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Dollar sluggish ahead of Yellen’s testimony

Dollar sluggish ahead of Yellen’s testimony

Article by ForexTime

The Greenback was neatly packaged and delivered to bears during Tuesday’s trading session, following reports of emails that show President Donald Trump’s eldest son met with a Kremlin-linked Russian lawyer prior to the US general elections last November. This fresh revelation has added to the political uncertainty in Washington and may delay the proposed tax reforms & infrastructure spending plans. With the Dollar Index under intense selling pressure on the daily charts, Dollar bullish investors are likely to search for fresh inspiration to support prices from Janet Yellen’s Congress testimony later today.

Yellen is scheduled to testify on the economy before the House Financial Services Committee this afternoon; her remarks will be closely scrutinized for clues on when the Federal Reserve plans to raise rates. While markets expect Yellen to reiterate her hawkish remarks and upbeat outlook on the US economy, this may not be enough to support the US Dollar. Investors not only need fresh insight on when the Federal Reserve plans to raise rates, but also require greater clarity on the timings and magnitude of the balance sheet reduction. It will also be very interesting to hear Yellen’s thoughts on falling inflation rates and tepid wage growth, and how these may impact the Fed’s path to monetary policy normalization.

A situation where nothing new is brought to the table may punish the vulnerable Greenback further. From a technical standpoint, the Dollar Index is pressured on the daily charts. A breakdown below 95.50 may open a direct path towards 95.00.

Sterling gifted a lifeline

Sterling bulls were offered a lifeline on Wednesday following a mixed UK employment report that slightly eased some Brexit-related concerns. The UK employment market continued to display resilience against Brexit, with the unemployment rate falling to 4.5% for the three months to May, marking a landmark 42-year low. Despite the encouraging jobs picture, wage growth disappointed, signalling another fall in total earnings. With inflation outpacing wage growth, British consumers are seeing their spending power diminish and as such, may fuel concerns over the longevity of the UK’s consumer-driven economic growth. This simply takes us back to the question – will the Bank of England be willing to raise interest rates during such fragile economic conditions? Markets may pay very close attention to the UK’s macro fundamentals, political developments in Westminster and Brexit talks for further clues on what actions the BoE may take.

 

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.


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ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Sterling lower ahead of UK employment data

Sterling lower ahead of UK employment data

Article by ForexTime

Investors who sought fresh insight into the outlook for UK interest rates were left empty-handed on Tuesday, after Bank of England’s Deputy Governor Ben Broadbent maintained a safe distance from monetary policy discussions in the speech he gave in Aberdeen. Sellers were swift to exploit this disappointment and to attack the GBPUSD with prices sliding towards 1.2820 as of writing. Price action suggests that the British Pound may be living on borrowed time, with bulls becoming increasingly exhausted as rate hike speculations become overshadowed by political uncertainty and Brexit woes. Although the hawkish remarks made a couple of weeks ago by BoE’s Mark Carney and Andrew Haldane may continue to support rate hike expectations in the background, questions should be asked whether the central bank will actually raise interest rates during such fragile economic conditions.

While the argument for higher rates is that they may be able to tame inflation, this could end up doing more damage than good to the UK economy, which is currently tackling deteriorating fundamentals at home and uncertainty abroad. Higher rates may end up impacting business confidence and pressure consumers even further.

The main risk event for Sterling on Wednesday will be the UK employment report which will be closely scrutinized for any signs of Brexit having an impact on unemployment and wage growth. BoE Hawks could be in store for a rude awakening if wage growth remains subdued and fails to meet market expectations.

From a technical standpoint, the GBPUSD is under pressure on the daily charts. The breakdown below 1.2850 may encourage a further depreciation towards 1.2775.

WTI Crude lurches higher

WTI Crude sprinted higher during Tuesday’s trading session with prices clipping $45.80 after reports that the Energy Information Administration (EIA) was lowering its forecast for 2018 production, encouraging investors to profit take. The upside was complimented by a decline in U.S Crude inventories which plunged almost three times more than forecast in the latest week, ultimately exciting oil bulls and easing some oversupply concerns.

