empty
 
 

Forex Analysis & Reviews: EUR / USD: Weak reports from the US and Powell's unexpected doubts
time 26.06.2019 08:59 AM
time Relevance up to, 28.06.2019 08:47 AM

Extremely weak macroeconomic reports from the United States did not prevent the US currency from adjusting for the entire market. The dollar index moved away from local minima, reflecting the increased interest of dollar traders. The immediate reason for the growth of the dollar was the comments of the Fed representatives, who leveled investors' concerns about an aggressive reduction in the interest rate. However, this price movement must be treated with some caution despite some recovery of the American currency. The market actually ignored yesterday's macro reports while they signal quite alarming trends.

First of all, we are talking about the indicator of consumer confidence in the US. Contrary to the forecast of growth to 132 points, this indicator fell to 121.5 points, which has been the weakest growth rate since September of the year before last. Moreover, according to experts, this is the strongest monthly drop in the index over the past four years that indicates a one-time decline for almost 10 points. According to analysts, this is a response of Americans to the actions of US President Donald Trump, who not only aggravated relations with China last month but also initiated trade conflicts with Mexico and India. Although the last two states did not aggravate the conflict, residents of the United States still responded to the increased uncertainty.

This image is no longer relevant

Here it is worth recalling Nonfarm, which showed a slowdown in the labor market. Last month, only 76 thousand jobs were created, whereas previously this figure ranged from 170 to 330 thousand (in particular, in April the American economy created 225 thousand jobs). The unemployment rate is still kept at record-low values but this indicator is a "lagging" economic indicator. Hence, this fact serves as a weak consolation for dollar bulls. Also, there is an extremely weak growth in the average hourly wage given this level of unemployment. All of these are reflected in the dynamics of inflation.

Thus, core inflation in May with the consumer price index, excluding prices for food and energy, remained at the level of 0.1% on a monthly basis. At this level, the indicator has been released for the past four months. In annual terms, the index came out at a two percent level although experts expected growth to 2.1%. The index went below this value only in February last year. The general consumer price index was also in the "red zone", both in annual and monthly terms. Meanwhile, the consumer price index rose in May by only 0.1% m/m and 1.8% y/y, while analysts expect to see CPI at the levels of 0.2% and 1.9%, respectively.

Other indicators show a slowdown in the US economy, for example, in the housing market. At the end of last month, sales of new buildings in the States decreased by almost 8%. The figure published yesterday showed a decline for the second month in a row in April as sales of new homes fell by 3%. It is worth noting that experts predicted the growth of the indicator in April and in May but the real figures did not coincide with the expectations of analysts. By the way, this dynamic is also due to the trade war between the United States and China. The growth of duties on Chinese materials led to an increase in real estate in general while the purchasing power of Americans decreased respectively. Obviously, a further slowdown in the US economy will further constrain the demand for new buildings, reducing the performance of the housing market.

Yesterday it became known about the decline of another macroeconomic indicator, particularly the index of business activity in the manufacturing sector of the Richmond Federal Reserve Bank based on a survey of manufacturing companies in the region. This is a secondary indicator but the dynamics of this index looks significant against the background of slowing down of key indicators. After the February maximum of 19 points, it slowed down to three points in June. The structure of the indicator suggests that the component of average employment during the working week and the component of wages have decreased most strongly. In other words, inflation components slowed down first of all, which indirectly affect the overall inflation rate in the country.

This image is no longer relevant

Despite such a "bunch" of alarm signals, the market yesterday chose to focus on the words of James Bullard and Jerome Powell. The head of the Fed said that the American regulator is still thinking whether to lower the interest rate or not. Given the fact that the market assesses the likelihood of such a move at 100%, these doubts have provided significant support to the US currency. Followed by Powell, James Bullard, who is famous for his "dovish" position, also spoke stating that a one-time rate cut of 50 basis points is a "bust". In his opinion, this scenario is unlikely to come true. Although, he said that the "standard" rate cut by 25 bp is a reasonable step.

Thus, after yesterday's speech by the Fed Chairman, traders again doubted that the American regulator would lower the interest rate at the next meeting. This fact gave strength to dollar bulls, including the major pair with the euro. In my opinion, this is a temporary phenomenon since the deceleration of key indicators of the American economy "cannot be hidden under a carpet", figuratively speaking. Therefore, the temporary strengthening of the dollar should be treated with caution, although the price may rise in the near future before the establishment of the 13th figure in conjunction with the euro/dollar.

