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The euro will continue to focus on falling

Last week, the EUR/USD pair was a step away from updating its annual low and found a local trough at 1.1065.

A decrease in the consumer sentiment index from the University of Michigan to its lowest level over the past seven months somewhat cooled the outburst of the "bears" in EUR/USD. However, this did not force them to abandon their plans.

The weakness of the European economy, the focus of the European Central Bank (ECB) on easing monetary policy, as well as increasing political risks in the region make the euro currency vulnerable. You should not be surprised then at the increase in the chances of its decline by the end of this month to $1.1. A week ago, the derivatives market estimated the likelihood of such a scenario to be realized at more than 16%, while now these chances are 49%.

Obviously, the policy of American protectionism has a more devastating effect on China and the eurozone than on the United States. This is evidenced by the fact that an industry from the eurozone had plummet into an abyss, and the fall of 0.1% of German GDP in the second quarter. Bloomberg analysts predict a further decline in German purchasing managers' indices in August, which increases the risks of a technical recession in the largest currency bloc economy. The divergence of economic growth between the EU and the US is well traced in the dynamics of such an indicator as the index of economic surprises. This fact does not allow the bulls to sleep peacefully for the euro.

If last year investors still had hope that the eurozone would get on its feet and begin to accelerate, then this year it seems that they will be disappointed. The United States still looks like an island of stability in the ocean of world recession.

The "bearish" factor for the euro is also the deterioration of the political landscape in the EU. In Italy, a split in the ruling coalition allowed the country's deputy prime minister, Matteo Salvini, to initiate a motion of no confidence in the head of government, Giuseppe Conte. Early Parliamentary elections loomed on the horizon, and the flight of investors from the Italian debt market was reflected in the increase in the differential yield of local and German government bonds.

On the contrary, the greenback is doing well. Of course, the USD index rally complicates the life of US exporters and helps reduce corporate profits, but this is an objective process. When rates on government bonds in the United States are higher than in other countries, and the US economy looks better, the dollar, it would seem, is doomed to strengthen.

However, there is a fly in the ointment - US President Donald Trump's dissatisfaction with the Fed's actions and, as a result, a possible reduction in the rate of federal funds by the end of this year from 2.25% to 1.75%. However, it is unlikely that the Chairman of the Federal Reserve, Jerome Powell in Jackson Hole, will want to signal a cut in interest rates by 50 basis points at once in September. As for the minutes of the July meeting, it can show the arguments of dissenters who opposed for the FOMC members to ease monetary policy. It is assumed that this will support the EUR/USD bears. In such conditions, the continuation of the fall of the main currency pair seems quite logical.

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Gold at the crossroads: there are plenty of reasons for a correction, but no less in favor of growth

Gold froze at a crossroads. Apparently, speculators who push prices higher, and consumers who want to buy cheaper metals, decided to take a break.

Since the beginning of this year, gold has risen by almost 19% in price, breaking the psychologically important mark of $1,500 per ounce. The last time this level was observed was in April 2013.

The main reason for the growth of quotes was the fear of investors about the global recession, which forces them to shift capital to safe haven assets. It is assumed that if the concerns of market participants begin to be confirmed, the rally of precious metals will continue.

"Rising prices to a six-year high is primarily due to bonds, and it is extremely important for investors to monitor changes in their yield in order to understand what will be the dynamics," said Oax Hansen of Saxo Bank.

The decrease in bond yields in the world has already led to the fact that sovereign bonds with a total volume of almost $16 trillion give a negative percentage.

The jump in the cost of precious metals was also caused by expectations that the Fed, the ECB and other central banks would stimulate economic growth in various ways. The easing of monetary policy tends to lower interest rates and increase the investment attractiveness of gold.

A sharp rise in prices carries the risks of an equally sharp decline, analysts warn.

"The aggregate gold volume in ETFs is steadily growing and has reached 77.4 million ounces, which is the highest for six years. Previous similar bursts of speculative demand caused a serious correction of quotations," O. Hansen said.

In addition, fears of a global recession may also be exaggerated: now markets are most likely driven by emotions. Recent macroeconomic data for the United States were positive and the reduction of interest rates by the world central bank is aimed at maintaining economic growth.

Reducing tensions in Washington and Beijing's trade relations could also serve as a reason for a short, albeit sharp, price correction.

Another negative point for gold may be the expected decline in demand for jewelry in India due to an increase in import duties in the country from 10% to 12.5%, as well as a change in ETF positions, which will respond to the sale of precious metals in response to a restoration of risk appetite .