Although Saudi Arabia exceeded its oil production cap for June as it pumped 10.07 million barrels, this was eventually overlooked by markets. While further upside could be expected in the short term amid the speculations of a cut in U.S production, gains may be limited by the firm oversupply dynamics of the markets. From a technical standpoint, WTI Crude is experiencing a technical bounce on the daily charts. Sellers still have some control below $47.

Commodity spotlight – Gold

Gold bulls received inspiration on Tuesday as investors sought safety, following reports of emails that show President Donald Trump’s son meeting with a Kremlin-linked Russian lawyer prior to the general elections last November. A weakening Dollar supported the metal further as prices found their comfort zone, around $1218. Although the zero-yielding metal has been noticeably pressured by the rising prospects of tighter global monetary policies, the return of uncertainty could support prices in the short term. From a technical standpoint, although Gold has popped higher it still remains under pressure on the daily charts. Sellers may exploit the current technical bounce to send prices lower with $1200 acting as a level of interest.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.


Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Oil bulls jump on OPEC report

Oil bulls jump on OPEC report

Article by ForexTime

Oil markets saw some life injected back into them today as OPEC members hit 97% compliance in cuts set out by the organisation. The result of this was a bullish rebound as the market still perceives OPEC to have some control over oil markets. Further adding to this was the API private oil inventory data which showed a drawdown of -8.13M barrels, which is a nice indicator as supply issues have been a problem in the past. The real public inventory data is due out tomorrow from the Department of Energy in the US and expectations will be high to see some sort of drawdown based on the API figures.

On the charts the rebound has pushed up through resistance at 45.69 and it will be interesting to see if the candle closes above or falls back. If we do a see a drawdown tomorrow which is bigger than expected then I would expect the market to target resistance at 47.16 as a result. This area though is a lot more robust and the market will be keen to see if there is potential to move higher from here, or if we need further data in the future to continue. If we see supply being built back up then support at 43.77 and 41.85 as likely targets for traders. However, candles recently have shown very long tails which leads me to believe that the bulls are looking assert their control and stop bearish movements any further.

The New Zealand dollar has been a star as of late when it comes to economic performance and the likeability of the currency for traders. After recent positive data from a monetary perspective and a fiscal one the NZDUSD has been somewhat bullish as of late. And the week coming should see further interest as Chinese data as well as business PMI and CPI are due out on Wednesday. All of which has the ability to push the NZD higher in the event they are very positive.

For the NZDUSD traders the market has been one of interest, with strong waves on the daily chart showing less and less appetite for large bullish movements any higher than the previous wave. So far the NZDUSD has hit resistance at 0.7345 and has looked to trend lower as this looks like the upper limit of the bullish wave. It has also paused as of today on support at 0.7200, but the market is looking it could turn so the potential to move lower is looking all the more likely and a test of support at 0.7120 looks to be on the cards.

 

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.


Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Currency markets brace for Yellen’s testimony

Currency markets brace for Yellen’s testimony

Article by ForexTime

Investors seem to have adopted a “wait and see” approach during Tuesday’s trading session with currency markets on standby ahead of Yellen’s congressional testimony on Wednesday and Thursday. With the economic calendar relatively light due to the lack of macroeconomic data, price action should dictate where most major pairs trade today.

Euro bulls flourish above 1.1300

The encouraging macro-fundamentals for the European economy and current relief from political risk in Europe continue to support the Euro with the EURUSD hovering near a yearly high at 1.1140 as of writing. Sentiment is turning increasingly bullish towards the Euro and such can be reflected on the EURUSD with buyers in firm control above the 1.1310 higher low. From a technical standpoint, there have been consistently higher highs and higher lows on the daily charts which fulfill the prerequisites of a bullish trend. Prices are trading above the daily 20 SMA while the MACD has also crossed to the upside. A breakout and daily close above 1.1450 should encourage a further appreciation higher towards 1.1160.

