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Thursday, June 8th
Today the EUR/USD is showing lack of momentum, having stuck in a range of 15-pips near the level of 1.1260, after yesterday’s volatile trades, as the market has frozen in anticipation of crucial events of this “Super Thursday”. Today, several key risk events of the week will take place at once that makes investors nervous, forcing them to refrain from placing any directional bets, however, during the day high volatility is expected for the pair. The key driver for the euro today will be the ECB Interest Rate Decision, especially after recent headlines that the regulator lowered its inflation forecasts for 2019. Moreover, the market expects that head of the ECB M.Draghi will also keep dovish tone during press conference and won’t provide any information regarding early QE program tapering. Besides ECB policy decision, investors will also closely watch for the results of the UK general election, which will provide more clarity regarding UK position in Brexit negotiations, thereby also lending some directional impetus on the pair.
The GBP/USD pair stalled its 4-day winning streak and now is retreating from its 2-week highs, posted yesterday at 1.2969, as the market remains nervous ahead of the key risky event – the UK general election, which will shape up next direction for the pound in mid-term projection. The pair was trading modestly flat throughout the Asian session, as the market has already priced in a Conservatives’ victory, as it would provide more clarity on Brexit negotiation process. On the other hand, in the worst scenario the UK election will fail to deliver any winner and, as a result, it will lead to a hung parliament that could significantly weigh on the British currency due to more uncertainty it will cause. However, the positive effect from the win of the Conservative party may also not last long, as the UK PM T.May adheres to “Hard Brexit” scenario that could also negatively affect the pound. Also today, investors will focus their attention on the ECB policy decision, as sharp moves of the EUR/GBP cross will provide the GBP/USD pair with some directional impetus, while results of the UK exit polls will be published during the next Asia.
The USD/JPY pair was unable to continue recovery from its 7-week lows, marked yesterday at 109.12, after facing resistance near its psychological level of 110.00. The pair came under strong selling pressure after Bloomberg reported that the BoJ is adjusting its policy to quit its massive QE program, while giving no clues on terms when it will be done. Also, seems that the market payed little of attention to disappointing Japanese GDP figures, providing no impetus on the pair. Meanwhile, pair’s renewed decline could be also partially attributed to cautiousness across the market, as investors are gearing up for “Super Thursday”, lending some support to safe-haven assets. Nothing noteworthy is scheduled in data calendar for the pair, so broad market sentiment, backed by much awaited risky events from the UK and the Eurozone, will remain as a main driver for the pair during this trading session.
The AUD/USD pair regained its upside, having stepped away from its overnight lows, posted at 0.7525. Seems that bulls have passed over the red numbers of Australian trade balance, while receiving some support from better-than-expected Chinese exports and imports figures, allowing the pair to reverse its overnight losses. Adding to this, slightly weaker tone around the greenback and ongoing recovery in copper provided additional support to the pair this morning. However, further gains of the pair remain capped amid broad cautiousness, which is dominating the market ahead of today's big risky events, such as the UK general election and the ECB policy decision. Looking ahead, today both economic calendars will remain muted, so broad market sentiments will continue to determine further pair’s directional course.
The main events of the day:
UK General Election – 11.00 (GMT +3)
ECB Interest Rate Decision – 14.45 (GMT +3)
ECB Press Conference – 15.30 (GMT +3)
BoC Governor S.Poloz’s speech – 18.15 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1168 R. 1.1326
USDJPY S. 108.83 R. 110.37
GBPUSD S. 1.2857 R. 1.3017
USDCHF S. 0.9585 R. 0.9707
AUDUSD S. 0.7470 R. 0.7606
NZDUSD S. 0.7152 R. 0.7228
USDCAD S. 1.3387 R. 1.3585
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