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Old 25-06-2019, 07:14
MikhailLF MikhailLF is offline
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Default Re: Forex News Analysis by LiteForex

Morning Market Review
2019-06-25 08:35 (GMT+2)

The euro showed moderate growth against the US dollar on Monday, updating local highs of March 21. The strengthening the single currency is caused by the weakness of the dollar, which reacts negatively to the prospects for reducing the interest rate by the Fed. However, the threat of easing monetary policy exists in Europe, too. Some analysts believe that before leaving, the head of the ECB, Mario Draghi, will try to convince the board members of the need for new incentives amid low inflation expectations. The macroeconomic statistics published on Monday showed no significant support for the euro. The German Ifo index of economic expectations in June showed a decline from 95.3 to 94.2 points, with a forecast of a decline to 94.5 points. The business optimism index for the same period decreased from 97.9 to 97.4 points (better than analysts' forecasts of 97.3 points).


The British pound showed ambiguous dynamics against the US currency on Monday, updating local highs of 21 May. The news background of the beginning of the week remained fairly calm, so investors were focused on the former drivers. The dollar is still pressured by the greatly increased tensions between the US and Iran, as well as the uncertainty in trade relations with China in anticipation of the G20 summit, at which Donald Trump and Xi Jinping can meet. The pound is pressured by uncertainty with Brexit. Investors fear that changing the prime minister will not help the approval process of the current agreement, and the country will be forced to leave the EU without an agreement at all, which threatens another slowdown in the global economy.


The Australian dollar strengthened against the US one on Monday, rising to new local highs of 10 June. Amid the lack of new drivers in the market, USD is noticeably losing to AUD due to increased tensions. This is due to several factors, including the escalation of the conflict between the United States and Iran, as well as the upcoming meeting of the heads of the United States and China. Despite the optimistic mood of the market, analysts fear that, if the June negotiations of Donald Trump and Xi Jinping come to a standstill, the next chance to normalize trade relations between the countries will not appear soon. Published on Monday, macroeconomic statistics from the United States was ambiguous. The Chicago Fed National Activity Index in May rose from -0.48 to -0.05 points, which turned out to be significantly better than forecasts (-0.37 points). The Dallas Fed Manufacturing Index in June fell from -5.3 to -12.1 points, against the forecasts of growth to 4.8 points.


At the beginning of the week, the US dollar showed ambiguous and inactive trading dynamic against the Japanese yen. In the absence of significant news factors, investors continued to play on existing drivers. The yen was moderately supported by indices from Japan. The index of leading indicators in April rose from 95.7 to 95.9 points, with a forecast of 95.5 points. The index of coincident indicators for the same period strengthened from 101.1 to 102.1 points, which turned out to be better than market expectations of 101.9 points. Today, the yen is showing aggressive growth, despite the publication of ambiguous statistics from Japan. Prices for corporate services in March showed an increase of 0.8% YoY, slowing down from the previous value of 1.0% YoY. Investors are also focused on the publication of the minutes of the meeting of the Bank of Japan on monetary policy from April 24-25. However, the document did not reflect anything new and reaffirmed the commitment of the regulator to the soft policy. Probably, the rates will remain unchanged at least until the spring of 2020.


Oil prices returned to decline at the beginning of the week, departing from local highs, updated on Friday. The reason for the decline in quotes was the existing factors of low demand for petroleum products against the background of a slowdown in the global economy and an increase in tensions in certain regions. In particular, the attention is focused on the conflict between the USA and Iran, aggravated after the US drone was shot down in the Persian Gulf. The conflict between the USA and China remains unresolved. However, investors have high hopes for meeting Donald Trump and Xi Jinping meeting at the G20 summit, which will be held at the end of the week in Japan. On Tuesday, investors are focused on the speech of Fed Chairman Jerome Powell and on the publication of the API report on oil reserves for the week of June 21.
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