Dollar dropped to a seven-month low against the euro

Good morning from beautiful Hamburg and welcome to our latest Daily FX Report. Federal Reserve Bank of Atlanta President Dennis Lockhart said he continues to expect the first interest- rate increase in nearly a decade this year, while cautioning that a stronger dollar, a weaker Chinese yuan and falling oil prices complicate the outlook. Traders are pricing in a 22 percent probability that the Fed raises rates at the September meeting, down from about 48 percent on Aug 18. The calculation is based on the assumption that the effective fed funds rate will average 0.375 percent after the first increase.

Anyway, we wish you a successful trading day!

Market Review – Fundamental Perspective

The dollar dropped to a seven-month low against the euro as concern the global economy is losing momentum led traders to cut bets the Federal Reserve will raise interest rates this year. The dollar pared losses as U.S. stocks trimmed declines. A drop in commodity prices deepened a rout in emerging-market currencies that began after China’s shock devaluation of the yuan on Aug. 11. The dollar fell 2.1 percent to $1.1619 per euro at 5 p.m. in New York after falling as low as $1.1714, the weakest since Jan. 15. It plunged 3 percent to 118.41 yen, the weakest since Feb. 5, after touching a seven-month low of 116.18. Intercontinental Exchange Inc.’s U.S. Dollar Index, which serves as the benchmark for various futures and options instruments, was down 1.8 percent after falling as much as 2.5 percent, the most since March 2009.
A measure of returns from commodities sank to its lowest since 1999 and shares in resource companies tumbled by the most since the financial crisis on concern that a slowing Chinese economy will exacerbate supply gluts. The Bloomberg Commodity Index of 22 raw materials from oil to metals lost 2.2 percent to end the day at 85.8531, the lowest closing since August 1999. Shares in miners and explorers including Glencore Plc, BHP Billiton Ltd. and Exxon Mobil Corp. tumbled while Brent crude fell below $45 a barrel for the first time since 2009. Brent for October settlement declined 6.1 percent to $42.69 a barrel on the ICE Futures Europe exchange, the lowest close price since March 2009. West Texas Intermediate in New York dropped 5.5 percent, taking its loss over the past year to 59 percent. While there’s speculation that market turmoil may prompt the Federal Reserve to delay an increase in interest rates, the dollar has strengthened over the past year.

Daily Technical Analysis

GBP/CAD (Daily)

This minor currency pair is trending very sustainable in 2015. No resistances are close to the current level to stop the bulls and it might be possible that this development continues in short term. The bulls power is also shown by the MACD which is long since May the ZigZag indicator shows additionally the clear trend movements. Trading ideas could be realized by limit orders to buy on dips.

Support & Resistance (Daily)