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Fundamental Analysis
Fundamental updates by Solid ECN
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[QUOTE="Solid ECN, post: 208026, member: 83167"] [JUSTIFY][img]https://i.ibb.co/pj9Ft88/market-review-2.png[/img] [B]EURUSD[/B] The European currency loses value against the US dollar during the Asian session on May 9, testing the level of 1.0500 for a breakdown. The EUR/USD pair develops flat dynamics in the short term and remains around record lows, renewed on April 28. Market sentiment does not have excessive demand for risky assets, which does not allow the trading instrument to change the trend. Also, the dollar is supported by the rather active course of the US Federal Reserve for further tightening of monetary policy, while the European Central Bank (ECB) is not ready for decisive action. The representatives of the European regulator are only discussing the possible start of the interest rate hike cycle, despite the alarming rise in inflation in the region due to the military crisis around Ukraine. The timing of the possible start of tightening monetary policy is called the end of summer, but there have been no official statements on this subject so far. The March macroeconomic statistics from Germany, published last Friday, put additional pressure on the currency positions. Thus, the volume of industrial production in the EU's largest economy fell by 3.9% after rising by 0.1% last month, although analysts expected a correction of only 1.0%. Experts believe that the risks of recession in the German and European economies continue to rise in the current situation. [B]GBPUSD[/B] The pound starts trading with a rather active decline against the US currency, renewing record lows of June 2020 and testing 1.2270 for a breakdown. After a sharp rapid fall last week, the GBP/USD pair remains under pressure from the development of a military conflict on the territory of Ukraine. At the same time, the EU countries and their partners continue to impose new sanctions against the Russian economy, thereby exacerbating the situation with inflation in the region. An embargo on the supply of Russian oil and gas, which is currently impossible due to the lack of agreement between all bloc members, may become a particularly harmful issue. The pound practically did not react to the tightening of monetary policy by the Bank of England last week and only strengthened the downward dynamics against the backdrop of a revision of economic prospects for the near future. The British regulator raised the interest rate by 25 basis points to 1.00% per annum. The decision was taken unanimously by all nine board members. [B]AUDUSD[/B] The Australian dollar is actively decreasing during the Asian session, renewing local lows since the end of January this year and testing the level of 0.7000 for a breakdown. The trading instrument remains under pressure from the rapidly strengthening US dollar and low investors' demand for risky assets. Traders react to the report on the US labor market, published last Friday, which largely fell short of analysts' expectations. Thus, the number of new jobs created by the national economy in April increased by 428K, exceeding experts' forecasts of 391K, while the average wage rate slowed down from 0.5% to 0.3% MoM, with preliminary estimates of 0 .4%, and from 5.6% to 5.5% YoY. The unemployment rate in the US remained at the same level of 3.6%, while the market expected a decline to 3.5%. In general, the labor market shows resilience, and the US economy is close to full employment. At the beginning of the new trading week, the pressure on the position of the Australian currency is exerted by poor macroeconomic statistics from China. Thus, for April, exports slowed sharply from 14.7% to 3.9%, while imports showed a negative trend at –2% YoY after a decrease of 0.1% last month. At the same time, the Chinese economy manages to maintain a trade surplus of 51.12B dollars, slightly higher than the previous value of 47.38B. [B]USDJPY[/B] The US dollar is strengthening its position against the Japanese yen during the Asian trading session, retesting the level of 131.00 for a breakout and approaching the local highs of April 28 within the general market trend, which contributes to the strengthening of the "safe" dollar amid worsening global economic prospects. Investors are less interested in the yen as a shelter asset since the difference in interest rates between the US and Japan supports the US currency. Meanwhile, macroeconomic statistics published at the end of last week provide more support to the yen. Thus, April's inflation in the Tokyo region showed a sharp acceleration from 1.3% to 2.5% YoY, which significantly outstripped analysts' forecasts of 1.9%. Excluding food and energy prices, the figure accelerated to 0.8%, while the market expected a decline of 0.5%. At the beginning of a new trading week, the yen quotes are strengthening after the publication of business activity in the manufacturing sector. According to data from Jibun Bank, in April, the index rose from 50.5 to 50.7 points. [B]XAUUSD[/B] Gold prices are correcting, leveling last week's corrective growth attempt, which allowed the XAU/USD pair to retreat from the local lows of February 16. The metal noticeably loses to the dollar as a shelter asset because, unlike the American currency, it does not bring interest income to its owners. As the US Federal Reserve tightens monetary policy and raises interest rates, this difference becomes more and more noticeable, provoking market participants to form new short positions on the instrument. Meanwhile, the demand for gold remains quite high due to the general uncertainty in the global economy. Investors are also concerned about the situation with COVID-19 in China, where authorities are still trying to contain the outbreak, which has led to significant restrictions in Shanghai and Beijing.[/JUSTIFY] [/QUOTE]
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