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Friday, August 11th
The EUR/USD pair came out of its brief consolidation phase to the downside, as investors are taking some profits off the table after yesterday’s upsurge, backed by poor US PPI report and dovish speech of FOMC member B.Dudly, talking about weaker inflation rate. The selling pressure, however, seems to have eased for the time being, as traders currently are preparing for the much-awaited US CPI report, due for release later during the NA session. This inflation data will be one of the key factors of the Fed's next monetary policy action and hence, should provide a fresh directional impetus to the major currency pair. Besides the US crucial data, today we won’t see any relevant data reports, as the EU docket won’t be able to surprise the market during European trading hours, leaving the pair at the mercy of global market trend until the major event.
The AUD/USD pair was the weakest asset of the Asian session, having refreshed its multiweek lows at 0.7839 level, as several factors were weighing the Aussie. Earlier this session the pair came under strong selling pressure after RBA Governor P.Lowe delivered his speech, which was perceived by the market as more dovish. Mr. Lowe stated that stronger AUD prevents full employment in the labor market, which remains one of the key risks to the Australian economy, while current cash rate is supporting jobs growth. Moreover, strong risk aversions were ruling on the market during the Asian session that additionally weighed higher-yielding assets, such as the Aussie. However, the pair managed to recover some ground in early Europe, as investors prefer to lock in some profits ahead of the key event of this Friday. Today the US economy will release much-awaited inflation readings, which will hog the limelight during the NA session, but until then the global market trend will continue to determine pair’s direction.
Seems that the USD/JPY pair lost its offered tone by the European opening, as investors are now bracing for the much-awaited US data. However, the pair was trading with a strong negative bias during the Asian session, having refreshed its 2-month lows at 108.91 level, on the back of ongoing war of words between the US and N. Korea, which has boosted flight to safety. This time the government of North Korea made harsh statement, saying that the US will suffer "shameful defeat" and promised to “mercilessly wipe out the provocateurs”. For the events ahead for the rest of the week, we have crucial US CPI report, which will have strong impact on the pair, as it will indicate a possible next Fed rate move in December 2017.
The GBP/USD pair failed to recover some ground during the Asian trading session, having faced resistance at it psychological level of 1.3000. The pair remains heavy at the end of this week, as broad risk-off sentiments, fueled by another spike of tensions between the US and North Korea, are weighing the pound lately. However, it is expected that the pair will remain near the lower border of the recent range, as investors refrain from placing any important directional bets ahead of crucial US inflation figures. Unlike to the US docket, the UK data calendar will remain broadly silent at the end of this week, so the pair’s price action during European trading hours will be determined by USD-dynamics and headlines, coming from the Korean peninsula.
The main events of the day:
US Core CPI – 15.30 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1671 R. 1.1835
USDJPY S. 108.48 R. 110.54
GBPUSD S. 1.2915 R. 1.3045
USDCHF S. 0.9582 R. 0.9696
AUDUSD S. 0.7836 R. 0.7930
NZDUSD S. 0.7181 R. 0.7419
USDCAD S. 1.2647 R. 1.2793
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