The US currency is weakening against the pound but is strengthening against the euro and the yen. Investors are focusing on the comments of Atlanta's Federal Reserve Bank head Raphael Bostic, who said the US economic recovery is under threat due to rising cases of coronavirus in many states.
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At 16:00 (GMT+2), Canadian June data on the index of business activity from Ivey will be published. The indicator reflects the state of business activity in the national manufacturing industry and is based on a survey of procurement and supply managers of leading national enterprises in all sectors. At the same time, their attitude to the current economic situation and the prospects for its further development are assessed. Previously, the indicator rose from 22.8 to 39.1 points. Continuation of this trend may support the Canadian dollar.
At 16:00 (GMT+2), US data on the number of vacancies in the JOLTS labor market for May will be published. The indicator captures the number of new open vacancies in the non-agricultural sector and is an important indicator of the US labor market. The value is expected to decline from 5.046 million to 4.850 million jobs. The implementation of the forecast may put pressure on the US dollar.
On Monday, the pair made another attempt to break above the reversing level of 18.35 ([6/8]), but again failed and returned to the central Murrey channel. Currently, quotes are testing the central level of 17.96 ([4/8]), the breakdown of which will give the prospect of further downward correction to 17.73 ([3/8], the lower line of Bollinger Bands) and 17.57 ([2/8]).
Last week, the USD/CAD pair corrected down to reach 1.3549 (Murrey [3/8]) but today, the instrument tries to grow.
The euro strengthened against the US dollar yesterday amid retail growth in the Eurozone by 17.8% in May after a decline of 12.1% a month earlier. YoY, a decrease in the indicator slowed down from –19.6% to –5.1%, which also favorably affected the rate of EUR. The dollar won back part of the positions lost on Monday after the publication of data from the USA: the ISM Services PMI in July exceeded the forecast (50.1 points) and increased from 45.4 to 57.1 points.
On the H4 chart, the uptrend is still in force; the downward correction is observed. The instrument is trading around the center line of Bollinger Bands; the indicator cloud is narrowing, and a lateral trend is likely to form in the short term. MACD histogram is in the positive zone preserving a steady signal for opening long positions. Stochastic is in the neutral zone, and the lines of the oscillator are directed downwards. The sell signal remains.
EUR has shown slight growth against USD during today's Asian session, consolidating after a sharp increase at the beginning of the week, partially due to the publication of good macroeconomic statistics from Europe. In May, Retail Sales in the eurozone grew by 17.8% MoM after a decrease of 12.1% MoM last month. Analysts had expected increase by 15% MoM. In annual terms, the decline in sales slowed sharply from –19.6% YoY to –5.1% YoY, which also turned out to be better than market expectations (–7.5% YoY). Macroeconomic statistics from Europe, which indicates a gradual recovery in domestic demand, have a positive effect on investor interest in risk. At the same time, traders are concerned about the active increase in the incidence of coronavirus, primarily in the United States.
Today, during the Asian session, the USD/JPY pair shows flat trading dynamics, consolidating near the level of 107.30. Investors are focused on the statistics from Japan, which, however, did not form any directional trends in the instrument.
GBP slightly strengthens against USD during today's morning session, trading close to the local highs, updated on July 2. GBP is moderately supported by macroeconomic statistics from the UK, but weaknesses of USD is the main reason for continued growth.