In case the Fed comes with a surprise - not to continue to lower the interest rate - a correction in gold prices is also possible.

"We expect the Fed to disappoint the market without lowering interest rates in the coming months, and profit taking will ultimately trigger the end of the gold rally. In the event of a pullback, the $1,350 mark per ounce is likely to become a new level of support," representatives of the Fitch rating agency said.

However, there are plenty of factors in favor of the growth of quotes.

According to Deutsche Bank analysts, the main drivers of gold price growth will be real interest rates, stock risk premium, US dollar, as well as purchases of precious metals by central banks.

According to the forecast of Deutsche Bank, the price of gold will be $1,575 per ounce in the next year and a half, and under certain conditions it can reach $1,700.

"Gold is an extremely profitable investment amid the easing of monetary policy by the leading central banks of the world," said Mark Mebius, founder of the Mobius Capital Partners investment fund.

"The long-term prospect of gold – up, up and only up, because the money supply in the world will grow, grow and grow again. Therefore, I believe that gold should be bought at any price," he said.

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The pound believed in Brexit with a deal. How long?

On Thursday, the British currency jumped sharply up. Such a change of mood was facilitated by the statements of the German Chancellor. According to Angela Merkel, Britain still has time to make a deal with the European Union. These comments were perceived by the market as the willpower of politicians aimed at breaking the impasse of Brexit.

Such a violent reaction of market participants can be understood. Due to difficulties with Brexit, pound positioning is too skewed towards sales. Therefore, a small, or even controversial, positive regarding the possible conclusion of an agreement with Brussels sets sterling in motion.

After an unexpectedly strong increase in the British currency, strategists began to think about the correction of the market.

"There is probably the potential for the development of a correction," wrote Credit Agricole SA.

British Prime Minister Boris Johnson will soon meet with various EU leaders to discuss the possibility of a deal. Not the fact that everyone will be as friendly as Germany.

Although French President Emmanuel Macron softened the rhetoric after Angela Merkel, there were still notes of disagreement in his comments. Macron opposed the demands of the UK to reconsider the country's exit from the EU, saying that this is "not an option."

Some strategists drew attention to the fact that the French leader, speaking about the prospects for resolving the border issue with Northern Ireland, noted that in 30 days the parties would not be able to agree on a deal that would be fundamentally different from Theresa May's deal. Macron also made clear that a border decision should ensure that Northern Ireland remains in a single market with the European Union.

Pound buyers have revived, but there is no guarantee that a compromise will be found. The chances of London and Brussels to reach a "workable solution" on the Irish miserable border, which should prevent the growth of the pound.

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Japan Producer Prices Add 0.1% In July

Producer prices in Japan were up 0.1 percent on month in July, the Bank of Japan said on Tuesday - in line with expectations following the 0.1 percent decline in June.

On a yearly basis, producer prices gained 0.5 percent - shy of expectations for an increase of 0.6 percent and down from 0.7 percent in the previous month.

Individually, prices were up on an annual basis for real estate services, leasing, advertising and transportation.

Prices were down for hotels, rentals and ocean freight transportation.

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EUR/USD: Should the Fed soften the blow or refuse to play along with Trump?


The EUR/USD pair is still stuck in the range of 1.1050-1.11150 and so far has not found a reason to exit this side trend.

The day before, former head of the Federal Reserve Bank of New York William Dudley voiced what many probably thought, but did not dare to say out loud.

"If the re-election of Donald Trump in 2020 poses a threat to the US economy, then the Fed should stop being apolitical and indulge the head of the White House," said the former vice president of FOMC.

One of the reasons for the slowdown in US GDP, indeed, is the trade war between Washington and Beijing, which adversely affects investment and exports. Tariffs are a heavy burden on US citizens. The question is, why then should the Fed follow the lead of a person who is pushing the country to the abyss?

According to W. Dudley, attempts by the regulator to protect the US economy from the negative effects of a trade war may not only be ineffective, but will worsen the situation even more.

"What if easing monetary policy would only provoke the US president, allowing him to further escalate the trade conflict and increase the risk of recession?" he said.

D. Trump raises old and introduces new tariffs, putting pressure on the Fed, urging it to cut the interest rate by 1% and to revive the quantitative easing (QE) program. He does all this in order to win the trade war, which harms the US economy. This is the truth that people refuse to listen. However, as you know, he will not get away from it. Another round of escalation of trade tension has led to a decrease in the differential yield of ten- and two-year US government bonds to -5.3 basis points for the first time since March 2007. At the same time, the spread between ten-year and three-month bonds fell to -51.4 basis points. Thus, the chances of a recession in the United States are growing by leaps and bounds, and there is no need to look for the culprit.

