12th July 2018 - The Greenback is still able to hold its gains

Walid Salah Eldin

Active member
201 1
The greenback is still able to keep what it gained yesterday against its rivals on continued trust in the interest rate outlook differential boosted by higher than expected surging of US PPI in June by 3.4% year on year, while the market was waiting for increasing by only 3.2% and rising by 3.1% in May.
The data came to fuel the interest rate outlook ahead June US CPI release today which is expected to show soaring of the broad figure by 2.9% and of the core figure by 2.3%.

Despite The US blue chips dovish closing on growing worries about the trade tensions escalating, The Asian session watched Nikkei 225 rising by 275 points until now to hover above 22200 level.
As USDJPY breaking out of 111.50 resisting area could help the main Japanese exporters shares to easily shrug off Trump's highlighting of the probability of imposing new levies on $200b of Chinese imports.
USDJPY broke during the US session 111.50 resisting area which could hold previously on last May. 21 and it is now trading near 112.30, after increasing of the upside momentum had been triggered by stop selling orders.

EURUSD has found no way but to the downward again, after short lived existence above its daily SMA50, while the comments which come out from the ECB members are still unclear about the interest rate outlook in EU which is looking more worried about the negative impacts of the Trade War.
The ECB shown uncertainty and cautiousness can keep the pressure on the common currency in coming period with no clearer communication from the ECB about a closer interest rate hike, as it seems to most of the market participants currently very lagged and slow behind the Fed.

While GBPUSD looked this week more vulnerable to the downside on increasing political concerns, after the resign of Boris Johnson from being a foreign secretary in May's conservative government following the resign of Brexit Minister David Davis on rising discrepancies on the Brexit talks.
Boris Johnson was not only the foreign secretary, he was also the one who gathered considerable momentum to the Brexit when he was the Mayor of London defying The Former British PM David Cameron.
While the probability of taking the lead of the conservative party by Boris Johnson won't lead to anything but a hard Brexit.

Even USDCAD which has dipped down to 1.3063 on BOC decision to raise rate by 0.25% to 1.5% rose again to be traded now near 1.32, after BOC chief mentioned that going on in the tightening path is to slow down on trade risks.
Poloz assured on that none of the monetary policy decisions was a reaction to the Fed's tightening actions.
The CAD has been also negatively impacted by the oil price losses on growing concerns about close ending of OPEC and non-OPEC deal, after OPEC decision last month to raise production by 1m bpd starting from July giving non OPEC producers enough excuse to raise production too.
The US foreigner Secretary Pompeo has affected negatively also on the oil prices by his talking about US looking into excuses from oil importers from Iran, after he was talking previously about targeting lowering Iran oil exports to zero.
It looks that WTI standing above $70 per barrel can be in check in the coming hours, Despite the unexpected falling of US EIA crude oil inventory in the week ending on Jul. 2 by 12.633m barrels, while the median forecast was referring to retreating by only 4.489m.

Have a good day

Kind Regards
Global Market Strategist of FX-Recommends
Walid Salah El Din
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