Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from a cloudy but celebrating Hamburg and welcome to our first Daily FX Report for this week. All focuses had been on the final of the Football World Cup 2014 held in Brazil on Sunday. After a hard game, the german team was able to defeat their opponent thanks to the match winning goal of Götze in the 114th minute of this final. The german national team is now World Cup Winner of the year 2014 and was able to win this titel for the fourth time in the history of the sport.
Anyway, we wish you succesfull trading week!
Market Review – Fundamental Perspective
Angela Merkel the German Chancellor addresses the euro region’s fragility and the need for governments to respect debt and deficit limits on the 12th of July during a campaign rally for her Christian Democratic Union. This warning was a message to France and Italy whom aimed for a softening in euro-area rules, and was a reaction to the turmoil in global markets caused by Banco Esperito Santo SA which has been lowered in its long-term credit rating after a parent company missed payments on commercial papers.
The European Central Bank president’s, Mario Draghi, newest economic stimulus tool will offer banks more than 700 billion euros of cheap lending. This liquidity providing measure is part of the so-called TLTRO program which aim to offer cheap funding to the european bank sector within a four years program. This seem to be a good signal for the euro area, by offering cheap liquidity on the short-run and aiming on increasing inflation on a long-run. Global markets consider this measure being a positive stimulus for the euro-area.
The Japanese Yen was weaker on Monday as a result of the Bank of Japans monetary policy meeting. The USD/JPY traded at 101.38 which marks an increase of 0,02%. In the past week investor could observe a steady dollar against the euro, the yen and the Australian dollar. Information (as provided below) rised concerns over the euro-area and Japan. The AUD/USD traded at 0.9384 which marks a decrease of 0.09%. Finally, the rupiah fell the most in more than a week as a result of the Bank of Indonesia affirmation that the current account deficit would probably widened close to a record last quarter.
Daily Technical Analysis
USD/TRY (1 Hours)
After a bull trend that started in the beginning of July, this currency pair entered a bear movement right after reaching the resistance line at 2.14165. Facing a high volatility, the downward trend seem to continue, almost reaching the support line at 2.11733. The Fibonacci- Fan might strengthen this hypothese with the support line being crossed. Finally the MACD does not suggest an oversold market which might indicate that the trend can still continue.
Support & Resistance (1 Hours)
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Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.