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EURUSD - Rising gas prices put pressure on the euro
Since the beginning of the week, the European currency continues its downtrend, under pressure from rising natural gas prices and weak macroeconomic statistics. Now the quotes of the EURUSD pair are in a corrective trend, trading around 1.0182.
Earlier, the governments of the eurozone countries adopted a resolution under which they will voluntarily reduce gas consumption by 15% until the end of March next year in order to reduce fuel shortages due to supply restrictions from Russia. Against the background of this decision, the prices for "blue fuel" are showing a sharp increase, at the moment reaching record March levels in the region of 2.6 thousand euros per 1.0 thousand cubic meters. In turn, macroeconomic statistics turned out to be quite weak: the August ZEW Survey on Current Situation in Germany fell to –47.6 points, and ZEW Economic Sentiment was –55.3 points, while the same indicator in the eurozone adjusted to –54.9 points from –51.1 points a month earlier.
The EURUSD pair is holding within the global downward channel, reversing to the downside again. Technical indicators, having reversed in the direction of growth, once again gave a signal to sell. The fast Alligator indicator EMAs crossed the signal line from above, and the histogram of the AO oscillator is forming descending bars approaching the transition level.
Support levels: 1.0111, 0.9951 | Resistance levels: 1.0260, 1.0406
Key Releases
USD is strengthening against its main competitors – EUR, GBP, and JPY.
The July data from the US construction market was published yesterday, which alarmed investors: the number of building permits issued decreased by 1.3%, and the volume of new homes – by 9.6%. Also, the American Association of Mortgage Bankers said that the demand for loans is at its lowest level since 2000, as potential home buyers are not ready to put up with high rates. Thus, the labor market is beginning to experience significant difficulties against the backdrop of a serious tightening of monetary policy, and some experts have already started talking about the onset of a recession in this particular economic sector. Poor July retail sales data in the US were released today, showing zero dynamics instead of the expected growth of 0.1%, as the effect of lower gasoline prices was leveled by a decrease in car sales. In the evening, investors are waiting to release the minutes of the US Federal Reserve meeting, from which they hope to find out whether the rate will increase by 75.0 basis points, as before, or by 50.0 basis points. Any hint of a monetary policy correction could cause significant price movement.
EUR is weakening against USD but is strengthening against JPY and GBP.
Q2 Eurozone macroeconomic data were published today: gross domestic product (GDP) grew by 0.6% QoQ and 3.9% YoY, slightly lower than the forecasted 0.7% and 4.0 % but still positive. Employment in the region is also increasing, albeit slower than before: by 0.3% QoQ and by 2.4% YoY. However, experts believe that the further economic prospects for the Eurozone are negative: GDP will begin to decline in the second half of the year under the pressure of high inflation and disruptions in supply chains. Most analysts believe that by the end of the year, the European economy will enter a recession, and next year's growth will be very insignificant.
GBP weakens against USD and EUR but strengthens against JPY.
Investors are focused on the publication of July data on inflation in the UK, where the consumer price index fell from 0.8% to 0.6% MoM, not justifying the analysts' forecast of 0.4%, and it rose from 9 .4% to 10.1% YoY, which is higher than the preliminary estimate of 9.8% and is the highest value since 1982. Experts say that the main driver of inflation is the increase in energy prices, which intensified after the start of the Ukrainian crisis, and they fear that the fight against it in the UK may last longer than in other countries. Under these conditions, the actions of Bank of England officials come to the fore, who have already adjusted the interest rate six times but so far have not been able to stop the rise in prices. According to calculations, the regulator is expected to continue its hawkish policy of tightening monetary parameters, which could catalyze an even deeper recession in the British economy in the year's second half.
JPY is weakening against its main competitors – USD, EUR, and GBP.
