Market News and Charts for July 19, 2021
Hey traders! Below are the latest forex chart updates for Monday’s sessions. Learn from the provided analysis and apply the recommended positions to your next move. Good day and Good Luck!
The pair will continue to move lower in the coming sessions near the 82.00 key support area. The ADP Non-farm Employment Change report is down for the second consecutive month in June at -294,200. Immigrant workers fuel the Canadian economy and the continued border restrictions along with rising covid-19 cases worldwide put the labour market on hold. Meanwhile, Economist David Rosenberg sees a possible deflation next year despite the soaring cases in the previous months. The dovish view eases the pressure for the BOC to hike rates and control inflation. The BOC made an intercorrelation between inflation and employment in a recent statement. The central bank suggests that inflation will increase in the near term as the pandemic swayed foreign workers. Soaring inflation is visible from the Housing Start report which came in at 282,100. While lower than the previous data of 286,300, the result in June is an improvement from the 270,000 forecasts.
The market is mixed over the UK’s “Freedom Day”. This was after Britain recorded more than 50,000 daily infections for the first time in six (6) months on July 16. The UK has one of the world’s highest vaccination rates at 69.5% with 36.1 million individuals or 54.0% fully vaccinated. However, the rising dominant variant, Delta, is deadlier and more contagious. It is also more potent against vaccines. In the US, a travel warning to Britain was issued by the CDC which will negatively impact the UK economy. Meanwhile, recent economic data shows challenges in the labour market. Unemployment in the country jumped to 4.8% in May despite a decline in claimants at -114,800. Analysts believe that lower jobs creation of only 25,000 was the culprit behind the bleak data. The low number of applicants and higher compensation package by employers highlights the “Great Resignation” trend as businesses recall their employees back to the office.
Inflationary concerns cooled down on Friday as the Eurozone recorded a decline in the consumer price index (CPI) to 1.9%. The previous record is 2.0% in line with the ECB’s annual target and sparks fear of overshooting the benchmark in the coming months. In addition, the trade surplus fell to 7.5 billion which is nearly half of April’s 15.2 billion records. In addition, raising the interest might get complicated as the European Central Bank signals a policy shift. Currently, the ECB’s mandate revolves around keeping prices stable. However, it might soon follow other central banks in tracking employment before adjusting the rate. The decline in the euro against the AUD will be gradual as investors weigh the possible impact of lowdown in Australian states amid the resurgence of coronavirus. Victoria’s lockdown is extended by another week while South Australia recorded an outbreak of the Delta variant and is due to enter a lockdown on Monday, July 19.
The EURUSD pair will extend its decline to form a “Double Top” pattern. The US retail sales were up 0.6% in June triggering fears of a rise in inflation. In turn, some analysts believe that the central bank might move to tame prices in the short term which will push the US dollar higher. Meanwhile, in May, the report contracted by -1.7%, and analysts expect the negative trend to continue with a consensus estimate of -0.4%. In addition to soaring prices, the demand for the American dollar will increase as investors look to preserve their capital. US indices fell due to soaring coronavirus cases with the deadlier and more contagious Delta variant dominating new local cases. However, analysts don’t see the rise in cases to impact the recovery of the US economy in the short term. In addition, America might be the first recipient of a third dose vaccine from Pfizer and Moderna. The booster shot is anticipated to help combat stronger coronavirus variants.
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