So far, crude oil prices continue to recover for the second day after the collapse last Monday and Tuesday amid reports that OPEC ++ may not change the deadlines for the implementation of agreements aimed at reducing the volume of crude oil production and expanding them. Moreover, D. Trump threatens to use military force against Iranian ships, which supposedly get too close to American ships in the Red Sea. Nevertheless, everything is calm in the currency market.
Earlier, we repeatedly pointed out the main reasons for such vague dynamics in the currency markets, which, unfortunately, have not disappeared and continue to exert a compensatory effect on the dynamics of the dollar against its counterparts.
Today, the data on the volume of exports, imports and trade balances of China were published, which came out in line with expectations, respectively: -1.0%, 6.6% and 19.93 billion US dollars. The May consumer confidence index in Germany, which is a leading indicator, expectedly collapsed, but only noticeably more than the forecast - to -23.4 points against the expectation of a decline to -1.8 points and an increase of 2.7 points in April.
In addition to these data, investors will pay attention today to the publication of business activity index values in the manufacturing and services sectors in Germany and the eurozone, as well as in the UK and the USA. Lower values of these indicators can plunge into gloomy stock markets again, but only temporarily as well as revive the dynamics of the currency exchange market.
On the other hand, the EU summit will also attract attention, which will discuss the previously developed plan for the restoration of the European economy, measured at 2 trillion euros. So far, the previously proposed plan for unlimited purchases of bonds worth 300 billion euros has not been approved and divided the EU into two camps. The so-called "southern" camp expectedly wants more support, and the "northern" camp is against it. This failure to agree is already one of the reasons for the coronavirus pandemic, which could split the EU and the Eurozone.
The main currency pair EUR/USD remains under pressure before the summit, as market participants, seeing the discord in the EU, doubt that an effective agreement will be reached. If this does not happen, then the single currency, which is already paired with the dollar which is not in a good condition due to its continued attractiveness as a safe haven currency, will continue to actively decline.
Forecast of the day:
The EUR/USD pair remains under pressure expecting the result of the EU summit. If it does not bring a positive result, the pair will continue to decline to the level of 1.0770 with the prospect of a further local decline to 1.0655.
The USDCAD pair is trading above the level of 1.4115. Rising crude oil prices and increasing demand for risky assets today may cause the pair to decline to the level of 1.4000, and to 1.3860 in the future.
