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Wednesday, June 27th
The EUR/USD pair trades today in the north direction after yesterday’s retreat, having refreshed its intraday highs in the region of 1.1670. On Tuesday, the pair lost its bullish momentum and corrected lower after three days at a profit on the back of renewed buying interest around the US dollar. However, rally of the US dollar was short-lived and the pair regained its positive tone. Moreover, significantly improved demand for safety due to ongoing battle of the US against the rest of the world also offers some support to the common currency in the middle of this week. In the day ahead, investors will focus their attention on the slew of data from the US economy, while the EU data calendar remains empty. However, widespread sentiment will remain the key driver for the pair on Wednesday.
The GBP/USD pair consolidates its positions on Wednesday, trading within 1.3210-30 range, after yesterday’s retreat. On Tuesday, the pair received notable bearish impetus, following dovish comments by BoE MPC member John Haskel, who said that a rate cut is possible if UK economy continues to lose steam. Meanwhile, now markets’ attention is shifting towards the speech of BoE Governor M. Carny, who will speak straight after the publication of the BoE Financial Stability Report, and is expected to bring fresh details about UK’s economy and BoE’s further action. In addition, investors today will focus their attention on the bloc of data from the US economy, which will also be able to bring some trading opportunities, while broad risk-off sentiment will continue to affect the pair during this trading session.
The NZD/USD pair remains one of the weakest assets of Asia, having tested its 7-month lows on the level of 0.6811. Moreover, the pair totally ignored NZ trade balance numbers, which came above market expectations. The main reason of pair’s retreat can be called broad demand for safety, additionally underpinned by last headlines, saying that President Xi Jinping called China to prepare for a trade war. Next important event for the pair will be RBNZ’s cash rate decision, scheduled for the next Asian session. It is expected that the Bank won’t offer us any surprises, however, any changes in monetary policy may cause volatility.
The USD/JPY pair remains pressured in the middle of the week, having lost part of its yesterday’s gains and dropped below the level of 110.00. Yesterday the pair managed to recover part of its recent losses on the back of attempts of the US dollar to recover its positions across the market. However, bears again took control over the pair this Wednesday, as risk-off sentiment is still gripping the market. According to the latest headlines, Chinese President Xi Jinping has started preparations for a full-blown trade war with the US. On the other side, on Tuesday Trump Administration signaled that it would back down on new investment restrictions against China, however, cautious tone continues to dominate the market as the US-China trade conflict went too far and markets are awaiting for fresh actions from both sides. Next for release are US durable goods orders and pending home sales, which will be able to influence the pair during the NA session, while broad market sentiment will remain the key navigator for the pair on Wednesday.
Major events of the day:
BoE Governor M. Carney’s Speech – 11.30 (GMT +3)
US Core Durable Goods Orders – 15.30 (GMT +3)
US Pending Home Sales – 17.00 (GMT +3)
US Crude Oil Inventories – 17.30 (GMT +3)
BoC Governor S. Poloz’s Speech – 22.00 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1582 R. 1.1754
USDJPY S. 109.00 R. 110.74
GBPUSD S. 1.3129 R. 1.3351
USDCHF S. 0.9831 R. 0.9961
AUDUSD S. 0.7355 R. 0.7441
NZDUSD S. 0.6811 R. 0.6923
USDCAD S. 1.3242 R. 1.3366
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