Daily News & Market Analysis from FXTimes

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Hello fellow traders,

We are a team of economists, traders and market analysts at FXTimes.com. Our goal is to post daily news and economic analysis covering the Forex industry, as well as educational resources and opinion articles. We will post several high quality, 100% original articles every day with the goal of engaging fellow traders and informing the investing public. Our articles cover key economic data, Forex pairs, monetary policy discussion, charts, technical analysis and educational resources.

We look forward to updating this thread with high quality content on a regular basis.

Warm regards,

FXTimes Team
 

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Federal Reserve Drops “Patient” Pledge In March Interest Rate Statement

The Federal Open Market Committee made no changes to its benchmark lending rate on Wednesday, but dropped the word “patient” from its official rate statement, fueling expectations for a midyear rate hike.

As expected, the Federal Reserve held its target for the overnight rate at 0 percent to 0.25 percent, unchanged since December 2008. The minutes of this month’s policy meetings will be released on April 8.

“Information received since the Federal Open Market Committee met in January suggests that economic growth has moderated somewhat,” read the official rate statement on Wednesday. “Labor market conditions have improved further, with strong job gains and a lower unemployment rate. A range of labor market indicators suggests that underutilization of labor resources continues to diminish.”

The statement made no mention of remaining patient in deciding when to begin raising interest rates. The Fed had previously said it was prepared to keep interest rates at record lows for longer than previously expected to account for global uncertainties and very weak inflation. Fed Chair Janet Yellen struck a dovish tone last month when she told the Senate Banking Committee there would be no interest rate adjustment in the “next couple of FOMC meetings.”

However, the FOMC is under growing pressure to normalize monetary policy in order to manage expectations and facilitate a gradual rate hike timetable. Over the past several weeks the financial markets had priced in a midyear rate hike, helping to push up the US dollar to new 12-year highs. The dollar’s strength is due in large part to diverging monetary policies between the US and its trade allies. About a dozen central banks have eased monetary policy this year to counteract weak inflation. The protracted decline in oil prices is expected to keep inflation low for a while longer, with the latest indicators showing a further drop in energy prices over the horizon.

In total, 15 of 17 officials said 2015 was the appropriate timing of policy firming, with only two officials indicating 2016.

The Fed downgraded its forecast for real GDP growth this year to 2.3 percent to 2.7 percent. It had projected a growth rate of between 2.6 percent and 3 percent in December. It also lowered its growth projections for 2016 and 2017. However, the central bank’s outlook on employment improved, with officials now forecast an unemployment rate of 5 percent to 5.2 percent this year, down from 5.2 percent to 5.3 percent in its previous forecast.

The outlook PCE inflation worsened this year to 0.6 percent to 0.8 percent, compared to the previous forecastof 1 percent to 1.6 percent. Inflation is expected to return to target in the next two years.

Officials also lowered their median forecast for the federal funds rate at the end of 2015 to 0.625 percent from 1.125 percent in December, suggesting the path toward rate normalization would be slow and steady.
 
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Dollar Rebounds Following Fed-Induced Selloff

The US dollar rebounded on Thursday, posting its biggest daily rally in a year-and-a-half after a cautious Federal Reserve signaled a more gradual path to rate normalization.

The dollar index, a trade-weighted average of the dollar against a basket of competitor currencies, climbed 0.6 percent to 99.12. The index plunged nearly 2 percent on Wednesday afternoon following the Federal Reserve’s policy statement.

The EURUSD retreated sharply from its Wednesday highs, falling more than 1.60 pips to 1.0670. Initial support is offered at 1.0615 and resistance at 1.1076.

The USDCHF climbed 85 pips to 0.9913. It faces initial support at 0.9584 and resistance at 0.9827.

The USDCAD climbed to a daily high of 1.2765 on Thursday. It would subsequently consolidate at 1.2720, advancing 142 pips. The pair faces initial support at 1.2397 and resistance at 1.2785.

The dollar also posted solid gains against the British pound, Japanese yen and Swedish krona.

The dollar index is likely to find fair value at around the 100.00 mark, as investors continue to speculate about how patient the Fed will be in adjusting interest rates. The first rate hike is likely to materialize in September, leaving enough room for two rate adjustments this year.

