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Tuesday, June 13th
The Loonie is undoubtedly the best performer of this week, having shown a massive swing of more than 150 points in the pair with its US neighbor on the back of hawkish talks of BoC Senior Deputy Governor C.Wilkins. Yesterday the USD/CAD met huge wave of offers, stepping away from 1.3465 spot to the region of 1.3280 after Ms. Wilkins mentioned that the CB would reconsider its monetary policy and assess whether all the stimulus of the Bank are still needed. The statement of the BoC member was perceived by the market as clear hint on further rate hike. Moreover, the Canadian dollar continues to benefit from better-than-expected jobs report and slightly firmer oil prices, keeping the pair within striking distance of its 2-month lows, posted at 1,3263 in early Europe. On the other side, further downside remains capped as investors are gearing up for the much awaited Fed interest rate decision, which is scheduled on this Wednesday. However, now all investors’ attention shifts toward the US PPI data, which will be released later in the NA session, while the market will continue to digest the latest comments of the BoC superior.
The EUR/USD pair was unable to hold its position above the level of 1.1200, and broke to the downside after brief consolidation phase in the Asian trading session. Seems that the divergence between Fed and ECB policies is still pressuring on the Euro, especially ahead of tomorrow’s possible Fed rate increase and in absence of any comments from ECB members regarding QE program tapering. According to market’s expectations, the probability of a rate hike on Wednesday is almost 100%. Moreover, investors will look closely for any hints regarding timing of further tightening measures, which could provide additional impetus to the USD. Looking ahead, now immediate focus shifts toward German ZEW Economic Sentiment, while US PPI numbers will also be able to grab traders’ attention during NY trading hours.
Seems that the AUD/USD pair lost its upside impetus in the mid-Asian, however, remaining in the region of its 7-week highs, marked last week. The major has eased most part of its overnight gains and retreated from its overnight highs, posted at 0.7565 level, as Australia provided the market with disappointing data of NAB Business Confidence. However, ongoing softness of the US dollar and better sentiments on the commodity market are limiting pair’s further decline. On the other hand, prevailing market’s cautiousness ahead of widely expected Fed rate increase and accompanying statement will continue to influence the pair during this trading session. Next of note for the major remains the US PPI report due later in the NA session, which will be able to influence pair’s further short-term trading course.
The pound remains under pressure during the first half of the week, forcing the GBP/USD pair to retreat to the region of its multi-week lows, located near 1.2650 level. Cable’s decline is majorly attributed to uncertainty around the policy of the UK and upcoming Brexit negotiations, while the UK legislature keeps “hung” parliament status. However, the pair managed to recover some pips this morning, as ongoing weakness of the US dollar continues to drive the market lately. On the other hand, any further significant moves will remain capped amid growing nervousness ahead of crucial events of this week. In the meantime, today both economic calendars will be able to attract investors’ attention, as the UK inflation report and US PPI will bring some impetus to the pair during this session.
The main events of the day:
UK CPI – 11.30 (GMT +3)
German ZEW Economic Sentiment – 12.00 (GMT +3)
US PPI – 15.30 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1168 R. 1.1250
USDJPY S. 109.18 R. 110.80
GBPUSD S. 1.2558 R. 1.2820
USDCHF S. 0.9658 R. 0.9708
AUDUSD S. 0.7510 R. 0.7562
NZDUSD S. 0.7151 R. 0.7235
USDCAD S. 1.3220 R. 1.3522
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