Investors are focused on the publication of the July data on foreign trade in Japan: the volume of exports increased by 19.0% instead of 18.2%, while the volume of imports added 47.2%, which is higher than the forecasted 45.7% and brought the trade balance deficit to 1.4368T yen. In general, the situation for Japanese companies remains difficult due to rising fuel prices and a weakening yen, and experts fear that the export-oriented national economy may begin to decline in the event of a global economic crisis. Also, today, poor June data on orders in the engineering sector was released, which is the main indicator of investment in production: the indicator rose by 0.9% MoM against the forecast of 1.3%, and the value fell from 7.4% to 6.5% YoY.
AUD is weakening against its main competitors – EUR, JPY, GBP, and USD.
AUD is under pressure amid the publication of data on the wage change index in the second quarter of this year: the indicator remained at the same level of 0.7% QoQ instead of the expected growth of 0.8%, and it rose from 2.4 % to 2.6% YoY, which is less than the forecast of 2.7%. Although wages are rising at the fastest rate in almost eight years, they still lag behind the pace of inflation, so consumer demand remains under pressure, worsening the economic situation in the country. On the other hand, a serious increase in wages caused by a shortage of qualified personnel could become a catalyst for a new wave of consumer price growth, as enterprises will shift the costs of hiring and retaining employees to buyers of their products. Under these conditions, the Reserve Bank of Australia (RBA) will be forced to continue aggressively raising interest rates, further increasing the risks of a recession in the national economy.
Oil quotes are trying to reduce.
The American Petroleum Institute (API) weekly report on energy inventories was released yesterday, which was generally positive for the market: the figure fell by 0.448M barrels, exceeding the forecasted decrease by 0.117M barrels, while gasoline inventories fell by 4.5M barrels. However, these data failed to strengthen fuel quotes significantly, as investors' fear of an impending global recession, supported by poor production data in China and July inflation statistics in the UK, continues to prevail. Today, markets are waiting for data on oil inventories from the Energy Information Administration of the US Department of Energy (EIA): the value may decrease by 0.0275M barrels, which will support energy prices.
ADAUSD - Technical analysis
The ADAUSD pair is moving within a long-term downtrend, but since the middle of last month, it has attempted to grow, forming a short-term upward channel. Currently, under the influence of the delay in the activation of the Vasil update and the publication of the latest minutes of the US Federal Reserve, which confirmed the regulator's determination to continue raising interest rates, the price has dropped to 0.5280 (the middle line of Bollinger bands, the lower limit of the ascending channel). Consolidation below this level will give the prospect of quotes returning to 0.4882 (Murrey [4/8], bottom line of Bollinger bands) and 0.4638 (Murrey [3/8]). The key "bullish" level is 0.5615 (Murrey [7/8]), which has been repeatedly tested this week, and consolidation above which will allow the trading instrument to rise to 0.5859 (Murrey [8/8]), 0.6103 (Murrey [+1 /eight]).
Technical indicators do not give a single signal: Bollinger bands are directed upwards, the MACD histogram is increasing in the positive zone, and Stochastic is directed downwards. The level of 0.5280 is quite strong, so the return of the price to the upward movement within the short-term upward channel seems to be a more likely scenario.
Resistance levels: 0.5615, 0.5859, 0.6103 | Support levels: 0.5280, 0.4882, 0.4638
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Key Releases
The USD is weakening against the pound today and has ambiguous dynamics in pairs with the euro and the yen.
Investors are focused on the minutes of the last meeting of the US Fed, published earlier, which confirmed the “hawkish” mood of the regulator's members on the issue of adjusting monetary policy parameters until inflation begins to decline significantly. The calculated "neutral" level for them is the range of 2.25-2.50%. Department officials also noted that their actions will be based on economic data, which is the main difficulty for the market. After the US Fed meeting, the July inflation statistics were released, according to which the rate slowed down to 8.5%, and it is not yet known whether this will be enough to start adjusting the interest rate to 50.0 basis points. In addition, weekly data on the US labor market turned out to be better than experts' expectations: initial applications for unemployment benefits increased by 250.0K, which is lower than the 265.0K expected by analysts, and the total number of citizens receiving benefits reached 1.437M, which also inferior to the forecast of 1.438M.
