Daily Forex Market Preview – 09/08/2018
The U.S. Dollar was on the back foot on Wednesday. China is set to hit the U.S with fresh trade tariffs of the amount of $60 billion. The market reaction was however largely muted.
The British Pound was hit by a bout of negative sentiment. The currency weakened against the Dollar and the Euro as investors grew concerned about a no Brexit deal. The Euro was seen rising to a nine-month high. The sentiment increased as the UK’s international trade minister, Liam Fox said that the odds of a no-deal Brexit had increased significantly.
The RBNZ held its monetary policy meeting during the overnight session. The overnight cash rate, OCR was left unchanged as widely expected. The RBNZ’s monetary policy statement also did not see any major changes.
Earlier today, China’s inflation data showed that consumer prices advanced 2.1% on an annualized basis in July. The data beat expectations of a 2.0% increase and was higher from 1.9% since June.
Looking ahead the U.S. will be reporting on the Producer Prices Index data. Consensus for the PPI is at 0.2% on both the headline and core PPI measures. The weekly unemployment claims report is also due later today too.
The markets are expected to be relatively quiet during the European trading session with no major releases scheduled.
EURUSD (1.1612): The EURUSD currency pair was slightly bullish but price action was muted overall. The rather slow momentum following the bounce off the support level at 1.5400 could come at a risk of another decline to the downside. Price action on the 4-hour chart shows that there has been a retracement. However, while the currency pair is still trading within the range of 1.1730 and 1.1540, there is scope of a reversal. If the bearish short-term trend resumes, there is a potential for prices to break past the support level.
USDJPY (110.79): The USDJPY currency pair closed below the support level at 111.13 – 110.85. The declines came on the back of a failure to close higher, following a brief retest of the support level. The move to the downside is expected to send the USDJPY lower. In the medium-term, we expect the declines to potentially push prices to test the lower support at 108.74 initially. However, with price action testing the 50-day moving average, we could expect some short-term support to hold the declines.
XAUUSD (1215.02): Gold prices managed to modestly push higher on the day. Price action was seen closing above the 1211.50 level of support. However, with the gains being very modest, there is a risk of further consolidation. The main resistance at 1219.75 remains a key level that needs to be breached. A close above this level could push Gold prices higher. The next main resistance level is seen at 1242.25 level.