The dollar edged up as market players prepare for a potential full-scale Sino-U.S. trade war. The U.S. is scheduled to impose tariffs on $34 billion of Chinese goods. The perception of the relative strength of the U.S. economic growth and the attraction of its higher bond yields are supporting the dollar.
The International Monetary Fund (IMF) on Thursday cut its 2018 forecast for German GDP growth to 2.2 percent, saying rising protectionism and the threat of a hard Brexit had exposed Europe's biggest economy to significant short-term risks. "Short-term risks are substantial, as a significant rise in global protectionism, a hard Brexit, or a reassessment of sovereign risk in the euro area, leading to renewed financial stress, could affect Germany's exports and investment," it said in a report.
The ECB, which originally had said asset purchases would continue at least through September, decided instead to briefly taper buying before ending buying altogether next year. As for interest rates, they are to remain unchanged “at least” through the summer of 2019, ECB President Draghi said.
We are neutral from oversold. We consider probable another test below 1.16 area.
Our special Fibo retracement is confirming the following S/R levels against the monthly and weekly trend lines obtained by connecting the relevant highs and lows back to 2012:
Weekly Trend: Neutral
1st Resistance: 1.1720
2nd Resistance: 1.1905
1st Support: 1.1567
2nd Support: 1.1490
UK Construction PMI rose to 53.1 in Jun, bettering expectations of an unchanged report from May’s 52.5. This was the strongest reading in the index since Nov last year. BoE MPC “hawk” Saunders remarked that UK rates may have to rise faster than markets expect as the UK economy is running out of slack. That suggests he will maintain his recent voting pattern (favoring a rate hike) at the Aug meeting. Later in the week, focus will likely fall on what may become a “back me or sack me” meeting between PM May and her cabinet as they attempt to thrash out a workable Brexit policy.
Governor M.Carney said that global risks have intensified at his speech in the release of the BoE’s Financial Stability Report.
UK CPI (inflation) as expected while U.S. CPI (inflation) ticked up.
We are neutral from oversold. We expect a drop back to 1.31 area.
Our special Fibo retracement is confirming the following S/R levels against the monthly and weekly trend lines obtained by connecting the relevant highs and lows back to 2001:
Weekly Trend: Neutral
1st Resistance: 1.3203
2nd Resistance: 1.3285
1st Support: 1.3060
2nd Support: 1.2880
Last Australia GDP ticked up after a row of three months below the expectations.
A possible trade war between the US and China took a step closer to becoming reality.
The Reserve Bank of Australia (RBA) dropped the Meeting Minutes of their latest rate decision, and little of note was there to entice Aussie traders to hit the buy button. The central bank is set to hold steady on rates for the foreseeable future as Australian growth figures continue to miss the mark.
Interest rates in the U.S. raised as expected.
The Fed appeared to be content to let inflation run above the 2% target for a “temporary period,” signaling no rush to tighten monetary policy.
We are neutral from oversold. We consider very probable a new test in 0.73 area for testing a strong Support area.
Our special Fibo retracements are confirming the following S/R levels against the monthly and weekly trend lines obtained by connecting the relevant highs and lows back to 2012:
Weekly Trend: Neutral
1st Resistance: 0.7408
2nd Resistance: 0.7480
1st Support: 0.7339
2nd Support: 0.7301