In economic data, US jobless claims edged up slightly last week, adding further sign the labour market was on solid footing amid a broad slowdown in economic growth. The number of Americans filing first-time unemployment benefits increased 1,000 to a seasonally adjusted 291,000 for the week ending March 14, the Labor Department reported on Thursday. The less volatile four-week average rose 2,250 to 304,750 last week.

The economy added 295,000 nonfarm jobs in February, as the unemployment rate fell to a more than six-and-a-half year low of 5.5 percent. The Federal Reserve expects the unemployment rate to fall to as low as 5 percent this year, according to Wednesday’s revised summary of economic projections.
 

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Crude Prices Under Pressure As OPEC Keeps Production Steady

Highlights:

Brent, WTI both fall on Thursday.
US dollar rebounds following biggest selloff in 6 years.
Kuwait oil minister says OPEC will keep production elevated.

Global crude prices declined on Thursday after Kuwait’s oil minister said OPEC has little choice but to keep production steady, raising fresh concerns about an oversupplied energy market.

Brent crude tumbled 2.4 percent to $54.64 a barrel. The global benchmark had rallied more than $2 on Wednesday after a broad US dollar selloff in the wake of a cautious Federal Reserve policy statement. The dollar experienced its biggest single-day plunge in six years, but has since recovered most of its losses.


West Texas Intermediate (WTI) for April delivery also declined, falling 1.9 percent to $43.50 a barrel.

Oil prices were under pressure on Thursday after Kuwait’s oil minister said OPEC would keep production steady.

“We don’t want to lose our share in the market,” Ali al-Omair said, echoing the cartel’s decision last November to maintain production levels despite falling prices.

Global output is expected to slow eventually as very low price points squeeze the market. In the meantime, however, production remains at record-high levels. Earlier this week the Energy Information Administration said US crude inventories rose to a new record high last week for the tenth consecutive week. The global supply glut has lowered the outlook on WTI to $40 a barrel in the short-run.
 

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USDCAD in Full Reversal Mode Ahead of Canadian CPI

Technical Bias: Bearish

Highlights:

- USDCAD reverses Wednesday’s losses, as the US dollar rebounds across the board.
- Canada set to release CPI and retail sales figures on Friday.

The US dollar roared back on Thursday, after a cautious Federal Reserve statement pushed up the Canadian dollar to two-week highs on Wednesday.

The USDCAD rallied to a high of 1.2765. It would subsequently consolidate at 1.2716, advancing 140 pips. The pair faces immediate support at 1.2397 and resistance at 1.2785.

The US dollar posted its biggest one-day drop in six years on Wednesday in the wake of mixed signals from the Fed about rate normalization. The USDCAD nearly reversed all of its losses on Thursday as investors turned their attention to Canadian data.

Statistics Canada will report on national CPI on Friday. Canadian CPI is forecast to rise 1 percent annually in February following an identical increase in January. So-called core inflation, which strips away goods such as food and gasoline, is forecast to rise 2.1 percent annually.

The Bank of Canada is predicting negative inflation from low oil prices, but says this won’t constitute deflation, which would require a decline in prices in most consumer categories. Inflation expectations remain “solidly anchored,” according to a BOC official, who only last month reassured the markets deflation would not impact the economy.

The BOC cut interest rates in January for the first time in more than four years, ensuring that slumping prices would not put a bigger dent in the Canadian economy. The BOC made no change to its key interest rate at the March policy meetings.

Separately, Canada’s statistics agency will report on January retail sales on Friday. Retail sales are forecast to drop 0.7 percent, following a 2 percent drop in December that was also the biggest in four years.
 

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USDCAD Slips As Canada Inflation Holds Steady

Technical Bias: Bearish

Highlights:


  • USDCAD tumbles more than 100 pips, falls below 1.26.

  • Canada inflation rate steadies at 1 percent YoY in February.

  • Canada retail sales tumble more than forecast in January, falling 1.7%.

