After the bullish start of the year, the rand has started to weaken since the last Thursday. Let’s point out the main factors affecting the ZAR and set the key levels for this week’s trading.
Morning brief for June 6: it is all about Thursday
Markets today are exceptionally quiet before the great Thursday with ECB meeting, UK general election, and Comey’s testimony all scheduled for the same day.
The yen strengthened to 109.86 against the USD in Tokyo reaching its highest level since April 25. USD/JPY may extend its downfall to 108.85 in the short-term unless USD manages to reclaim its positions.
The US dollar index which tracks the USD against a basket of its trade-weighted peers hit its seven-month low ahead James Comey testimony before Congress scheduled on Thursday.
The euro pared its yesterday’s losses and rose above 1.1265 ahead of the ECB meeting which is due on Thursday. A Bloomberg survey showed 90% analysts anticipate the ECB to upgrade its risks around the Eurozone recovery to balanced. The main focus will be on whether the central bank removes its easing bias on interest rates. If it is the case, we will see the EUR posting new gains against USD. The technical outlook for EUR/USD is still positive. To reaffirm our expectations, the pair should break a solid resistance at 1.1300. Otherwise, it may slide lower towards the support at 1.1210.
Australian dollar registered new highs in Tokyo morning following the RBA rate announcement. The central bank left its rates and policy unchanged saying that current monetary policy settings is consistent with growth and inflation targets. It also noted that an appreciating A$ would complicate economic rebalancing. The undertone for AUD/USD is still positive. Aussie may extend its recent rebound started last week at least to 0.7520. From here, a sustained move upside is not expected. The AUD/USD may rollback towards the support at 0.7425.
GBP recovered from its recent drop and rose to 1.2925 after a Guardian/ICM poll showed Tories have an eleven-point lead over Labour. The general election is scheduled for Thursday. We would cautious to change our neutral outlook at this stage before the Thursday’s ground-shaking event. Now, GBP/USD is trading range bound within the 1.2765 – 1.2950 levels.
USD/CAD dropped below 1.3460 overnight mainly on surging oil prices. The latter ones were trading a little bit higher in Monday’s session being driven by the political clash in the Gulf. Saudi Arabia, Egypt, UAE and Bahrain cut their ties with Qatar with the aim to punish the nation for its links with Islamist groups. In Tokyo morning, traders downplayed their concerns that Qatar’s isolation might hamper its oil supply. So, the Brent and WTI oil futures suffered significant losses. Brent crude declined to $49.23, WTI – to $47.15 from yesterday’s high at $48.42.
If we look at the daily charts of the US dollar index and the USD/JPY pair, we will see a misleading trend.
Britain has to leave the European Union in 66 days. Will it leave with a trade deal (good for the GBP) or without one (bad for the GBP)?
The last "Pennant" pattern has been broken, so bulls found resistance at 1.2915. Nevertheless, the market is likely going to move on, so we should...
USD/CHF remains weak across the board and stays strong with a bearish consolidation below the 200 SMA at H1 chart…
There's no any reversal pattern so far, so the market is likely going to test the nearest resistance area in the short term...