The euro is weakening against the pound and the yen today and has ambiguous dynamics paired with the USD.
In the focus of investors' attention is the publication of the July data on inflation in the eurozone: the consumer price index fell from 0.8% to 0.1% on a monthly basis, and increased from 8.6% to 8.9% on an annual basis, while the base monthly value adjusted from 0.2% to -0.2%, and the annual value from 3.7% to 4.0%. A significant contribution to the growth of inflation was made by the increase in prices for electricity (by 4.02%), food products, alcohol and tobacco (by 2.08%). These data may force the European Central Bank (ECB) to take another rate hike in the near future, and possibly more serious than in July (by 50.0 basis points). Regulator board member Isabel Schnabel has already said that there were no noticeable results after the introduced measures, and her rhetoric was interpreted by investors as a signal of continued tightening of monetary policy in the future.
The pound is strengthening against the USD and the euro today and has ambiguous dynamics paired with the yen.
The British currency is recovering its positions lost after the release of weak July data on inflation in the UK. In general, the situation in the national economy remains unstable, and market participants are preparing for the onset of a recession. In the last week alone, consumer spending tracked by debit and credit cards fell by 0.7%, according to the UK Office for National Statistics, as high inflation continues to limit demand. We also note that Liz Truss, the leader of the election campaign for the post of Prime Minister of the country, who previously announced her intention to partially limit the independence of the Bank of England, has now turned her attention to other regulators. In particular, she is going to review the functions of the Financial Conduct Authority (FCA), the Prudential Regulatory Authority of the Bank of England (PRA) and the Payments System Regulator (PSR). The reason for this was the insufficient attention of these organizations to ensuring economic growth in the country.
The yen is strengthening against the euro today and has ambiguous dynamics in pairs with the pound and the USD.
In general, the Japanese currency is still under pressure from the release of negative July trade data, which recorded a serious predominance of the volume of imports over exports, which continued to grow due to the increase in prices for oil, coal and gas. The released data testify to the instability of the national economic recovery process and may give the Bank of Japan more arguments in favor of maintaining the current soft monetary policy. Tomorrow, investors expect the publication of the July data on inflation in Japan. The consumer price index is projected to fall from 2.4% to 2.2% on an annualized basis, while the base value will increase from 2.2% to 2.4%. In any case, the indicator will continue to remain above the target level of 2.0%.
The Australian dollar is weakening today against the euro and the pound, but is strengthening against the yen and the USD.
The focus of investors is the publication of the July data on the labor market, which turned out to be mixed: the unemployment rate fell from 3.5% to 3.4%, which is a forty-eight-year low. Total employment decreased by 40.8K instead of the expected growth by 25.0K, while full employment decreased by 86.9K. Thus, the labor market is beginning to experience pressure from the tightening of monetary policy by the Reserve Bank of Australia (RBA). Nevertheless, experts are confident that interest rates will continue to rise in the near future, since the problem of high inflation is seen by officials as the most dangerous for economic development.
Oil quotes continue to rise today.
Prices are supported by the report of the Energy Information Administration of the US Department of Energy (EIA), which recorded a serious reduction in the reserves of "black gold" by 7.056M barrels instead of the expected decrease by 0.275M barrels, and gasoline – by 4.642M barrels, with a forecast of 1.096M barrels. However, only distillate inventories rose insignificantly by 0.766M barrels. Meanwhile, there is still no clarity around the “nuclear deal” between the Western countries and Iran, which could provide an additional volume of cheaper energy to the market. The lack of new comments from Iran, the EU and the USA is alarming for investors.
Oil quotes are trying to reduce.