The USDCAD was back on its heels Friday, falling to the lower end of the two-week range as Canadian inflation steadied in February, easing speculation the Bank of Canada was considering another rate cut to deflect tumbling prices.

The USDCAD declined 110 pips to 1.2590, capping off a volatile week. The next support level is located at 1.2410, followed by 1.2311. On the upside, resistance is ascending from 1.2815. The short-term technical indicators are showing downward momentum as US dollar pairs continue to oscillate following Wednesday’s Federal Reserve policy statement.

In economic data, Canada’s annual inflation rate held steady at the bottom of the central bank’s target range in February, as cheap gasoline prices were offset by higher food and insurance costs.

The consumer price index (CPI) of goods and services rose at an annual rate of 1 percent in February, Statistics Canada reported on Friday. That followed an identical increase the previous month and matched forecasts calling for the same.
So-called core CPI, which excludes eight volatile goods categories such as food and energy, eased to 2.1 percent annually from 2.2 percent.

The BOC has said falling gas prices could turn inflation negative over the short-run. Annual CPI is forecast to fall to 0.5 percent in the first quarter. However, the BOC is not concerned with deflation, as consumer price expectations remain firmly anchored.
In a separate report today Statistics Canada said retail sales declined more than forecast in January, as lower gas prices and fewer car sales weighed on consumer spending. Canadian retail sales fell 1.7 percent, much higher than the median estimate calling for a 0.7 percent drop. Retail sales had tumbled 1.8 percent in December.

Retail sales declined 2.8 percent in the province of Alberta, the epicenter of Canada’s oil and gas industry. That was the fourth consecutive monthly drop.
 

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Crude Oil Rallies as Dollar Crumbles

Highlights:

US, global crude prices rebound as US dollar declines.
US dollar index poised for its biggest weekly drop since 2011.
Oil prices are forecast to remain low for a while longer, with Brent crude averaging $52 a barrel in 2015.
Global crude prices rallied on Friday, with US crude poised for its first weekly gain in five amid the steepest decline for the US dollar since 2011.

US benchmark West Texas Intermediate (WTI) climbed nearly 4 percent to $45.69 a barrel and is on pace for its first weekly gain in more than a month, according to Bloomberg. The US benchmark had gained as much as 4.5 percent earlier in the day.

The price of Brent crude rose 1.29 percent to $55.13 a barrel at 10:05:13 ET.

Crude’s investment appeal was bolstered after the US dollar resumed its descent on Friday. The dollar index, a trade-weighted average of the dollar against a basket of six currencies, declined 1 percent to 98.28. The key gauge is poised for its biggest weekly decline since 2011, stemming from lukewarm interest rate expectations following the Federal Reserve’s midweek policy statement.

Oil prices are down around 15 percent from this year’s peak. Crude had rallied by around a third between January and February, leading to speculation that prices had finally bottomed. However, with US stockpiles shattering records over the last two months and OPEC exceeding its production target for nine consecutive months, the outlook on prices remains negative.

Earlier this week an OPEC oil minister said the 12-member cartel had little choice to but to keep production elevated in order to keep market share. Iran is also looking to increase oil exports following a deal on its nuclear program.

The Organization of the Petroleum Exporting Countries vowed to keep output at over 30 million barrels a day back in November, sending shockwaves throughout the commodities markets. The global supply glut is expected to push US crude prices below $40 a barrel. The outlook on Brent is also negative, with the global benchmark forecast to average around $52 a barrel in 2015, according to a recent forecast by Bank of America Merrill Lynch.
 

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EURUSD Weekly Outlook (Mar. 23 – 27)

Technical Bias: Bullish

Highlights:


  • Heavy slate of economic data in-store for the US dollar, including durable goods orders, CPI and revised GDP.
  • EURUSD enjoying strong upside for the first time in weeks, edging further away from parity.
  • Greek PM Tsipras set to meet with German Chancellor Merkel early in the week.

The euro is enjoying strong upside against the US dollar, having gained more than 300 pips last week to reach its highest level since March 10. The EURUSD has a favourable short-term outlook, although that could change with the presence of upbeat US economic data.

