Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from rainy and cold Hamburg and welcome to our Daily FX Report. On Tuesday, a gun battle broke out in the center of the rebel-held Ukranian city of Donetsk and residents ran for cover from artillery fire, taking a government military offensive into the heart of the retreating pro-Moscow separatist rebellion. It is the second heavy attack during this week. Putin and his Ukranian counterpart will meet next week for the first time in months to try to end their confrontation over the separatists rebellion in eastern Ukraine.
Anyway, we wish you a successful trading day!
Market Review – Fundamental Perspective
After a report showed that housing starts reached the highest level in eight months, the USD was able to gain in value and rose to the strongest level in nine months versus the EUR. This positive numbers are adding to evedince the U.S. economy is gaining more traction. Economists expect that the faster economic growth will cause the Federal Reserve to raise interest rates next year. As a result the USD strengthened by 0.3 percent against the EUR to $1.3320 per EUR and even touched the strongest level since November 7. The U.S. currency also added 0.3 percent against the JPY and is now traded at 102.92 JPY per USD. In the euro zone, the EUR fell due to weak European Central Bank data showing the 12-month average of the non- seasonally current-account balance fell to 18.3 billion euros in June. According to Bloomberg Economics calculation the number has been at 19.2 billion the month before.
After a report showed the annualized rate of price growth in the U.K. fell to 1.6 percent in July from 1.9 percent the month before, the GBP weakened against most of its 16 major peers. Economists had forecast 1.8 percent. Against the USD, the GBP depreciated by 0.7 percent to $1.6617 after even falling to the lowest level since April 8. The decline is demonstrating the pound`s world-beating rally over the last year where it has been the best performer among the major currencies. During the last month however, the GBP weakened 1.7 percent.
Due to a statement of the statistics bureau, which said that New Zealand`s producer output prices fell 0.5 percent in the second quarter, the NZD dropped the most in two weeks. The government cut its forecast for economic growth and projected smaller budget surpluses. The NZD depreciated by 0.7 percent against the USD and is now traded at 84.20 U.S. cents.
Daily Technical Analysis
EUR/JPY (Daily)
Since the end of May 2014 the currency pair experienced a downward movement among the 38.2 Fibonacci fan line. Finally, the support level at 136.13 was able to prevent the EUR from further losses. At the moment we see a slighty recovery of the EUR. According to the OsMA and the DeMarker below 30, it may be likely that the recent upward trend will last for a while.
Support & Resistance (Daily)
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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.