The American Petroleum Institute (API) weekly report on energy inventories was released yesterday, which was generally positive for the market: the figure fell by 0.448M barrels, exceeding the forecasted decrease by 0.117M barrels, while gasoline inventories fell by 4.5M barrels. However, these data failed to strengthen fuel quotes significantly, as investors' fear of an impending global recession, supported by poor production data in China and July inflation statistics in the UK, continues to prevail. Today, markets are waiting for data on oil inventories from the Energy Information Administration of the US Department of Energy (EIA): the value may decrease by 0.0275M barrels, which will support energy prices.
The EURUSD pair is trading in a downtrend, currently at 1.003.
On the daily chart of the asset, the price is falling within the global corridor with dynamic boundaries 1.024 – 0.97, getting ready to test the key historical support around 1. The four-hour chart shows that the potential for a downward movement is quite high, and the nearest solid support for the trading instrument can only be the initial trend of 61.8% of the Fibonacci extension around 0.9814. If the quotes fix below it, the downward dynamics may continue up to the basic trend of 100.0% on the Fibonacci extension around 0.9494.
Technical indicators keep a sell signal: indicator Alligator's EMA oscillation range expands downwards, and the AO oscillator histogram forms downward bars in the sell zone.
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USD is strengthening against its main competitors – GBP, EUR, and JPY.
The July poor data on sales in the US secondary housing market were published yesterday: the figure fell from 5.11M to 4.85M or 5.9%. Earlier, it became known that the number of building permits issued decreased by 1.3%, and the volume of new housing construction – by 9.6%, so experts are already talking about the possibility of a recession in the construction sector. Nevertheless, the US labor market, which remains stable, continues to support the US economy, despite the weakness in other areas. Louis Fed President James Bullard said that the regulator was considering another significant rate hike in September and added that it is not yet possible to say with certainty that inflation in the country has reached its peak.
EUR weakens against USD but strengthens against GBP and JPY.
Today, the German Producer Price Index for July was published: the indicator rose from 0.6% to 5.3% MoM and 32.7% to 37.2% YoY. Growing inflationary pressures in the economy leave the European Central Bank (ECB) with no other option than a further tightening of monetary policy, which threatens the region with a recession. For example, Germany is already in serious trouble: according to the monthly report released yesterday by the Ministry of Finance, the outlook for the German economy is negative due to reduced gas supplies from Russia, persistently high prices for energy and other goods, and longer-than-expected disruptions in supply chains. Of the positive news, we can note the release of the June data on the balance of the current account of the Eurozone countries: the balance again became positive and amounted to 4.2B euros.
GBP is weakening against EUR and USD but has ambiguous dynamics against JPY.
GBP remains under pressure from poor inflation data for July, with the CPI rising from 9.4% to 10.1% YoY, higher than the forecasted 9.8% and the highest reading since 1982. Under these conditions, the Bank of England is likely to continue raising rates, increasing the risks of a recession in the economy. British retail sales for July released today were generally positive, rising by 0.3% MoM instead of an expected decline of 0.2% and falling by 3.4%, which, however, is less than June's 6.1%. However, these statistics failed to strengthen the pound's position, as the positive effect was leveled by the start of transport workers' strikes, which could put additional pressure on the national economy.
JPY is weakening against EUR and USD but has ambiguous dynamics against GBP.
Investors are focused on the publication of data on inflation in Japan for July: the nationwide consumer price index rose from 2.4% to 2.6% YoY, while the underlying value corrected from 2.2% to 2.4%. Thus, the indicator exceeds the target level of the Bank of Japan for the fourth month in a row, calling into question the statements officials that the rise in prices is a temporary phenomenon. However, soon, the Japanese regulator is unlikely to abandon the current ultra-soft monetary policy.
AUD strengthens against GBP and JPY but has ambiguous dynamics against EUR and USD.
Due to a lack of significant economic releases, AUD is traded under the influence of external factors. Investors are looking ahead to Monday when preliminary data on business activity for August are released in Australia. It is predicted that the value in the manufacturing sector will decrease from 56.2 points to 55.0 points, and for the service sector, it will increase from 50.9 points to 51.0 points. These statistics will give an idea of the state of the Australian economy and whether it can withstand the pressure of the current rate hike by the Reserve Bank of Australia (RBA).