The EURUSD closed at 1.0820 last week, as the dollar declined by the widest margin since 2011. The US dollar index fell below 98.00 after climbing past the key 100.00 mark earlier this month.

The Greek debt crisis will continue to top headlines this week. Greek Prime Minister Alexis Tsipras will visit Berlin on March 23 to meet with German Chancellor Angela Merkel. The meeting comes just a few days after the European Union extend an olive branch to the cash-strapped Greek government. The EU has made available to Greece €2 billion in unused development funds in exchange for submitting a clearer reform pledge, which the Greek government has promised to do.

Eurozone Data

Industry data headline Eurozone releases this week. Markit Group will report on Eurozone and German manufacturing and services PMI on Tuesday. Business activity in both sectors is forecast to improve gradually in March.

On Wednesday the IFO Institute will report on German business confidence, which has been gradually trending upwards in recent months. The index of expectations, current conditions and the overall business climate are forecast to improve in March, according to economists.

US Data

On Monday the National Association of Realtors will report on existing home sales, which are forecast to increase in February. The Commerce Department will complete the housing picture on Tuesday with a report on February new home sales.

The Commerce Department on Tuesday will also report on inflation. The annual CPI rate for February is forecast to drop 0.1 percent, unchanged from the previous month. Core inflation is forecast to climb 1.6 percent annually.

Government economists will report on durable goods orders on Wednesday, a high profile data release that will be monitored closely. Durable goods orders are forecast to rise 0.2 percent in February following a 2.8 percent gain in January.

The week draws to a close with a revised reading of fourth quarter GDP. The economy expanded 2.2 percent annually in the final quarter of 2014, according to previous estimates. Recent data suggest there will be another downward revision to fourth quarter growth, perhaps as low as 2.1 percent.
 

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Crude Oil Declines as OPEC Prepared to Ride Out Price Slump

Energy prices declined on Monday after Saudi Arabia's oil minister said non-OPEC producers were also responsible for managing the supply-demand imbalance, implying that the 12-member cartel was prepared to ride out the market slump.

Global benchmark Brent crude tumbled 1.1 percent to $54.72 a barrel. West Texas Intermediate (WTI) was down 1.3 percent to $45.98 a barrel.

Prices are forecast to stay low throughout the year, as the US shale boom continues to boost stockpiles to record highs. The price point on WTI is forecast at around $40 a barrel in the short-term. Brent is expected to average in the low-50s for much of the year.

Triple-digit oil prices are unlikely to materialize any time soon, according to an OPEC governor.

“I think it’s difficult to reach $100 or $120 another time,” Mohammad al-Madi told an energy conference in Riyadh, Saudi Arabia.

Energy futures benefited from the US dollar selloff last week, with WTI posting its first weekly gain in more than a month.

- The FXTimes Team
 

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AUDUSD Breaks Key Resistance

The Australian dollar overcame a key resistance on Monday, climbing past the 0.7850 US handle after several failed attempts in weeks' past.

The AUDUSD advanced to a daily high of 0.7900. It would later consolidate at 0.7879, advancing 1.2 percent. The pair's next resistance test is 0.7901.

The US dollar continued to backtrack on Monday, sliding 0.75 percent against a basket of competitor currencies. The dollar index settled at 97.00.

In economic data, US existing home sales rose less than forecast last month, as inclement weather weighed on purchases in the Northeast and Midwest. The National Association of Realtors' gauge of existing home sales advanced 1.2 percent to a seasonally adjusted 482,000.

The Commerce Department will report on new home sales on Tuesday.

Australia had no economic data to report on Monday. China manufacturing PMI on Tuesday could provide direction for the AUDUSD. The Chinese manufacturing industry is forecast to grow in March after climbing to 50.7 in February.

