.1800 area.

EUR/USD. November 11, 2020 – Euro continues to weaken against the dollar

On Wednesday, the EUR/USD pair fluctuates weakly on both sides of the 1.1800 level, while the downward trend remains. Weak economic statistics from Germany put pressure on the euro: the ZEW economic sentiment index fell to 39.0 points, which was the lowest level since April this year. An additional negative is the worsening of the epidemiological situation in Europe.

At the same time, participants in the foreign exchange market are concerned about Donald Trump's attempts to annul the voting results in Michigan and Pennsylvania. And his further efforts in this direction will only increase the uncertainty in the United States and suppress the demand for risky assets.

Thus, the euro will continue to decline during the day, responding to the negative external background. The economic calendar is empty today, in the United States it is a day off in honor of the Veterans Day. Only in the evening will the speech of the head of the ECB Christine Lagarde be of interest.

GBP/USD. November 12, 2020 – Pound falls on weak economic data

On Thursday, the GBP/USD pair continues to decline, following the dynamics of yesterday. The current quote for the asset is 1.3145.

Uncertainty around Brexit continues to exert pressure on the pound sterling. Under current agreements, the UK and the EU must agree on an initial draft of the deal by November 19. The final agreement of the contract should take place before the end of December 2020.

Despite the ongoing negotiations, there is still no draft agreement, so the risks of a «hard» Brexit (without a deal) are growing every day. In this case, Britain will leave the single market and common customs space.

A large block of statistics from the UK was published today, which also put pressure on the British currency rate, as all data turned out to be worse than forecasted.

GDP in the III quarter increased by 15.5% in comparison with the previous quarter, which turned out to be worse than the forecast. Experts had expected growth to 15.8%. However, this growth has been a record since 1955. Industrial production data for September showed an increase of 0.5%, while experts had expected an increase of 0.8%. Manufacturing production rose 0.2% in September after rising 0.7% in August.