Morning Market Review

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06/12/2019

EUR/USD

EUR showed growth against USD again on Tuesday, returning to an uptrend after some decline at the beginning of the week. EUR remains heavily overbought in the nearest time intervals, as it shows an active growth since May 31, but this does not particularly disturb investors. The macroeconomic statistics from the US published yesterday was contradictory. Investors welcomed the growth of NFIB Small Business Optimism index in May from 103.5 to 105.0 points. At the same time, IBD/TIPP Economic Optimism index for June dropped sharply from 58.6 to 53.2 points, while analysts predicted its growth to 59.2 points. The May Producer Price Index in the USA also slowed down a bit. PPI in May showed an increase of 0.1% MoM after rising by 0.2% MoM in April. In annual terms, the indicator decreased from +2.2% YoY to +1.8% YoY, which turned out to be worse than the forecast of +2.0% YoY. It is also worth noting that European statistics on Tuesday turned out worse than market forecasts. Sentix Investor Confidence in June decreased from 5.3 to –3.3 points, while the forecast predicted a decline only to 2.3 points.

GBP/USD

GBP rebounded against USD on Tuesday, offsetting a decline of the previous day. The instrument was supported by moderately strong data on the labor market in the UK, as well as a general negative attitude towards the US currency. Average Earnings ex. Bonus showed an increase in April by 3.4% 3MoY, which turned out to be better than last month data (+3.3% 3MoY) and forecasts (+3.1% 3MoY). Average Earnings Index + Bonus for the same period slowed down from +3.3% 3MoY to +3.1% 3MoY, but turned out to be better than expectations of +2.9% 3MoY. The Unemployment Rate remained at the same level of 3.8%.

AUD/USD

AUD showed a slight decline against USD on Tuesday, retaining the "bearish" impulse formed at the beginning of the week. Yesterday, the instrument was moderately supported by the data from Australia, as well as rising pessimism about the prospects for the American economy. During the Asian session on June 12, the pair is trading downwards. Investors take a lead from ambiguous macroeconomic statistics from Australia and so far ignore the optimism of Chinese data. Westpac Consumer Sentiment in June showed a decline of 0.6% MoM after rising by 0.6% MoM over the previous period. Chinese statistics showed a rapid rise in the Consumer Price Index in May from 2.5% YoY to 2.7% YoY, which coincided with forecasts. The soft position of the RBA remains a negative factor for the instrument. Last week, the Australian regulator lowered the interest rate by 0.25% to 1.25%, noting the negative impact of external factors. By the end of the year, the RBA plans to reduce the rate to 1%.

USD/JPY

USD shows ambiguous trading in pair with the Japanese yen, remaining close to the local lows, updated on June 5. The yen is still under pressure from uncertain news background and the threat of a possible easing of monetary policy by the Bank of Japan. In addition, investors are currently not very interested in safe assets, although the situation remains rather unstable. During today's Asian session, statistics from Japan provide moderate support to the yen. Thus, the Japanese Core Machinery Orders in April increased by 5.2% MoM and 2.5% YoY, which was significantly better than the forecast of –0.8% MoM and –5.3% YoY. In turn, Producer Price Index in May showed a decline of 0.1% MoM after rising by 0.3% MoM in April. YoY, the indicator slowed from +1.2% to +0.7%.

Oil

Oil prices showed a slight decrease on Tuesday, continuing the development of a negative trend, re-formed at the beginning of the current trading week. Investors are focused on a program to reduce oil supply to the market under the OPEC+ deal. The main participants of the cartel have already agreed to extend the agreement after its termination in late June. Russia also announced the possible support of such a decision, which improved the prospects for maintaining a balance of supply and demand in the market. Yesterday's API report on Weekly Crude Oil Stock showed the growth rate for the week as of June 7 from 3.545 million to 4.850 million barrels. On Wednesday, investors expect the publication of similar statistics from the US Department of Energy.

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