Most of all, Trump' statement at the G7 summit on a phone call from the representatives of China regarding the resumption of trade negotiations seems to have surprised the Chinese themselves. So far, Beijing has not given any confirmation of the conversation. The trade war continues, the risks of a slowdown and recession in the US economy increases, and the USD index is growing.

The reasons for the greenback's strengthening primarily lies in the weaknesses of its main competitors. At the same time, Washington's fears of currency interventions with the aim of weakening the US currency are holding back EUR/USD bears from taking action. Neither the deterioration of the political situation in Italy, nor the decrease in German GDP by 0.1% in April-June in quarterly terms led to a breakthrough of support at 1.1050-1.1065 for the EUR/USD pair. It is possible that market participants decided to wait for the release of data on US GDP for the second quarter, as well as the August release on European inflation, which will be released this week.

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European Economics Preview: Eurozone Final PMI Data Due

Final Purchasing Managers' survey data from euro area is due on Monday, headlining a busy day for the European economic news.

At 3.00 am ET, Purchasing Managers' survey results are due from Norway, Poland and Turkey. Poland's factory PMI is forecast to rise to 47.7 in August from 47.4 in July.

In the meantime, Turkey's GDP data is due. The economy is forecast to contract 2 percent on year in the second quarter, following a 2.6 percent fall in the first quarter.

At 3.45 am ET, IHS Markit is scheduled to issue Italy's manufacturing PMI data. The PMI is expected to rise slightly to 48.6 in August from 48.5 in July.

Thereafter, final PMI figures are due from France and Germany at 3.50 am and 3.55 am ET, respectively.

At 4.00 am ET, IHS Markit is set to release euro area factory PMI data. The final reading is forecast to match the flash estimate of 47.0 in August.

Half an hour later, UK Markit/CIPS manufacturing PMI figures are due. The PMI is seen at 48.8 in August versus 48.0 in July.

At 5.00 am ET, Italy's Istat releases July retail sales data. Sales had increased 1.9 percent on month in June.

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EUR/USD: if there is a rebound, it will be short-lived, the decline will continue

After a slight rebound, the EUR/USD pair may resume falling, as the trend is still in a downward direction. Resistance is expected at a psychologically significant level of 1.1000, followed by 1.1027, then 1.050, at which EUR/USD held in mid-August. A potential rebound, if any, will be temporary. Although the situation in the German political arena encourages the euro's growth, Italy has not yet formed a government, and in Germany, the key parties have agreed only on fundamental principles and still need to agree on many details. Moreover, the economic situation in the eurozone remains alarming. Markit purchasing managers' final indices for the manufacturing sector show that prospects remain bleak.

How low can the euro go? This question after the Friday crash worries many traders. Most likely, the market will see a temporary recovery. The chancellor of the ruling CDU party, Angela Merkel, won the local elections in Saxony. In other regions, fears of the victory of extremists from the Alternative German State (AfD) also did not materialize. These results will help stabilize the shaky coalition and strengthen the role of Merkel as a guarantor of stability on the continent. There is another reason for the rebound. US President Donald Trump, although he introduced new duties, recalled that high-level talks should be held at the end of this month in Washington. Until recently, the relative lull in the trade war stimulated the growth of the dollar, now the dollar will experience downward pressure. In addition, the escalation of the trade war means better prospects for German manufacturers, which depend on exports to China.

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Ireland Services Activity Growth Weakest Since January

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Ireland's services activity grew at the slowest pace since January on weak new orders and employment, survey results from IHS Markit showed Wednesday.

The AIB services Purchasing Managers' Index fell to 54.6 in August from 55.0 in July. The score signaled the slowest rise since January. However, a reading above 50 indicates expansion in the sector.

Inflows of overall new business expanded at the slowest pace in four months, amid reports from some firms of Brexit uncertainty negatively affecting orders from the UK.

Irish service providers recorded the weakest payroll expansion since May 2013. On the price front, data showed that while the rate of input cost inflation eased, companies increased their output charges at a faster pace in August.

Meanwhile, sentiment towards activity over the coming year dropped to the lowest since December 2011 as Brexit weighed on optimism.

The composite output index held steady at 51.8 in August despite the manufacturing sector continued to contract.
 
