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Wednesday, August 16th
The EUR/USD pair extends its Asian consolidation pattern in the area of 1.1740 this morning, remaining in anticipation of fresh catalysts. Today the pair remains better bid, trying to extend recovery from yesterday’s drawdown, backed by positive data from the US economy, but further upside lacks of momentum, as broad cautiousness dominates the market today. On the other hand, improved demand for the US dollar, underpinned by renewed hopes of Fed rate increase in December, negatively affects the pair this Wednesday. Now immediate focus is remaining on Eurozone’s preliminary GDP report, while data from the US housing market will also be closely watched for fresh impetus in early NA session. However, the key event of this Wednesday remains release of FOMC Meeting Minutes, which will be able to provide another hint on Fed rate hike this year, thus setting the tone for the US currency in upcoming days.
The GBP/USD pair today consolidates yesterday’s retreat, staying in extremely tight range of 15 pips in the region of 1.2860-75. Yesterday the pair rallied on south for more than a figure, having refreshed its monthly lows at 1.2846 after crucial UK inflation data came under market’s expectations. Moreover, upbeat US retail sales data also added some fuel to the fire and accelerated pair’s downside rally. However, seems that US bulls took a breather in Asia, as investors now are gearing up for another pack of the UK data, leaving the pair without any clear direction this morning. Today we will have another eventful session ahead, as a slew of economic data from the UK labor market and the US Building Permits report will keep investors busy at the equator of this trading week, while the key risky event of this Wednesday will remain FOMC Meeting Minutes due to be published in the American afternoon.
The dollar/yen pair entered consolidation phase in Asia after a choppy start of this week. The yen remains one of the weakest performs lately, as improved risk appetite, backed by easing tensions between the US and N.Korea, remains one of the key drivers across the market, thereby negatively influencing yen’s safe haven status. Adding to this, the dollar shows positive dynamics against its main competitors lately, as yesterday’s green retail sales numbers and several recent hawkish Fedspeaks have reinforced expectations of Fed rate hikes by the end of this year. However, it is expected that cautious moods will keep prevailing on the market during this trading session ahead of today's important release of FOMC meeting minutes, which will be able to bring fresh impetus to the pair later in the NY trading session.
The AUD/USD pair was trading with slight bullish bias in European morning, extending its recovery from its monthly lows, posted yesterday in the region of 0.7800, on the back of calm market trend. Aussie’s positive mood can be mainly attributed to better risk-on sentiments, as tensions between the US and North Korea have disappeared from the market. However, any further gains of the pair seem limited, as investors refrain from making important decisions ahead of the key event of this day – FOMC Meeting Minutes, which will be able to provide some clues regarding next Fed monetary policy moves. Besides FOMC protocols, investors will also pay attention to the data from the US housing market, which will be able to lend some impetus to the pair during the NA session.
The main events of the day:
UK Average Earnings Index +Bonus – 11.30 (GMT +3)
UK Claimant Count Change – 11.30 (GMT +3)
US Building Permits – 15.30 (GMT +3)
US Crude Oil Inventories – 17.30 (GMT +3)
US FOMC Meeting Minutes – 21.00 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1633 R. 1.1843
USDJPY S. 109.13 R. 111.61
GBPUSD S. 1.2770 R. 1.3018
USDCHF S. 0.9672 R. 0.9784
AUDUSD S. 0.7765 R. 0.7903
NZDUSD S. 0.7175 R. 0.7341
USDCAD S. 1.2689 R. 1.2811
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