- The FXTimes Team
 

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Daily Technical Analysis Reports by FXtimes

Dollar Remains Vulnerable As Investors Wait For NFP

The US Dollar (USD) remains vulnerable after the spate of downbeat economic reports. The focus is now being shifted towards the Friday’s nonfarm report which will determine the long term direction of the greenback. Big moves are not expected before the release of NFP as investors remain cautious. Let’s take a quick look at some major currency pairs

Commodity markets slowed their depreciation amid the weaker dollar and a bounce on the Chinese market. As a result, risky currencies have also regained some ground. We review this rebound as temporary. NZD/USD tested the 0.6600 resistance today, but failed to overcome it. Don’t miss the NZ employment figures tonight. USD/CAD holds above the key support at 1.3100.

nzdusdm-h4-exness-ltd.png


EUR/USD came under resumed pressure after the US factory orders release. Tomorrow we’ll be watching service PMIs in euro zone. Bearish risks remain very high. GBP/USD holds in a sideways range above 1.5500. The market clearly remains uncertain about the BOE and the Fed’s policy intentions.

eurusdm-h4-exness-ltd.png


On Wednesday we’ll watch services PMI. Thursday is going to be a key day for the cable – BOE meeting, quarterly inflation report and policy minutes are on the schedule. Buy GBP against the EUR and JPY. USD/JPY consolidates slightly below the 124.00 mark. Resistance lies at 124.40/50, but this level could be broken on strong US data on Wednesday. Trend support – 123.70.

usdjpym-d1-exness-ltd.png


Meanwhile traders boosted bets on a September rate hike in the U.S. after Federal Reserve Bank of Atlanta chief Dennis Lockhart said he would only endorse putting it off should there be a significant deterioration in economic data. Analysts believe that Lockhart’s comments made the market wary of rate hikes once again. Caution toward the Chinese economy continues to weigh on the market as well.”
 

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GBPCHF Gains Favored as it Holds Key Support Area

Technical Bias: Bullish

Key Points
• British Pound spiked higher against the Swiss Franc despite miss in the UK Services PMI.
• UK PMI service released by both the Chartered Institute of Purchasing & Supply and the Markit Economics came in at 57.4, down from 58.5 in July 2015.
• GBPCHF is trading near a key resistance area, which might result in a short-term correction.

Technical Analysis
The GBPCHF pair gained heavily recently, as there was a lot of buying interest noted in the near term. There was a major bearish trend line on the hourly chart of the GBPCHF pair, which once cleared buyers were seen in control. The pair is now comfortably placed above the 100, 200 and 50 simple moving averages on the hourly chart, suggesting that sellers are struggling and more gains are likely.

GBPCHFH1.png


There is a possibility that the pair might correct lower moving ahead, and if that is the case it might find support around the 23.6% Fib retracement level of the last wave from the 1.4936 low. The most important support is around 50 SMA, sitting around the 38.2% Fib level.

On the upside, the recent high of 1.5282 is a resistance area, and if there is a break above it more gains are likely towards 1.5300.


Trade Idea
Buying dips closer to the 50 SMA is a good option.

-- By FXTIMES Team ---
 

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USDJPY Triggers Stops, Cable Eyes 1.5928 Ahead Of NFP

The USD/JPY finally triggered stops above the 124.45 strong static resistance level, and advanced to a fresh 2-month high of 125.00 before retreating some, holding anyway well into the green by the end of the day where the price of Cable finally recovered after the Market Services News.
Having been consolidating below the mentioned 124.45 for most of the first two sessions of the day, the USD/JPY pair fell down to 124.01 after the release of poor US data, from where the pair bounced sharply higher and extended to the mentioned daily high.
The 1 hour chart shows that the price remains well above its 100 and 20 SMAs, whilst the technical indicators are resuming their advances after correcting overbought readings, pointing for a continued advance.

usdjpym-h4-exness-ltd.png


In the 4 hours chart, the Momentum indicator has turned lower, but holds above its 100 level, whilst the RSI indicator corrects overbought readings, heading lower around 65, supporting a short term corrective movement, but far from suggesting a stronger bearish move. Should the price accelerate beyond 125.00, the logical target comes at 125.85, the year high posted last June.
Meanwhile, the GBP/USD pair recovered from a daily low set at 1.5525, with the Pound recovering ground, despite the UK service sector resulted worse-than-expected. The Markit Services PMI fell to 57.4 in July from 58.5 in June, although the most disturbing reading was the employment sub-component showing that hiring hit a 16-month low, which may result in a more conservative decision from the BOE this Thursday.
The Central Bank will not only have its monthly economic policy meeting, but will also release the Minutes of the meeting right afterwards. Given the latest comments from some MPC members suggesting the time for a rate hike is getting closer, market expectations are of a change in the vote, which may boost the pair beyond the 1.5700 level.
In the meantime, the 1 hour chart shows that the price is holding above a bullish 20 SMA, whilst the technical indicators are losing their upward strength near overbought territory.