Golden cosmos

Good evening, dear traders. As promised, here's the evening forecast for gold. Sorry, was not able to publish it in the morning, because it has already started to work.

The trade wars drove gold to an incredible $ 1,550 per troy ounce. This is the largest gold trend. for many years! Over the past year, gold has passed a record of 36,000p and continues to storm the high, knocking out the stops of medium-term sellers. And just yesterday, according to perhaps the most effective Price Action trading strategy, a pattern called "daily absorption in the trend" has appeared - which speaks of an ongoing trend and after which it is recommended to buy. Today, to the American session, there was a magnificent rollback, allowing you to go into longs at the best price.

On the other hand, sellers who have been selling gold from highs for two weeks now have to hide their risks only for one single extreme - this year's high - quotation 1554. Although, gold has not yet risen above. This is a trap that will be slammed in the near future and trap sellers.

I propose to take a closer look from the rollbacks to the longs - with a take on updating 1554 and higher. Often breakdowns of weekly extremes for gold are very volatile - and give a positive slippage, on which you can earn good profit. This is the first part of the plan.

The second part is for those traders who are buying in a large amount (scalpers). The idea is very simple and is to work after the breakdown of 1554, which for example to 1560-1570, and then to return to the broken level of 1554. This is an old scalping technique in the overbought market to work on the consolidations of large buyers after the breakdown of key extremes. It is due to this that the price decline to a broken level, which becomes support.

Be that as it may, you can earn in both cases.

I wish you success in trading and follow the policy of money management!

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European Economics Preview: Germany Factory Orders Data Due

Factory orders from Germany and quarterly national accounts from Switzerland are due on Thursday, headlining a light day for the European economic news.

At 1.45 am ET, the State Secretariat for Economic Affairs is set to release Swiss GDP data. The economy is forecast to grow 0.2 percent sequentially in the second quarter after expanding 0.6 percent in the first quarter.

At 2.00 am ET, Destatis is scheduled to publish Germany's factory orders data for July. Orders are forecast to shrink 1.5 percent on month, in contrast to June's 2.5 percent increase.

At 3.00 am ET, retail sales data is due from the Czech Republic. Economists expect sales to climb 5.9 percent on year in July, following a 0.2 percent rise in June.

Half an hour later, Sweden's central bank is set to announce its rate decision. The bank is forecast to leave its key rate unchanged at -0.25 percent.

In the meantime, IHS Markit is scheduled to issue Germany's construction PMI data for August.

At 5.00 am ET, Greece unemployment data is due for June.

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Euro drops to new lows against the pound, but the joy will be short-lived

EUR/GBP fell below a critical level of 0.90. The positive attitude towards the British pound makes the EUR/GBP pair forget about further growth and break through the critical support level of 0.90 in order to move lower to new two-month lows. The euro weakened amid optimism over Brexit and is falling for the third consecutive session in response to an obvious change in sentiment against the British pound. The currency is recovering amid growing optimism, especially after British lawmakers voted to postpone Brexit's deadline and the government did not approve a bill calling for a general election on October 15. Nevertheless, the scenario of a "hard" Brexit without a deal is still under consideration, which means that soon political instability will return to the UK.

What to expect from GBP? The renewed growth momentum is pushing the currency to new heights in the light of recent political events in the UK. Nevertheless, according to forecasts, sterling will remain under pressure, as political uncertainty has not disappeared, and the likelihood of general elections is also high, and this is only a matter of time. On the other hand, the Bank of England remains "silent" in relation to Brexit and its potential consequences. It is worth recalling that at its last meeting, the central bank refused to include the likelihood of a "hard divorce" scenario in its forecasts.

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Australia Business Confidence Weakens In August: NAB

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Australia's business confidence and conditions deteriorated in August, survey results from the National Australia Bank showed Tuesday.

The business confidence index fell to +1 from +4 in July. Likewise, the business conditions index declined to +1 from +3 a month ago.

Business confidence and other forward looking indicators suggest there is unlikely to be an imminent turnaround in business conditions, NAB Chief Economist Alan Oster said.

The business survey for August was a disappointment on the headline figures, and consistent with domestic demand growth remaining significantly below potential, Tom Kennedy, an economist at J.P. Morgan said.
 