Oil quotes are being corrected amid the strengthening of the USD and investors' fears about a slowdown in the global economy.
Experts believe that a significant increase in inflation in the Eurozone and the UK, a decline in production in China, and a weakening of the US construction market may reduce global oil demand. However, not all traders look at the situation pessimistically: for example, the new head of OPEC, Haitham Al Ghais, said that the global economy would cope with the current crisis and a decline in energy demand next year is possible but will not be serious.
Key releases
The USD today is moderately strengthening against the pound and the euro, but weakening against the yen.
Investors continue to prepare for the symposium in Jackson Hole and expect today's publication of data from the US construction market. On Friday, the chairman of the US Fed is to comment on the current situation in the economy and further actions of the regulator in the field of monetary policy. Most experts believe that despite the slowdown in inflation in July from 9.1% to 8.5%, Powell will confirm the need for further interest rate hikes until prices slow to 2.0%. He is likely to oppose slowing down the current rate of adjustment in value, as the problem of high retail prices has not yet been resolved and is considered by officials to be the most serious in the US economy. Also today, July data on new home sales in the USA will be released, which may add anxiety to investors: it is expected that the figure will decrease from 590.0K to 575.0K. Recall that other results of the sector last month turned out to be weak: the number of permits issued for construction decreased by 1.3%, the volume of construction of new houses – by 9.6%, sales in the secondary housing market – by 5.9%. The implementation of the forecast may put pressure on the dollar, as it will confirm the deterioration of the US construction industry.
The euro is weakening today against its main competitors – the yen, the pound and the USD.
The focus of investors is the publication of preliminary August data on business activity in the eurozone countries, which turned out to be weak: the index in the manufacturing sector and the composite index are in the stagnation zone for the second month, while growth continues only in the service sector, but it is also very insignificant. The index of business activity in manufacturing decreased from 49.8 points to 49.7 points, the composite index – from 49.9 points to 49.2 points, and in the service sector – from 51.2 points to 50.2 points. For the economic leader of the eurozone, Germany, the indicator in the service sector decreased from 49.7 points to 48.2 points, the composite indicator – from 48.1 points to 47.6 points, and in manufacturing increased slightly – from 49.3 points to 49. 8 points, but still remained in the slowdown zone. Overall, the stats continue to deteriorate as the high cost of living reduces consumer demand and disruptions in the supply of energy and components slow down production. According to experts, the continuation of the current dynamics makes a recession in the winter months more likely.
The pound is weakening against the USD today, strengthening against the euro and has ambiguous dynamics paired with the yen.
The pressure on the pound is exerted by weak preliminary data on business activity in the British economy: in the industrial sector, the indicator corrected from 52.1 points to 46.0 points and found itself in a stagnation zone for the first time since May 2020 against the backdrop of lower consumer demand, a shortage of personnel and instability since supplies of components and energy carriers. According to experts, these reasons will lead to a further slowdown in the sector in the coming months. Services are also slowing down, dropping from 52.6 points to 52.5 points as inflation continues to rise sharply, forcing citizens to lower spending levels, while the composite business activity index reached 50.9 points from 52.1 points earlier, which increases the risks of a recession, the onset of which the Bank of England predicts by the end of this year.
The yen is weakening against the USD, strengthening against the euro and has ambiguous dynamics paired with the pound.
Today, preliminary July data on business activity in the Japanese economy were published: the index in industry fell from 52.1 points to 51.0 points, and in the service sector – from 50.3 points to 49.2 points and for the first time since April of this year was in the zone of stagnation. In general, Japanese businesses are also under pressure from high fuel and electricity prices and weak demand. On the positive side, it is worth noting that, according to local media, the government is discussing the possibility of easing quarantine requirements for citizens. In particular, testing at the border of vaccinated travelers should be canceled, as well as the daily limit of those entering the country should be increased from 20.0K to 50.0K. These decisions will increase the influx of tourists and have a beneficial effect on the state of the national economy.
