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Wednesday, March 7th
The EUR/USD pair remains better bid this Wednesday, extending its bullish trend for the fifth consecutive session. The latest positive dynamics of the pair could be explained by concerns over global trade war. Recall, recently the US President D.Trump announced that the US would impose steep tariffs on steel and aluminum imports, which sparked wide speculations regarding potential trade war, thus negatively affecting the US dollar positions. And now, Donald Trump's chief economic adviser, Gary Cohn, announced his resignation, the reason for which were the recent Trump's tariff plans, since Mr.Cohn was a supporter of free-trade. However, it is expected that the pair won’t show any volatile moves during this session, as markets await for the ECB meeting, which will take place already tomorrow. Likely the ECB will leave its rate unchanged, however, any comments regarding further QE program will have notable impact on the common currency. But today the EU economic calendar will bring us only secondary data reports, while the US will release ADP nonfarm employment change, which is often considered as pre-NFP data.
The USD/CAD pair shows positive dynamics this Wednesday, remaining within striking distance of its multimonth highs, marked earlier this week at 1.3000 spot. The key reason of offered tone around the Loonie could be called resign of President’s chief economic advisor - Gary Cohn that underpinned market fears of global trade war and brought fresh uncertainty over NAFTA negotiations. Mr.Cohn’s resign is mostly explained by D.Trump's metal tariff plans, which go against Cohn's free-trade stance. However, seems that the pair entered consolidation phase ahead of BoC interest rate decision. There won’t be a press conference after the meeting, so we won’t hear any comments from BoC officials, while investors will digest BoC Rate Statement for any details regarding Bank’s monetary policy actions. Besides the BoC meeting, investors will also pay attention to data from the US labor market, which will bring additional trading opportunities during the NA session.
The GBP/USD pair stalled its upside trend in the middle of the week, after four consecutive days at a profit. It seems that ongoing flow of positive data from the UK economy and hawkish tone of the BoE, with markets widely expecting the UK's central bank to increase interest rates by this May, push the pound higher against its major rivals. However, the UK currency is still being weighed by Brexit concerns, as there is still no any sustainable progress in the Brexit negotiations. Recall, last Friday UK PM T.May gave a speech, where she was supposed to give more clarity on her negotiation strategy, but the market didn’t receive all answers, so there are still many reasons to fear “hard” Brexit. On the data front, today the UK economic calendar will remain silent, while the US will release data from the labor market, which will bring fresh trading opportunities during NA session.
The AUD/USD pair was trading back and forth this Wednesday, as we saw pretty eventful Asian session. In early Asia, the pair came under notable bearish pressure on the back of dovish rhetoric of RBA Governor Philip Lowe, who reiterated that Australia is still lagging behind global growth trends due to disappointing prospects of housing and labor markets. Moreover, weak Australia’s GDP numbers also added some negative pressure to the pair in the first half of the Asian trading session. However, the pair managed to regain its positive tone and to recover part of its losses, following Gary Cohn’s announcement that he is resigning from the White House as a top economic advisor to Donald Trump. This news have triggered broad demand for risky assets, which positively affected the Aussie as a higher-yielding currency. In the day ahead, investors’ attention will be attracted by ADP nonfarm employment change numbers, which are often treated as the preliminary data of the main report from the US labor market.
Major events of the day:
US ADP Nonfarm Employment Change – 15.15 (GMT +2)
BoC Interest Rate Decision – 17.00 (GMT +2)
Crude Oil Inventories – 17.30 (GMT +2)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.2291 R. 1.2477
USDJPY S. 105.53 R. 106.75
GBPUSD S. 1.3764 R. 1.3990
USDCHF S. 0.9334 R. 0.9454
AUDUSD S. 0.7722 R. 0.7894
NZDUSD S. 0.7185 R. 0.7365
USDCAD S. 1.2777 R. 1.3043
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