AUD/USD paused, awaits news after a five-day rally

After a sharp rally during the previous five trading days and adding almost 150 pips over this period, the AUD/USD pair entered the consolidation phase and fluctuates in a narrow range near 0.6850. Earlier, the National Australia Bank reported that the business confidence index fell to 1 point in August from 4 points in July, and the business conditions index fell to 1 point from 2 points, in such conditions it is difficult for the aussie to continue to press the dollar. In addition, the producer price index in China fell to -0.8% in August year-on-year, which further inhibits growth.

On the other hand, the lack of significant macroeconomic data from the United States did not make it possible for the US dollar index to strengthen and limited losses in the pair. At the moment, the US dollar index shows a small daily gain of 98.38 points. It seems that investors are likely to stand aside and watch, waiting for new events around the trade conflict between the US and China. Earlier today, the White House trade adviser said that "patience is needed regarding trade negotiations between the US and China," but he has not made any statements hinting at progress in the negotiations.

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Japan Core Machine Orders Sink 6.6% In July

Core machine orders in Japan were down a seasonally adjusted 6.6 percent on month in July, the Cabinet Office said on Thursday - coming in at 896.9 billion yen.

That beat expectations for a fall of 8.1 percent following the 13.9 percent surge in June.

On a yearly basis, core machine orders rose 0.3 percent - again exceeding expectations for a fall of 4.3 percent following the 12.5 percent gain in the previous month.

The total value of machinery orders received by 280 manufacturers operating in Japan increased by 0.1 percent in July.

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EUR/GBP returns to growth, pound lacks good news

A Scottish court ruled that the suspension of Parliament was unlawful and the uncertainty exacerbated the GBP. The EUR/GBP pair returns to the level of 0.8940 after three consecutive sessions of decline. Returning to the political situation in the UK, one should take into account the forecasts, which set out several worst-case scenarios in the event of the hard version of Brexit at the end of October. Analysts emphasize the high likelihood of riots, rising food prices and shortages of medical supplies. On the other hand, the euro also cannot find support. The German Consumer Price Growth Index is likely to fall by 0.2 percent in August compared with July and grow by 1.4 percent year on year. Additional data indicate a decrease in industrial production in the eurozone in July by 0.4 percent compared with the previous month and by two percent year on year, which is below market expectations.

The sale of the British pound also caused a slight downward correction after recent positive results. Sterling will remain under scrutiny, as political pressure has not subsided, and the issue with Brexit has not been resolved. Now everyone is looking at the events taking place in the political arena of Great Britain during the period of "inaction" of the Parliament, which will begin its work in mid-October, it is expected that the queen will personally deliver a speech. At the same time, we remember that the Bank of England recently ruled out "negative interest rates" and expressed its opinion about the "likelihood of a recession in the country."


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Denmark Producer Prices Fall In August

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Denmark's producer prices declined further in August, figures from Statistics Denmark showed on Monday.

The producer prices fell 3.1 percent year-on-year in August, following a 2.2 percent decline in July.

Domestic market prices decreased 4.4 percent annually in July and foreign market prices declined 1.4 percent.

Import prices fell 1.0 percent annually in August and decreased 0.3 percent from the previous month.

On a monthly basis, producer prices fell 0.3 percent in August, after a 0.5 percent rise in the previous month.
 
Japan Has Y136.3 Billion Deficit In August

Japan posted a merchandise trade deficit of 136.329 billion yen in August, the Ministry of Finance said on Wednesday.

That beat forecasts for a shortfall of 365.4 billion yen following the 250.7 billion yen deficit in July.

Exports were down 8.2 percent on year to 6.140 trillion yen, also topping expectations for a decline of 10.9 percent following the 1.5 percent annual drop in the previous month.

Imports sank an annual 12.0 percent versus forecasts for a decline of 11.0 percent after easing 1.2 percent a month earlier.

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Bank Of Japan Keeps Policy Unchanged

The Bank of Japan kept its monetary policy unchanged as widely expected on Thursday, after the U.S. Federal Reserve resorted to further easing.

The Policy Board of the BoJ voted 7-2 to maintain interest rate at -0.1 percent on current accounts that financial institutions maintain at the bank.

The bank said it will purchase government bonds so that the yield of 10-year JGBs will remain at around zero percent.

Further, the bank will purchase JGBs in a flexible manner so that their outstanding amount will increase at an annual pace of about JPY 80 trillion.

The bank said it will reexamine economic and price developments at the next monetary policy meeting in October, when it updates the outlook for economic activity and prices. The bank repeated that it will not hesitate to take additional easing measures if needed.

It is worth recalling that the Bank made similar pledges in 2016 amid concerns over China's economy, but never followed through on them, Marcel Thieliant, an economist at Capital Economics, said.