The Australian dollar has ambiguous dynamics paired with its main competitors – the euro, the pound, the yen and the USD.
Today, preliminary July data on business activity in the Australian economy were published: the index in the industrial sector fell from 55.7 points to 54.5 points, and in the service sector – from 50.9 points to 49.6 points and ended up in a stagnation zone. In general, the dynamics repeats those in other developed economies. The service sector is shrinking due to high inflation and reduced spending by citizens, and the industry is supported by high prices for coal and other raw materials exported from Australia, but it could come under pressure in the event of a serious downturn in the global economy.
Oil quotes are trying to grow today.
The rise in oil prices was supported by fears of a new production cut by the OPEC cartel and its allies. The day before, Saudi Arabia's energy minister told the national SPA news agency that the organization has the means to deal with the current downturn, including cutbacks in production. This comment made investors suggest that a decision on this issue could be discussed at the next meeting of the countries participating in the OPEC + agreement. During the day, investors are also waiting for the publication of a weekly report from the American Petroleum Institute (API). The last time oil reserves in the USA fell by 0.448M barrels. The continuation of this trend may put additional pressure on quotes.
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EURUSD - A fall is possible.
On the daily chart, the downward wave of the higher level C of (B) develops, within which the fifth wave v of (C) forms. Now, the fifth wave of the lower level v of C is developing, within which the wave (v) of v of C is forming.
If the assumption is correct, the EURUSD pair will fall to the area of 0.98 – 0.97. In this scenario, critical stop loss level is 1.0082.
If the assumption is correct, the EURUSD pair will fall to the area of 0.98 – 0.97. In this scenario, critical stop loss level is 1.0082.
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Morning Market Review
EURUSD
The European currency is trading with a weak downtrend, testing the level of 0.9880 for a breakdown and remaining in the area of record lows updated the day before. Investors are in no hurry to open new positions, preferring to wait for the publication of data on the dynamics of Gross Domestic Product (GDP), as well as on Employment Rate. According to the first estimates, the growth rate of the region's economy in the second quarter amounted to 0.6% in quarterly terms and 3.9% in annual terms. Tomorrow, the European Central Bank (ECB) decision on interest rates is expected to be published, accompanied by a press conference and a speech by the President of the regulator, Christine Lagarde. The ECB is expected to correct the value by 50 basis points to 1.00%, and also continue to tighten monetary policy in an attempt to curb inflation. At the same time, traders would like to hear further comments from the ECB on the prospects for a recession, given the widespread decline in business activity and a sharp increase in energy prices, provoking a full-fledged energy crisis in Europe.
GBPUSD
The British pound is moderately declining, leveling the attempts of the "bulls" to show corrective growth at the beginning of the week. The GBP/USD pair is testing the level of 1.1450 for a breakdown, approaching the all-time lows of March 2020, updated last Monday. Support for the US currency was provided by strong macroeconomic statistics from the US, published the day before. The ISM Services Employment Index in August strengthened from 49.1 points to 50.2 points, while the forecast was for a decline to 48.2 points, and the ISM Services PMI over the same period increased from 56.7 points to 56.9 points against the background of preliminary estimates of experts on the decline to 55.1 points. In turn, the ISM Services New Orders Index corrected from 59.9 points to 61.8 points, while analysts had expected a reduction to 57.0 points. The data again reflected the resilience of the US economy, which allows the US Federal Reserve to continue the "hawkish" monetary policy to combat high inflation, especially given the further rise in energy prices. Today, the focus of investors will be hearing the report on inflation, as well as a number of speeches by representatives of the Bank of England, including its Governor Andrew Bailey.