gbpusdm-h4-exness-ltd.png


In the 4 hours chart, the pair is now above a horizontal 20 SMA, whilst the Momentum indicator is crossing its mid-line towards the upside, showing no actual strength at the time being, but enough to keep the downside limited around the strong static support placed at 1.5560.
 

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EURCAD Next Leg Lower Underway

Key Points
• Euro recovered against the Canadian Dollar recently, but found resistance around 1.4400 resistance area.
• German Factory orders released by the Deutsche Bundesbank posted an increase of 2% in June 2015, more than the forecast of 0.2%.
• In terms of the yearly change, the German Factory orders rose 7.2%.

Technical Analysis
The EURCAD pair tested an important resistance area around 1.4400 twice, but failed to clear it. It resulted in a downside reaction, which pushed the pair below the 100 hourly simple moving average. There are a couple of bearish trend lines formed on the hourly chart, which are acting as a barrier for an upside move. As long as the pair is below the trend line confluence area more declines are likely.

EURCADH1.png


The failure to move higher was also due to the 76.4% Fib retracement level of the last drop from 1.4431 to 1.4282. Overall, there can be a downside move if sellers remain in control.

On the downside, the next level of support can be seen around the 200 SMA.

German Factory Orders
Today in the Euro Zone, the German Factory orders, which is an indicator that includes shipments, inventories, and new and unfilled orders was released by the Deutsche Bundesbank. The market was expecting an increase of 0.2% in orders in June 2015, compared with the preceding month. However, the outcome was way above the forecast, as the German Factory orders rose by 2%.

In terms of the yearly change, the German Factory orders increased 7.2% in June 2015, compared with the same month a year ago. It was also higher, when compared with the last gain of 4.5% (revised).

Overall, the data was on the positive side, and helped the Euro to gain traction. However, there was no reaction in EURCAD, as the pair was seen under the bearish pressure all the time.

Trade Idea
Selling rallies closer to the highlighted trend line resistance area is a good option.

- The FXTimes Team
 

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GBPJPY Primed For Lift-Off

Key Points
• British Pound continued to find bids against the Japanese Yen, as there is a monster support formed around 193.20-00.
• UK trade balance released by the National Statistics registered a trade deficit of £-9.184B in June 2015, compared to the forecast of £-9.200B.
• UK total trade balance posted a deficit of £-1.601B, compared to the forecast of £-0.885B.
• GBPJPY showed bearish signs, but it found support around 193.50-40 area.

Technical Analysis
There was a sharp downside move in GBPJPY recently, which resulted in 200 pips loss taking the pair towards 193.20. However, the pair found support around the mentioned area, as there are several hurdles aligned around the stated area. First, it represents the previous swing low. Moreover, there is a bullish trend line formed on the hourly chart of the GBPJPY pair, i.e. acting as a support for the pair.

GBPJPYH1.png


Currently, the pair is making an attempt to correct higher, but facing a barrier around the 23.6% Fib retracement level of the last drop from the 195.26 high to 193.13 low. Moreover, the 100 hourly simple moving average is also positioned above it.

A break above the 100 SMA could set the pair for more upsides in the near term.

On the downside, the recent low and the trend line support area is very crucial.

UK Trade Balance
Earlier during the London session, there was a major release, as the UK trade balance data, highlighting the balance between exports and imports of goods was released by the National Statistics. The forecast was lined up for a £-9.200B deficit in June 2015, compared to the preceding month. However, the outcome was better than the forecast, as the trade balance registered a deficit of £-9.184B. Furthermore, the total trade balance came in at £-1.601B.

Trade Idea
Buying dips around the trend line and support area is a nice deal in the near term.

- The FXTimes Team
 
 
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