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Wednesday, June 21st
The pound was consolidating yesterday’s drop against its US counterpart in Asia, remaining with no chances to recover positions, as investors stay cautious amid lingering political concerns and dovish BoE Governor M.Carney’s remarks. Yesterday the GBP/USD pair fell from the region of 1.2750 to the level of 1.2603, following speech of the Bank of England Governor Mark Carney, who stressed that now it is not the right time for adjusting rate, as UK inflation remains subdued. Adding to this, ongoing uncertainty on the UK political field also keeps the pair capped, as Conservatives failed to reach a deal with the Democratic Unionist Party, which means that the UK PM T.May is still on a back foot to form the ruling coalition, which in turn also weights the pound across the board. Now immediate focus shifts toward another speech of the BoC member A.Haldane, while US Existing Home Sales, expected later during the NA session, will be able to set up short-term directional trend for the pair.
The EUR/USD pair is trading in a tight range of 10 pips near the level of 1.1130, remaining without clear direction so far this Wednesday. Yesterday the pair refreshed its 3-week lows at 1.1119, as divergence between the Fed and ECB is still weighing the common currency. Moreover, another hawkish Fedspeak from the FOMC member E.Rosengren and better tone of the greenback are limiting pair’s chances to recover its positions. Nothing much is schedule in data calendar from Eurozone, so the pair will continue to trace global market’s sentiments ahead of US Existing Home Sales data, which will remain as an exclusive event for the pair this Wednesday.
The USD/JPY pair remains bearish for the second day in a row, as prevalent risk-off moods are supporting the yen across the board. Ongoing UK political turmoil and sell-off around the oil remain key determinants across the market, thus boosting demand for safe-haven assets, such as the yen. Moreover, seems that the market payed little of attention to dovish BoJ Monetary Policy Meeting Minutes, which once again showed that the Bank expects that the inflation will remain subdued, so the regulator will continue to ease its monetary policy until inflation achieves target level of 2%. Later in the NA session, the US economy will release data from the US housing market for fresh impetus on the pair, while risk-off trend and US dollar’s price actions will continue to drive the pair during European trading hours.
The AUD/USD pair continues to lose positions for the third session in a row, remaining within striking distance of its weekly lows, posted earlier this day at 0.7555. The Minutes of the RBA, released during the Asia, reiterated worries of the Bank regarding weaker results from the Australian labor and housing markets. Moreover, prevalent risk-aversion amid concerns over the UK political situation and continuing weakness of oil prices are limiting pair’s chances for recovery. In the day ahead, the USD dynamics and persisting risk-off trends will continue to drive the major ahead of the US existing home sales data and EIA crude inventory report, which will be able to provide fresh impetus to the pair.
The main events of the day:
US Existing Home Sales – 17.00 (GMT +3)
US Crude Oil Inventories – 17.30 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1092 R. 1.1184
USDJPY S. 111.03 R. 111.99
GBPUSD S. 1.2505 R. 1.2817
USDCHF S. 0.9706 R. 0.9788
AUDUSD S. 0.7538 R. 0.7644
NZDUSD S. 0.7194 R. 0.7290
USDCAD S. 1.3170 R. 1.3334
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