Forex Analysis & Reviews: 06.09.2019 - Markets will closely monitor...

06.09.2019 01:17 PM

Markets will closely monitor data from Europe and the US, as well as the decision of the Central Bank of the Russian Federation on rates (We sell or buy EUR/USD and USD/CAD pairs based on statistics)

Today, the focus of the market will be important data on economic statistics. First of all, we highlight the publication of intermediate values of the Eurozone GDP for the 2nd quarter, as well as figures on employment in the States.

According to the forecast, it is expected that the growth of the European economy in the second quarter will decrease to 1.1% from 1.2% year on year and in quarterly terms, the growth rate will drop to 0.2% from 0.4%.

If the data are confirmed, then the ECB will have every reason despite some discrepancies in the assessments of the future monetary policy by representatives of the regulator to begin large-scale incentive measures. This may ultimately lead to the resumption of the bearish trend of the single European currency.

Of the American statistics released today, the undoubted favorite will be the values of the number of new jobs in the US economy. In August, the US economy is expected to have 160,000 new jobs in the non-agricultural sector, compared to 164,000 a month earlier. The forecast is also to maintain unemployment at around 3.7%.

What will be the data, it will become known at 12.30 UTC but they may turn out to be significantly higher than expected. In any case, the employment figures from ADP presented on Wednesday showed a significantly higher value of the number of new jobs at 195,000 against 142,000 a month earlier and growth forecasts of up to 148,000. Of course, data from Automatic Data Processing or an employment report from ADP does not always coincide with the official values from the US Department of Labor, but in general often show general dynamics, which is important. So, if the value of the number of new jobs also demonstrates growth above expectations, then this will undoubtedly support the dollar. It can also weaken the market's expectations that the Fed will begin the process of lowering interest rates this year, and not just limit itself to a single decrease this month.

With regard to the final decision of the Central Bank of the Federal Republic on rates, we note that cutting the key rate by 0.25% to 7.00% is justified against the background of a slowdown in inflation and the direct economic need to stimulate business activity in Russia. But this decision is actually the stock market of the Russian Federation, as well as the dynamics of the ruble is already taken into account in prices. Investors will be interested in the further course of the regulator. If the Central Bank makes it clear that the reduction in rates can continue, it will be positively received by the stock market, and the ruble will experience noticeable problems with growth in relation to the dual-currency basket.

Forecast of the day:

The EUR/USD pair is trading above the level of 1.1025. If data from the United States turns out to be weaker and Eurozone GDP is no worse than the forecast, the pair will continue to grow locally to 1.1145. But if the values of the indicators are opposite, we should expect a local price fall to 1.0925.

The USD/CAD pair may resume decline on weak data on employment in the States and the resumption of rising oil prices. In this case, it will continue to fall to 1.3175 and then to 1.3125. However, if the NFPs come out better than expected, the pair could jump to 1.3270.