Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from a sunny Hamburg and welcome to our last Daily FX Report for this week.Ten Arab countries have agreed to join forces in order to help the US in its fight against the jihadist group Islamic State (IS). Following talks with US Secretary John Kerry in Jeddah, they agreed to provide military support and humanitarian aid as well as to try to stop the flow of funds and foreign fighters to IS. Finally the US will expand their air strikes from Iraq into neighbouring Syria.
Anyway, we wish you a successful trading day and a relaxing weekend!
Market Review – Fundamental Perspective
The USD has gained against its 16 main counterparts this week. This weeks gain has been the biggest in 10 months an expected economic data might support this movement. The USD appreciated the most aginst the AUD. Also speculation on a possible raise in interest rates by the Federal Reserve Bank have spread uncertainty over financial markets. The AUD/USD has gained 0.4 percent to 0.9064. Also the EUR/USD was little changed at 1.2917.
After a week in which the GBP has lost ground against most of its counterparts, the currency was able to raise yesterday after a poll showed that the supporters of the Scottish Independence have lost ground before next weeks vote. The GBP/USD is traded at 1.6237 after a 0.3 percent increase yesterday.
The JPY has faced its longest losing streak for this year before the todays highly expected speech of the Bank of Japan Governor Haruhiko Kuroda. The downward movement of the currency followed the announcement of the Bank of Japan Kuroda that they won’t hesitate to act in order to achieve their inflation target. The USD/JPY has fallen 0.1 percent to 107.24 after touching its weakest level since September 2008. The currency has faced a 2 percent weekly loss which was the fifth straight weekly loss.
Furthermore the European Union said that it will impose stronger sanctions to Russia in order increase the political pressure on the government. The U.S. has also announced that they would implement similar measures.
Finally European Central Banks investments fell in the second quarter for the first time in more than a year. It has fallen to 0.3 percent as annual economic growth slowed to 0.7 percent in the region.
Daily Technical Analysis
EUR/AUD (1 Hour)
This currency pair seem to have entered a bullish movement along the Fibonacci-Fan after reaching the level of the second support level at 1.37997. Minor depreciation occurred that pushed the pair back to the level of its first support line at 1.38779 but the upward movement continued until reaching the level of the resistance line at 1.42165. The level of the MACD might support the hypothese of a lasting bullish movement. Finally The Momentum does not provide any evidence for a bullish divergence which might strengthen the initial hypothese.
Support & Resistance (1 Hour)
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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.
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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.