Weekly Currency Review: Euro Zone, Britain, US diverge in News and Policy

Summary Currency Review

  • Economic data concerning jobs and economic output is behind a soft US dollar and currency review
  • News headlines surrounding trade negotiations continue to move markets
  • Trade resolution with Mexico provides temporary relief for American markets but uncertainty remains concerning Brexit negotiations

Euro VS British Pound: British Economic Output and currency review

Between June 6th and June 9th, the Euro gained .62% against the British Pound in light of more negative news surrounding the UK that has caused more selling of the Pound. The British Government recently revealed that Industrial Production contracted 2.7% during April and Manufacturing Production declines 3.9%, both of these figures surprising markets to the downside. Furthermore, GDP figures showed the economy contracted 0.4% during the same period. This currency review is currently dictated by fundamental economic news as well as political news surrounding Brexit negotiations and the Theresa Mays resignation. However, the trade deficit shrunk to 12.11 billion Pounds in April.


Euro VS US Dollar: Jobs Data and Speculation on American Economy

In the bullish forecast period, the Euro gained 1% against the US dollar. This large move can be explained by news coming out of the US and further updates in American trade disputes. On Friday, a disappointing jobs report stated that 75,000 new jobs were added in May, well below the expected 185,000 and outlook for April was revised down as well. Although unemployment remains steady at 3.6%, there is data to suggest and economic slowdown and the probability of a rate cut has increased because of this data. Simultaneously, the market is trading the news that US President Donald Trump has cancelled his plans to impose tariffs on Mexico in light of a trade deal that includes immigration reform in Mexico.

US dollar VS Canadian Loonie: Diverging Jobs Outcome

Recent economic reports from the US and Canada have told different stories. While the employment report in the US disapointed as only 75,000 new jobs were added in May, well below the expected 185,000, Canadian jobs report beat expectations by 27,700. This divergence is largely responsibly for the recent move.

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On June 6th, 2019 I Know First algorithm issued bullish predictions for currencies for a month time horizon. The predictions include EUR/USD, USD/CAD (US Dollar to Canadian Loonie), and EUR/GBP (Euro to British Pound) with signals ranging from -0.37 (GBP/USD) to 0.80 (USD/BRL) with predictability indicator ranging from 0.32 for USD/CNY to 0.53 for USD/BRL. Over the 3-day trading period from 6th June 2019 to 9th June 2019, the currency market was in good agreement with the I Know First forecast.
This bullish currencies forecast was sent to the current I Know First Subscribers on 6th June 2019.

How to interpret this diagram

Algorithmic Currency Forecast: The table on the left is the forex forecast for the forex outlook produced by I Know First’s algorithm. Each day, subscribers receive forecasts for six different time horizons. Note that the top 52 currencies in the 1-month forecast may be different than those in the 1-year forecast. In the included table, only the relevant currencies have been included. The boxes are arranged according to their respective signal and predictability values (see below for detailed definitions). A green box represents a positive forecast, suggesting a long position, while a red represents a negative forecast, suggesting a short position.
Forecast Performance: The table on the right compares the actual currency performance with I Know First’s prediction. The column titled “Forecast” shows which direction the algorithm predicted, and the column “% Change” shows the actual currency’s performance over the indicated time period. The “Accuracy” column shows a “v” if the algorithm correctly predicted the direction of the stock or an “x” if the forecast was incorrect. The “I Know First Hit Ratio” represents the algorithm’s accuracy when predicting the trend of the currency.
Signal: This indicator represents the predicted movement direction/trend; not a percentage or specific target price. The signal strength indicates how much the current price deviates from what the system considers an equilibrium or “fair” price.
Predictability: This value is obtained by calculating the correlation between the current prediction and the actual asset movement for each discrete time period. The algorithm then averages the results of all the prediction points, while giving more weight to recent performance. As the machine keeps learning, the values of P generally increase.

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Algorithmic traders utilize these daily forecasts by the I Know First market prediction system as a tool to enhance portfolio performance, verify their own analysis and act on market opportunities faster. This forecast was sent to current I Know First subscribers.

Please note-for trading decisions use the most recent forecast. Get today’s forecast and Top stock picks.