Morning Market Review

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03/18/2020

EUR/USD

EUR is growing against USD during today's Asian session, correcting after another active decline yesterday when EUR was under pressure from the depressing statistics on business activity from ZEW. The German ZEW Economic Sentiment collapsed from 8.7 points to –49.5 points in March, which turned out to be almost half the market’s expectations of –26.4 points. The German ZEW Economic Sentiment for the same period fell from –15.7 to –43.1 points with a forecast of –30 points. ZEW Economic Sentiment in the euro area in March fell from 10.4 to –49.5 points with a forecast of a decrease of only 35.4 points. Meanwhile, the coronavirus pandemic continues to rage in Europe, which is pushing states to take new measures to support the economy and tighten quarantine. Many European companies have announced that they will suspend their production for several weeks in an attempt to minimize their losses. On Wednesday, European investors are focused on the February statistics on consumer inflation in the euro area.

GBP/USD

GBP is correcting against USD during today's Asian session, retreating from half-year lows, updated the day before. The instrument adds about 0.45% and is trying to consolidate above 1.2100–1.2110. The main driver of the pair's movement remains the coronavirus epidemic, which stirs the markets. Investors continue to buy USD as a safe currency, only occasionally paying attention to more risky assets. The current growth of GBP can be attributed to the fixation of quick profits, while fundamentally the situation remains the same. Macroeconomic statistics from the UK published yesterday turned out to be mixed. Claimant Count Rate in February increased by 17.3K after a decrease of 0.2K in the previous period. Analysts had expected a more confident growth of 21.4K. Average Earning Including Bonus in January increased from 2.9% 3MoY to 3.1% 3MoY, which was 0.1% better than expected. At the same time, the Unemployment Rate in January rose from 3.8% to 3.9%.

NZD/USD

NZD today shows flat trading dynamics, consolidating after another decline yesterday, which led to the updating of record lows since May 2009. NZD noticeably lose to USD, which is popular with those trying to minimize their risks. The pursuit of liquidity does not interfere even with unprecedented measures to support the US economy. On Monday, the Fed sharply reduced its rates to the lowest levels, and also said that it had adjusted its program aimed at providing USD abroad with other leading regulators. The US Treasury Department announced that it intends to buy back USD 1 trillion in securities by US companies, while the business can expect a deferment in paying taxes. Yesterday's macroeconomic statistics from New Zealand put additional pressure on the instrument. Global Dairy Trade Price Index in February fell by 3.9% MoM after a decrease of 1.2% MoM in the previous month. The indicator was worse than the forecast of –2.7% MoM.

USD/JPY

USD is falling against JPY during today's Asian session, correcting after active growth yesterday, which proceeded against the backdrop of a market race for liquidity. At the same time, Japanese macroeconomic statistics released on Tuesday provided insignificant support to JPY. Industrial Production in January slightly increased from 0.8% MoM to 1.0% MoM. Capacity Utilization in the same period added 1.1% MoM after the decline by 0.4% MoM in December. At the same time, US data were disappointing. Retail sales fell in February by 0.5% MoM after rising by 0.6% MoM in January.

XAU/USD

Gold prices are consolidating during today's Asian session near the level of 1530.00, to which the instrument managed to rise due to corrective growth the day before. Investors drew attention to gold amid the ongoing rally of USD, as concerns about a further slowdown in the global economy remain. Additional support for the instrument was provided by weak US Retail Sales data, which reflected a natural weakening of economic activity at the beginning of the epidemic. On Wednesday, investors expect the appearance of statistics on the housing market in the US for February, but do not expect to receive any additional support for USD.

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