August 23, 2021
EUR/USD: The euro is correcting in a flat after a substantial decline. Friday turned out to be a bullish day for the European currency. However, the price failed to climb above the local high. Data on claims for unemployment benefits were slightly weaker than market forecasts, but they were still positive. The initial claims for unemployment benefits in the United States ultimately came out better than forecasted, having decreased by 29 thousand instead of 17 thousand. But continuing claims count is much more important. Instead of showing a 149 thousand decline, the indicator was only 79 thousand lower. So the overall decline in the number of jobless claims turned out to be less than expected. But we are still expecting a further improvement of the labor market situation, which will result in a stronger dollar and a downtrend for the euro.
USD/JPY: The dollar continued to strengthen against the Japanese yen on Friday. Even though Japan released data on foreign investment, which showed a positive trend, risk appetite improved with equities gaining and benchmark Treasury yields higher. US currency, in general, is still supported by fears that the spread of the coronavirus Delta variant could undermine global economic recovery when central banks begin to undo the incentives associated with the pandemic COVID-19. The local support level can be seen at 109.72. A breakout down could take the pair towards 109.20.
Brent: Brent crude oil has been declining for the entire past week. The Fed meeting minutes made it clear that the asset repurchase program tapering would begin as soon as in 2021, pressuring oil quotes. The further spread of the delta strain, especially in Southeast Asia, contributed to the decline.
Investors are worried about the covid-19 rates in China, as the country is the primary consumer of oil. The spread of the disease continues to weigh on expectations of a recovery in global fuel demand, although US figures released this week exceeded analysts’ expectations by three times – crude oil inventories fell by 3 million barrels instead of the expected 1 million. The downward movement is expected to continue.