ข้อดีจากการอ่านคำแนะนำของนักวิเคราะห์ได้แบบทันที
ฝากเงินเพิ่มเข้าไปในบัญชีการซื้อขาย
เปิดบัญชีการซื้อขาย

บทวิเคราะห์ของทาง InstaForex จะทำให้คุณทราบถึงแนวโน้มของตลาด! ในการที่เป็นลูกค้าของทาง InstaForex นั้นคุณจะได้รับการบริการเพื่อการซื้อขายอย่างเต็มประสิทธิภาพอย่างมากมาย

  • เทรดให้ดีแล้วคว้ารางวัล
    เติมเงินในบัญชีของคุณอย่างน้อย $500 สมัครเข้าร่วมการแข่งขัน และลุ้นรับรางวัลอุปกรณ์ติดต่อสื่อสารแบบพกพา
    เข้าร่วมการแข่งขัน
  • เฟอร์รารีจาก InstaForex
    เติมเงินในบัญชีของคุณอย่างน้อย $1,000
    เข้าร่วมการแข่งขันและรับรางวัลเป็นรถเฟอร์รารี่
    F8 Tributo
    เข้าร่วมการแข่งขัน
  • Chancy Deposit
    ฝากเงินเข้าบัญชีของคุณด้วย $3,000 และรับรางวัล $1,000
    เข้าร่วมการแข่งขัน
  • โบนัส 100%
    โอกาสพิเศษของคุณในการรับโบนัส 100% จากเงินฝากของคุณ
    รับโบนัส
  • โบนัส 55%
    สมัครรับโบนัส 55% สำหรับการฝากทุกครั้ง
    รับโบนัส
  • โบนัส 30%
    รับโบนัส 30% ทุกครั้งที่คุณเติมเงินในบัญชีของคุณ
    รับโบนัส

Recommended Stories

EUR/USD. Unforeseen event circling over traders

EUR/USD bulls have exhausted their potential, which was based on rumors of a slowdown in the pace of monetary policy tightening by the Fed. Traders fear a "black swan"

Irina Manzenko 22:49 2022-12-08 UTC+2

Inflation refuses to rise, failing the Fed and the ECB

Economists are concerned about signals from the world market. Data shows behavior that is contrary to expectations and probabilistic predictions based on historical data and economic theory. The reputations

Egor Danilov 22:49 2022-12-08 UTC+2

Euro: news

EURUSD The weekly U.S. jobs report is out - not huge - but there isn't much news this week. Applications for unemployment benefits rose to 230,000 for the week ending

Jozef Kovach 22:48 2022-12-08 UTC+2

The euro didn't get ahead of the curve

Why is the euro rising? It would seem that the EURUSD bulls have plenty of obstacles. The federal funds rate is higher than the ECB deposit rate. The U.S. economy

Marek Petkovich 22:48 2022-12-08 UTC+2

AUD/USD in a range. Is the bullish correction near its end?

Since the middle of last month, the pair has been trading mainly in a range between 0.6635 and 0.6835. Crossing this range to one side or the other might determine

Jurij Tolin 22:48 2022-12-08 UTC+2

Bitcoin accounts of Binance users are 101% secured with BTC

On Wednesday, the long-awaited report from South African auditing company Mazars was made public. It stated that the largest cryptocurrency exchange in the world, Binance, has direct control over

Irina Yanina 08:49 2022-12-08 UTC+2

Data on US inflation to determine market trends in foreseeable future (GBP/USD and AUD/USD)

It seems that high volatility could be seen only in the stock market. What is more, the satiation in both stock and currency markets is very uncertain. Yesterday, the currency

Pati Gani 08:28 2022-12-08 UTC+2

USD/CAD. The Bank of Canada is not an ally of the loonie

The Canadian dollar did not benefit from the Bank of Canada's December meeting. On the contrary, the loonie weakened noticeably against the greenback: the USD/CAD pair reached its monthly high

Irina Manzenko 08:08 2022-12-08 UTC+2

Analysts cast doubt on soft landing

Soon all three major central banks will announce their rate decisions. However, I'm not particularly interested in speculation about the size of rate hikes by central banks. Recently, there have

Chin Zhao 06:33 2022-12-08 UTC+2

GBP/USD. Overview for December 8. The Democrats won the Senate election.

On Wednesday, the GBP/USD currency pair maintained its position above the moving average line. Consequently, we can once more state that there has been a slight decline in the pair

Paolo Greco 04:10 2022-12-08 UTC+2
หากไม่สะดวกคุยในตอนนี้
ระบุคำถามไว้ได้ใน แชท.