Four Banks Fight Against Inflation
It will be the hottest week of September, with four central banks’ meetings, five PMI releases, and a lot to trade.
Forex today: risk-off sentiment is still actual
- The US dollar is falling. On Wednesday, the greenback managed to test levels above $94, however, didn’t stick there and closed at $93.90. On Thursday, the US dollar index is climbing down. The reason is a Wednesday’s meeting of the Fed. According to the report, the central bank is not going to hurry to increase the pace of rate hikes. The market already anticipates 2 additional rate hikes this year. That’s why investors need clues on a bigger number of rate hikes. The US dollar index is trading near $93.80.
- There was a big fall of the euro yesterday as economic data appeared to be weaker than expected.
Up to now, EUR/USD managed to recover and is trading near the resistance at 1.1720. The European Central Bank will release its report of the most recent meeting today at 14:30 MT time. If the central bank is hawkish, the euro will have chances to rise further. Otherwise, no important economic data and events will be out today. So there is a risk that EUR/USD will not be able to break the resistance at 1.1720.
- A new round of Brexit negotiations will end today, however, some headlines have already affected the pound. There are talks that Theresa May is going to ask the EU to prolong the transition period to 2023 (up to date, the period has to end at the end of 2020). On Wednesday, the UK currency closed below the pivot point support at 1.3350. However, comments on Brexit deal managed to encourage GBP, so, GBP/USD is trying to break above 1.3350. More positive news on the Brexit deal will support the further movement above 1.3350. Moreover, traders should pay attention to retail sales’ data at 11:30 MT time. The forecast is encouraging. If the actual data is greater than the forecast one, the pound will get an additional support. The last but not least, the BOE governor Mr. Carney is giving two speeches today (11:00 MT time and 20:00 MT time). Whether the governor sounds hawkish, the pound will rise.
- More positive news for the yen. The risk-off sentiment is increasing as North Korea officials suggested reconsidering the summit with the US. Moreover, US president Mr. Trump announced a possibility of new tariffs. The US Commerce is initiating an investigation into auto imports.
The USD/JPY pair is near the support at 109.70. Yesterday the pair couldn’t break this level, however, a weaker US dollar and the risk-off sentiment are putting pressure on the pair again. However, if we look at the weekly chart, we can see that the pair at a strong support: the pivot point support, 50.0 Fibo level, and 100-week MA. It means that a chance of the further fall to 108.50 is not high. A risk of a pullback to 110.35 is more likely.
- The Canadian dollar is continuing to fall. The first reason is an oil’s depreciation. The second reason is a Canadian government’s ban on a takeover of construction firm Aecon Group Inc. by a unit of China Communications Construction Co. USD/CAD broke the resistance at 1.2825 and tested the next resistance at 1.2850. Whether the pair is able to close above 1.2850, there is a possibility of the further rise to 1.2950. However, the greenback’s depreciation may slow down the further rise. So the pair will stay within 1.2825-1.2850.
That is all for today. Follow markets news with us!
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