AUDUSD
The Australian dollar shows negative dynamics, developing the "bearish" momentum formed the day before, when the AUD/USD pair came under pressure after the decision of the Reserve Bank of Australia (RBA). The instrument is testing the level of 0.6710 for a breakdown, updating local lows from July 14. The Australian regulator raised the interest rate by 50 basis points to 2.35%, which coincided with the main market forecasts, and in the accompanying statement it was noted that the main risks for the economy remain, and the RBA will continue to tighten monetary policy to stabilize the situation with inflation. At the same time, the regulator did not comment on the threat of an impending recession, noting only that the trajectory of the correction of the value may change. The macroeconomic data released today in Australia provide a weak support for the AUD/USD pair. AiG Performance of Services Index strengthened from 51.7 points to 53.3 points in August, which turned out to be better than the average forecasts. Australian GDP in the second quarter increased by 0.9% after rising by 0.8% over the previous period, although analysts had expected 1.0%, and in annual terms, the figure accelerated from 3.3% to 3.6%, ahead of forecasts at the level of 3.5%.
USDJPY
The US dollar shows strong growth, updating record highs over the past 24 years. The USD/JPY pair is testing 144.00, receiving support amid expectations of further tightening of monetary policy by the US Federal Reserve. Macroeconomic statistics published recently confirms investors' expectations regarding the stability of the US economy, the recession threshold of which is much further than in the economies of Europe or the UK. Meanwhile, the Bank of Japan is still taking a wait-and-see attitude, without launching a cycle of raising interest rates due to low inflation in the country. Moreover, the regulator has repeatedly stated its readiness to resort to additional support measures, if necessary. On Thursday, Japan will release data on the dynamics of GDP for the second quarter, as well as statistics on the volume of Bank Lending. The economy is expected to accelerate in the second quarter from 0.5% to 0.7% QoQ and from 2.2% to 2.9% YoY.
XAUUSD
Gold prices are moderately declining, developing the "bearish" momentum formed the day before. The XAU/USD pair failed to consolidate on Tuesday at its local highs of August 30, reacting to the publication of positive macroeconomic statistics from the US. In particular, the data showed an increase in ISM Services PMI in August from 56.7 points to 56.9 points, while analysts had expected it to decline to 55.1 points. At the same time, S&P Global Services PMI fell in August from 45.0 points to 44.6 points with neutral forecasts. One way or another, investors are confident in the stability of the US economy, especially against the background of the energy crisis and recession risks in Europe. Today, the publication of a monthly report from the US Federal Reserve, the so-called "Beige Book", is expected. In addition, the Bank of Canada will announce its decision on interest rates. Forecasts suggest an increase in value immediately by 75 basis points to 3.25%. Tomorrow, the European Central Bank (ECB) will also hold a meeting on monetary policy and it is assumed that the regulator will adjust interest rates by 50 basis points to 1.00%.
Morning Market Review
EURUSD
The European currency is correcting slightly after the EUR/USD pair showed the strongest growth in recent weeks the day before, supported by upbeat macroeconomic statistics from Europe, which gave investors hope that a recession could be avoided (or at least the timing of its occurrence will be shifted). According to the results of the second quarter, the growth rate of the Gross Domestic Product (GDP) of the Eurozone increased by 0.8%, while analysts expected growth of only 0.6%. In annual terms, the index accelerated from 3.9% to 4.1%. The Employment Rate added 0.4% QoQ and 2.7% YoY, while analysts expected 0.3% and 2.4%, respectively. Pretty solid results on the dynamics of the economy increased the likelihood that the European Central Bank (ECB) may decide on a more severe increase in interest rates than expected. The next meeting of the regulator will take place today, and at the moment, analysts predict a correction in the value in the range of 50–75 basis points.