GBPUSD hovering above 1.2900

The British Pound loitered around a two-week low against the Dollar during early trading on Tuesday as soft consumption data and business survey’s prompted investors to re-evaluate the Bank of England’s ability to raise UK interest rates this year. Although the GBPUSD has edged slightly higher as of writing, this has nothing to do with a change of sentiment but profit taking. With the Brexit drama, the political risk at home and soft economic data weighing heavily on Sterling, further losses could be on the cards. From a technical standpoint, the GBPUSD is coming under increasing pressure on the daily charts with 1.3000 acting as a ceiling. A breakdown below 1.2850 should encourage a further decline lower towards the pivotal 1.2775 level.

USDCAD tumbles to a yearly low  

The USDCAD remains under intense selling pressure on the daily charts with 1.3000 acting as a very tough resistance. There have been consistently lower lows and lower highs while prices remain well below the daily 20 Simple Moving Average. Although the trajectory clearly points to the downside, investors should trade the pair with diligence ahead of the Bank of Canada interest rate decision on Wednesday. An interest rate increase by the BoC may inspire Canadian Dollar bulls with enough inspiration to send the USDCAD towards 1.2800. From a technical standpoint, sellers remain in control below 1.3000 with 1.2800 acting as the first major level of interest.

USDJPY sprints towards 114.50

A renewed appetite for risk has punished the safe-haven Yen with bullish investors exploiting the Yen’s weakness to propel the USDJPY towards 114.50. From a technical standpoint, the pair is bullish on the daily charts and the upside momentum may open a path towards 115.00. Investors may be looking for a decisive breakout and daily close above 114.50 or a technical correction towards 113.50 to attack prices higher.

Gold edges towards $1200

Gold remains noticeably pressured by the rising prospects of tighter global monetary policies. Although the Brexit developments, geopolitical tensions and political risk in Washington may support the metal in the longer term, short term bears remain in control with sellers eyeing $1200. From a technical standpoint, the yellow metal is vulnerable to heavy losses on the daily charts. The breakdown below $1214 may trigger a further decline towards $1200.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.


Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Investors on the sidelines ahead of Janet Yellen’s testimony and the BoC meeting

Article by ForexTime

With the absence of any top tier news and the markets waiting for further indications on the Fed’s policy when Janet Yellen testifies before Congress on Wednesday, investors and traders are currently in a ‘wait and see’ mode. The week kicked off with most major asset classes moving in tight ranges. The S&P 500 closed 0.1% higher on Monday, while U.S. Treasury yields fell slightly after rallying on Friday’s Non-Farm Payrolls report and the dollar index remained stuck in a very narrow trading range.

It seems we will have to wait for another day for volatility to resume. The two key events on Wednesday are Yellen’s semi-annual testimony and Bank of Canada’s monetary policy announcement. Dollar bulls are counting on the Fed Chair’s continued hawkishness and whether she will provide more details on monetary policy becoming tighter. So far, she is still convinced that inflation weakness is temporary and expects that the sub5% unemployment rate will eventually boost prices. However, it has been more than one year since the unemployment rate dipped below 5% and wage growth is still anemic, making it difficult for many investors to believe that interest rates will increase at the pace suggested by monetary policy makers. It will require more than retracting her latest FOMC statement to encourage bulls to jump in again, such as more specific timing to unwind the $4.5 trillion balance sheet.

Given that other central banks have shifted towards a tighter stance, Bank of Canada’s meeting on Wednesday is going to be of great interest to traders. 13 out the 30 economists recently surveyed by Reuters expect the central bank to hike rates by 25 basis points tomorrow. If BoC joins the Fed this will not only boost the Lonnie but other major currencies as well, as investors will start to anticipate similar moves by the European Central Bank, Riksbank and Bank of England. I suggest keeping a close eye on yield differentials as they will be the major factor impacting currencies for the foreseeable future.

Pound traders will get the chance to hear again from Andrew Haldane, BoE’s Chief Economist, later today. The economist who was usually on the dovish end of policymakers surprised the markets on 21 June when he joined the Hawks. Given that inflation in the U.K. breached the 2% target and the economy did not fall into recession, he thinks that beginning the process of withdrawing some of the stimulus measures provided last year would be reasonable. If he ignores the recent bunch of weak economic releases and continued supporting the idea of policy normalization, the pound will likely make another attempt towards 1.3, but a break above this psychological resistance requires strong labor data on Wednesday.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.


Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

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