Everything is still the same in the currency market. Nothing special happens, as investors simply do not show noticeable activity due to conflicting, mutually exclusive factors that are still not going away.
First of all, this, of course, is the situation around the coronavirus pandemic in the USA, where a surge of infected COVID-19 was recorded in June as a result of protests by the Black population. This factor has supported and continues to support the dollar against major currencies. Secondly, the obvious recovery of the US economy, as well as the Chinese and European ones, in the wake of large-scale stimulus measures from the Fed and the Ministry of Finance, puts pressure on the exchange rate of the American currency. While these two factors are balanced, you should not expect noticeable changes in the market.
On the other hand, important economic data in America came out on Wednesday in a positive light. The ISM Manufacturing Sector Index (PMI) in June broke into the expansion zone, rising above 50 points to 52.6 points. The manufacturing price index also jumped to 51.3 points.
In the wake of these data, US major stock indexes closed mixed, and the dollar declined against major currencies with the exception of the yen and the franc. Such dynamics can be explained by the continuing hopes in the market that the US economy will add in the second half of the year, despite the global deterrent to coronavirus infection. Today, the focus of market players will be the publication of employment data in America. They come out on Thursday, and not traditionally on Friday because of the holiday of July 4 - Independence Day.
According to the forecast, the US economy received 3,000,000 new jobs in June compared to 2,509,000 in May. The unemployment rate is expected to drop from 13.3% to 12.3%. The average hourly wage yoy at the level of 5.3% from 6.7% will also be presented. The monthly value of the indicator should decline even further to -0.7% from -0.1%.
How can the market react to the numbers of economic statistics if they turn out to be higher than expected? The dollar can get support, but only limited, but if they are unexpectedly noticeably worse, then there is a high probability that demand for protective assets, including the dollar, will increase, but, again, its increase will be local for the reasons described at the beginning of the article.
Forecast of the day:
The USD/JPY pair is trading below the level of 107.65. Positive employment data in the United States will push the pair up to 108.15, while the negative ones will put pressure on it, and on this wave, it will rush to the level of 106.50.
The USD/CHF pair is likely to react to the publication of statistics on employment in America. On the positive side, it can grow to 0.9520. On the negative side, on the contrary, it will decline to the level of 0.9385.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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