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Thursday, August 17th
The EUR/USD pair lost its positive mood in the European morning, stepping away from vicinity of 1.1800, as investors are locking in some profits after sharp yesterday’s rally and also ahead of another key event, scheduled for this Thursday. Yesterday the pair bounced off its nearly 3-week lows, marked on the level of 1.1682, after non-favorable FOMC minutes once again showed concerns of the regulator regarding slow US inflation developments, thereby lowering market’s projections on Fed rate hike in upcoming months. Now all investors’ attention shifts toward ECB protocols, which will be able to boost speculations on divergence between the Fed and ECB. Besides ECB minutes, the Eurozone CPI report and US dataflow will also have some impact on the pair during this trading session.
The GBP/USD pair remains better bid for the second consecutive session, now wobbling in the region of 1.2900. Recent gains of the pair can be majorly attributed to sharp sell-off of the greenback on the back of unsurprising FOMC minutes, which once again reiterated concerns of the regulator over weaker inflation growth pace, thereby negatively affecting odds of Fed rate increase at the end of this year. Adding to this, auspicious data from the UK labor market, combined with a drop in the US housing sector are also supporting the pair, allowing it to extend recovery trend on Thursday. Another eventful session has approached the market, as both calendars contain fundamental reports, which will keep investors busy throughout this session, while several Fedspeaks will be able to provide another feedback on the US economy in American afternoon.
The AUD/USD pair extends its northern rally, having refreshed its weekly highs at 0.7950, following the main theme of this Thursday – sell-off of the US dollar. The pair caught fresh wave of bids after much awaited FOMC meeting minutes failed to provide anything new to the market, while spreading concerns over softer US inflation growth pace, forcing the market to readjust its expectations on Fed rate hike by the end of this year. However, mixed data from the Australian labor market, which showed an unexpected drop in full time jobs in July, has stalled pair’s bullish rally, locking its gains near the level of its recent highs. Looking ahead, it is expected that USD weakness will continue to remain as a main driver for the pair, while the US economic calendar, that contains Philadelphia Fed Manufacturing Index, several secondary tier reports and Fedspeaks, will be able to determine pair’s direction later in the NA session.
The yen staged a solid comeback yesterday against its American peer after dovish FOMC meeting minutes, forcing the USD/JPY pair to perform 80 pips downside rally. Seems that FOMC participants still haven’t decided, whether a rate hike is appropriate this year or not, as inflation indicators remain under its target level, that in turn negatively affects the greenback. Moreover, seems that investors’ risk appetite has deteriorated somewhat, also having supported the yen across the board, allowing the pair to retreat to the region of 109.70 in Asia. Today all investors’ attention will remain focused on the bloc of US economic reports due for release in the NA session, while US dollar’s price dynamics will continue to navigate the market throughout this Thursday.
The main events of the day:
UK Retail Sale – 11.30 (GMT +3)
EU CPI – 12.00 (GMT +3)
Philadelphia Fed Manufacturing Index – 15.30 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1643 R. 1.1839
USDJPY S. 109.46 R. 111.30
GBPUSD S. 1.2815 R. 1.2939
USDCHF S. 0.9573 R. 0.9807
AUDUSD S. 0.7774 R. 0.8008
NZDUSD S. 0.7189 R. 0.7379
USDCAD S. 1.2510 R. 1.2824
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