Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from a sunny Hamburg and welcome to our second last Daily FX Report. Russia fought back on Wednesday over new U.S. and EU sanctions and announced a ban on most fruit and vegetable imports from Poland, saying it could extend it to the entire European Union. The first European economic victims of the trade war were Polish apple growers, who sell more than half their exports to Russia. Moscow is by far the biggest importer of EU fruit and vegetables, buying more than 2 billion euros' worth a year.
Anyway, we wish you a successful trading day!
Market Review – Fundamental Perspective
Yesterday´s U.S. Commerce Department report showed gross domestic product expanded at a 4 percent annual pace in the second quarter, confirming the Fed´s view that a 2.1 percent contraction in the first quarter was transitory. Consumers, whose spending accounts for 70 percent of the economy, have grown more confident as the labor market improves and rising share prices boost wealth. U.S. policy makers tapered monthly bond buying to $25 billion in their sixth consecutive $10-billion cut, staying on pace to end the purchase program in October. The Fed said the labor market still has plenty of room for improvement, even after a surprising drop in unemployment, bolstering the case for keeping interest rates low. The USD is about to reach for its longest stretch of gains versus JPY in more than 12 years after the U.S. economy rebounded more strongly than economists forecast. It added 0.1 percent to 102.84 yen, heading for a 10th day of gains that would be the longest since December 2001. It has climbed 1.5 percent this month, the biggest advance among group of 10 currency peers. It was little changed at 1.3396 per euro and has risen 2.2 percent since June 30. There is a 63 percent chance the USD will rise by December 31 to touch 105 yen. That is up from a 45 percent probability on July 1. The odds of the U.S. currency strengthening to 1.32 per euro, as predicted by forecasters in a separate Bloomberg survey, have doubled to 70 percent over the period. The Bloomberg Dollar Spot Index, which tracks the USD against 10 major counterparts, was little changed at 1,020.57. It has climbed 1.7 percent this month, poised for the biggest advance since Mai 2013. The euro has its biggest monthly loss this July since February 2013. Rather than a cause for concern, the European Central Bank may see weakness in the euro as a welcome development to avoid deflation and spur exports to boost the economy.
Daily Technical Analysis
GBP/CHF (4 Hours)
Last month has brought high volatility to this currency pair. Overall we can see an upward trend along a rising Fibonacci fan, but the bears came sometimes out on top, as for now they share with the bulls the movement, between the resistance at 1.54057 and support at 1.53205. The Accelerator has shown some big movements during this month, but at the moment there might be no big dynamic in the pair.
Support & Resistance (4 Hours)
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Editors’ Picks
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