GBPUSD
GBPUSD is trading with a downtrend, testing the level of 1.1500 for a breakdown. The pound, remaining strongly oversold in the short term, is trying to show corrective growth, limited by weak performance, which the UK economy shows. Inflation in the country exceeds record levels since 1982 at the level of 10.1%, while further forecasts are also very pessimistic. The Bank of England expects the economy to enter recession in the fourth quarter and not be able to return to growth until 2024. At the same time, the British regulator is still set to further increase the interest rate at a meeting to be held next Thursday. Correction of the value in the range of 25-50 basis points is expected. Another factor of uncertainty for the pound and the British economy remains the policy of the new Prime Minister Liz Truss. In particular, the official is considering the possibility of fixing prices for electricity and gas for households by increasing budget spending and government loans.
XAUUSD
Gold prices are consolidating today near the level of 1715.00, waiting for the emergence of new drivers on the market. The day before, XAU/USD showed a noticeable growth of almost 1.0%, having received support from the correctional sentiment for the US currency. In addition, markets reacted to the decline in US Treasury yields. In turn, further growth of the precious metal quotes was restrained by an increase in interest rates by the Bank of Canada by 75 basis points, which once again confirmed investors' confidence in a similar decision by the US Federal Reserve. The upcoming meeting of the European Central Bank (ECB), which will be held today at 14:15 (GMT+2), brings uncertainty to the market. After the publication of optimistic macroeconomic data from the euro area the day before, investors expect a 75 basis point increase in interest rates, but a more cautious correction of 50 basis points is also possible. In addition, during the day there will be speeches by the heads of the US Federal Reserve and the ECB.
About us
Solid ECN Securities is a team of experts with more than a decade of experience in trading, IT, and brokerage development. Gradually over the years, we collected priceless information about the market demands. We have learned how to safeguard and secure the trading environment on contracts.
It was in 2017, that we were determined to establish an independent hub to protect our accounts and trades. It was at that time we came up with the idea of Solid ECN Securities. We started with a self-developed platform, but due to the trading demands, the platform could meet our minimums only. Therefore, we stepped up and made it to the next level.
We formed the company and hired more experts to expand the Solid ECN brand worldwide. The pillar of the company is to provide secure trading without discrimination.
It was in 2017, that we were determined to establish an independent hub to protect our accounts and trades. It was at that time we came up with the idea of Solid ECN Securities. We started with a self-developed platform, but due to the trading demands, the platform could meet our minimums only. Therefore, we stepped up and made it to the next level.
We formed the company and hired more experts to expand the Solid ECN brand worldwide. The pillar of the company is to provide secure trading without discrimination.
Visit solidecn.com
Trust Pilot Score 4.9
Why MetaTrader 5?
Contrary to commune belief, MetaTrader 5 is not an upgrade of MT4. The MT4 platform was developed for trading in the Forex environment, whereas MT5 was coded for CFDs, Stocks, and futures access. To be short, MetaTrader 5 is for more experienced and advanced traders, but before we go with the MT5, at Solid ECN we ran a survey of the traders we know, and found out that most rookies and novice users are already with the MT5 platform, and for the first time the MT5 users have surpassed the MT4’s!
Major differences
Major differences
- MT4 has 9-time frames, whereas MT5 offers 21-time frames. More time frames assist technical analyzers to have a better conception of the market movement.
- MT 4 has 4 pending orders, whereas MT5 provides 6 types of pending orders.
- MT 4 doesn’t have the market depth, but MT5 market depth is accessed within the chart.
- MT5 has the Economic calendar on default.
- MT4 has 4 types of pending orders, whereas MT5 holds 6 types.
- MT4 allows hedging only, whereas MT5 allows both hedging and netting on request.
- MT5 has 38 technical indicators, 44 analytical objects and unlimited charts
- Partial order filling policies (fill/kill or cancel return) is another advantage of the MT5 for advanced traders.
- The strategy tester of the MT5 platform is multi-threaded but MT4 is single-threaded.
MetaQuote corporation has been sending announcements about stopping MT4 updates. Therefore, we believe it was in the best interest of all parties to go with the MT5 platform!
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