Since then, concerns over the impact of looser policy on the health of banks have intensified. As such, the BoJ will keep its interest rate targets unchanged over the coming year, the economist noted.

Regarding economic outlook, the BoJ said Japan's economy is likely to continue on a moderate expanding trend, despite being affected by the slowdown in overseas economies for the time being.

Further, the bank said it is necessary to pay closer attention to the possibility of losing momentum towards achieving the price stability target.

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The dollar is trying to unravel the Fed's plans

The central event of this week - the next meeting of the Federal Reserve - did not bring clarity. Analysts continue to wonder what to expect from the regulator in the future.

However, unlike US President Donald Trump, who called Fed Chairman Jerome Powell "a terrible communicator," financial markets seem to have clearly understood the hints of the latter. The Federal Reserve chief's statement that the central bank is ready to aggressively reduce the interest rate in the event of a deterioration in the well-being of the US economy, caused the S&P 500 to grow most rapidly over the past six weeks. Prior to that, the index dipped under the influence of the regulator's rate forecasts: 7 out of 17 FOMC members believe that it should be reduced by 25 basis points by the end of the year, 5 believe that it will remain unchanged, and 5 would like to see not one, but two acts of monetary expansion. Apparently, investors were frightened not by the easing of the Fed's monetary policy (of which I have been certain for a long time already), but by the fact that the rate on federal funds is likely to remain at 1.75% until the end of next year.

Of course, you can talk for a long time about what affected the split in the ranks of the FOMC (3 out of 10 Committee members voted against lowering the interest rate from 2.25% to 2%), but when so much uncertainty is observed on the market, pluralism of opinions is inevitable. Experts call the current situation as "Powell's puzzle": the Fed is forced to balance between strong macro statistics in the United States, which allowed it to increase the country's GDP for the current year from 2.1% to 2.2%, and international threats, including trade conflicts and Brexit.

The mixed reaction of the markets and the lack of a clear signal from the Fed about the weakening of monetary policy in 2019 caused another bout of anger from the head of the White House, Donald Trump.

"Jay Powell and the Federal Reserve Fail Again. No "guts", no sense, no vision! A terrible communicator!", D. Trump wrote on Twitter.

Although the Fed chairman prefers to ignore such attacks against him, this time he commented on the idea of negative interest rates called for by the US president. According to J. Powell, if the situation begins to deteriorate, then the central bank will revive QE rather than lower the federal funds rate below zero.

The day before, the greenback slightly strengthened across the entire spectrum following the results of the September FOMC meeting, but today it is gradually losing ground, since the Fed still does not have a consensus on further actions to adjust the monetary rate.

The market is not completely sure how the US central bank will behave. Most analysts expect the regulator to further trim the rate on federal funds this year, but only one reduction is laid.

Probably, investors will wait for some new signals. In recent days, the trade war between the US and China has left the information field. If another escalation of the conflict occurs, the market may perceive this as a signal for more active easing of the monetary policy of the Federal Reserve.

"It is obvious that the Fed does not have a consensus on what to do next: on the one hand, D. Trump presses, blaming the central bank leadership for incompetence and demanding an urgent interest rate cut to zero or lower, on the other, there are no formal reasons for this," he said ING chief economist James Niley.

Valentin Marinov, Head of Currency Research at Credit Agricole, calls the FOMC decision to trim rates as "hawkish" cuts, believing that such a move is positive for the greenback.

"I believe that currencies that are more closely correlated with investor sentiment regarding risky assets will be more vulnerable to the dollar than the euro, yen and gold," he said.

"I think the Fed will succeed if it can slightly weaken the dollar's position, and make the curve of its fall rate a little steeper. Markets have already shown the expectation of another cut in the base interest rate in December, "said Jim Caron of Morgan Stanley.

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European Economics Preview: Eurozone Flash PMI Data Due

Flash Purchasing Managers' survey data from euro area is due on Monday, headlining a light day for the European economic news.

At 3.15 am ET, IHS Markit is slated to issue France flash PMI data for September. The composite output index is forecast to drop to 52.5 from 52.9 in August.

At 3.30 am ET, Germany's flash PMI data is due. Economists forecast the composite PMI to rise to 52.0 in September from 51.7 in August.

At 4.00 am ET, IHS Markit is scheduled to publish euro area final PMI results. The composite PMI is seen at 52.0 in September versus 51.9 in August. At 4.30 am ET, UK household finance data is due from IHS Markit.

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