On Tuesday, June 29, following the auction, the euro fell against the dollar by 0.23% to 1.1895. The rate declined to 1.1878 amid risk aversion due to the rapid spread of the infectious Indian strain and the introduction of new restrictions in Europe and Australia. By the close of the trading session, the price recovered to 1.1895. Before the payrolls and the OPEC + meeting (July 1), the market may shake even more, as it is unclear whether the dollar will continue to rally or will collapse after the NFP publication on Friday.
Scheduled statistics (GMT +3):
- 10:55 am Germany will report the change in the unemployment rate and the number of unemployed in June.
- 11:00, Switzerland is to release an Index of Swiss Investor Expectations, based on the ZEW and Credit Suisse for June.
- 12:00 the eurozone is to publish the CPI for June.
- 15:15, the US will report the change in the number of people employed from ADP for June.
- 15:30, Canada will announce the change in the volume of GDP for April and will release the producer price index for May.
- 16:45, the US is to publish the Chicago Purchasing Managers Index for June.
- 17:00, the US will announce a change in the volume of pending home sales in May.
- 17:30 the US Department of Energy will present a report on oil reserves.
Current situation:
At the time of writing, the euro is worth 1.1899. The fall stopped at 1.1878, which is 76.4% of the upward movement from 1.1847 to 1.1975. Three events remain in the focus of market participants: the rapid spread of two infectious types of viruses Delta (Indian) and Lambda (Peruvian), the report on the US labor market (July 2), and the OPEC + meeting (July 1).
In Britain, the first cases of coronavirus infection with lambda-strain have been identified. It is considered to be more contagious, so investors are monitoring its spread and the actions of the authorities.
The dollar index fell from 92.15 to 92.00. The status of the dollar is constantly changing, so there is nothing to focus on. Uncertainty between the US dollar and the yield on US 10-year bonds has weakened the link. Now the dollar index can grow with falling yields, so it is not known when it is a defensive asset and when it is not.
Option sellers benefit from shaking the markets ahead of important events with ambiguous news to increase asset volatility. The higher the volatility, the more expensive the options are. The more expensive the options are, the more profit they get after the market is in sideways movement before expiration.
On the dollar index, it is worth taking a closer look at the level of 91.95. If it doesn't hold, the index will drop to 91.88. For the euro, we can consider the price recovery to 1.1930 (45 gr.) As part of the correction. At the same time, you need to monitor the pairs AUD/USD (+ 0.18%) and NZD/USD (+ 0.17%). Their growth shows the mood of speculators and the level of risk appetite. They are now showing great returns against the dollar. Traders are willing to take risks and correct higher.
Summary: on Tuesday, following the trading results, the euro closed with a decline. The dollar index climbed to 92.19 amid the rapid spread of the contagious Indian strain and new restrictions in Europe and Australia. The Australian and the New Zealander suffered the greatest losses.
On Wednesday, at trading in Asia, the currencies of the Pacific region occupy the first lines. Against the background of the correction, the demand for risky assets increased. For the euro, we can consider the price recovery to 1.1930 (45 g.) As part of the correction and keep our finger on the pulse if negative flows again.