U.S. dollar slightly adjusted

July 06, 2020 12:00

Following a return of optimism in the markets last week, the U.S. dollar underwent a correction. Generally investors have increased their risk appetite, leading to a withdrawal of capital from safer assets, including the global reserve currency.

Economic data from the U.S. was mostly positive. The ISM manufacturing PMI index rose to a positive level of 52.6 points, indicating an expansion. Interestingly, the real estate market is showing resistance to the virus and activity is returning - the number of pending home sales increased by 44% in May compared to April. The consumer confidence index rose from 85.9 to 98.1 points, indicating a recovering consumer willingness to consume. 4.8 million new jobs have been created in the labor market, causing the unemployment rate to fall to 11.1%, but there is still a great deal of uncertainty in the market about these figures as new job applications remain positive and more people apply for unemployment benefits every week.


Coronavirus data remained consistent with last week's trends. Market participants focused on the situation in the U.S., where the number of new cases reached new heights and 57,000 new patients were recorded per day. In the main states of the country, the requirements for social activity are being tightened again in order to control the spread of the virus. In Brazil, the number of new cases has not changed and has remained at an altitude of 40,000. In India, the spread of the virus is gaining momentum and the number of new cases is growing every day and has almost reached the level of 25 thousand per day. In Russia, the pressure is slowly easing and the number of cases has fallen to 6.5 thousand a day.


The main currency pair EUR/USD changed insignificantly and fluctuated at the level of 1,125. Among the economic data was the manufacturing PMI index, which rose from 39.4 to 47.4 points, while the services sector index also recovered and rose from 30.5 to 48.3 points, indicating that sentiment in Europe is recovering rapidly. Preliminary inflation in Europe in June was 0.3% and exceeded expectations. Unemployment rose slightly in both Europe and Germany, reaching 7.4% and 6.4% respectively. EUR/USD has ended the week appreciating 0.2%.


The most important Asian pair USD/JPY showed a bullish sentiment. Among the economic indicators was the manufacturing sector PMI index, which stood at 40.1 points and remained in the negative zone, but the services sector recovered rapidly and rose from 26.5 to 45.0 points. Retail sales in May fell -12.3% year-on-year. The unemployment rate rose from 2.6% to 2.9%. USD/JPY ended the week appreciating 0.3%.


The British pound rose against the U.S. dollar. In Britain, first-quarter economic results were released, slowing down -1.7% year-on-year. The manufacturing PMI index was at 50.1 points, but the sentiment in the services sector recovered even faster and the index rose to 47.1 points. GBP/USD ended the week appreciating 1.2%.

Economic Events

This week will start with European retail data. The volumes of the German industrial sector will be monitored on Tuesday. No important data is planned for Wednesday, and German export figures are expected on Thursday. No important announcements were also scheduled for Friday.

According to Admiral Markets market sentiment data, 41% of investors have long positions in the EUR/USD pair (down -10 percentage points from last week's data). In the main Asian pair USD/JPY, 48% of investors have long positions (fell by -12 percentage points). In the GBP/USD pair, 34% of participants expect a rise (down -24 percentage points). Such market data is interpreted as the opposite indicator, so EUR/USD and GBP/USD are expected to rise and the USD/JPY position is relatively neutral. The analysis of positioning data needs to be combined with fundamental projections and technical analysis.

Sources: bloomberg.com, reuters.com, Admiral Markets MT4 Supreme Edition, investing.com

Discover the world's #1 multi-asset platform

Admiral Markets offers professional traders the ability to trade with a custom, upgraded version of MetaTrader 5, allowing you to experience trading at a significantly higher, more rewarding level. Experience benefits such as the addition of the Market Heat Map, so you can compare various currency pairs to see which ones might be lucrative investments, access real-time trading data, and so much more. Click the banner below to start your FREE download of MT5 Supreme Edition!

Disclaimer: The given data provides additional information regarding all analysis, estimates, prognosis, forecasts or other similar assessments or information (hereinafter "Analysis") published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:

  1. This is a marketing communication. The analysis is published for informative purposes only and are in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
  2. Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the Analysis.
  3. Each of the Analysis is prepared by an independent analyst (Jens Klatt, Professional Trader and Analyst, hereinafter "Author") based on the Author's personal estimations.
  4. To ensure that the interests of the clients would be protected and objectivity of the Analysis would not be damaged Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
  5. Whilst every reasonable effort is taken to ensure that all sources of the Analysis are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis. The presented figures refer that refer to any past performance is not a reliable indicator of future results.
  6. The contents of the Analysis should not be construed as an express or implied promise, guarantee or implication by Admiral Markets that the client shall profit from the strategies therein or that losses in connection therewith may or shall be limited.
  7. Any kind of previous or modeled performance of financial instruments indicated within the Publication should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
  8. The projections included in the Analysis may be subject to additional fees, taxes or other charges, depending on the subject of the Publication. The price list applicable to the services provided by Admiral Markets is publicly available from the website of Admiral Markets.
Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, you should make sure that you understand all the risks


Admirals An all-in-one solution for spending, investing, and managing your money

More than a broker, Admirals is a financial hub, offering a wide range of financial products and services. We make it possible to approach personal finance through an all-in-one solution for investing, spending, and managing money.