Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from Hamburg and welcome to our first Daily FX Report for this month. Yesterday Russian President Vladimir Putin called for immediate talks on the statehood of southern and eastern Ukraine. But his spokesman said that this didn’t mean Moscow now endorsed rebel calls for independence for territory they have seized. Beyond that the Polish Prime Minister Donal Tusk was appointed to chair European Union summits for the next two and a half years. He will take up his new job in Brussel from December 1st.
Anyway, we wish you a great start into a new trading week!
Market Review – Fundamental Perspective
Last Friday the Dow Jones Index of shares rose 0.1 percent and the Standard & Poor’s Index also climbed 0.3 percent. On Friday data showed that euro zone inflation declined to a fresh five- year low in August, this might concern the European Central Bank which is going to meet this Thursday. Consumer prices advanced 0.3 percent , down from inflation of 0.4 percent in July, but the market does not expect immediate policy action although ECB President Mario Draghi signaled last month that he might expand stimulus to ward of deflation. French Prime Minister Manuel Valls called for more action from the ECB to weaken the value of the EUR. The ECB targets an inflation rate at below-but-close to 2 percent over the medium term, a level not seen since the first quarter of 2013. In addition increased geopolitical risks from the intensifying conflict in Ukraine forced Europe to impose sanctions on its third largest trade partner Russia, a move which even dented the faltering economic rebound even further. The USD maintained gains versus the major peers a raft of manufacturing data from China to the euro area will be released. The EUR/USD tumbled to 1.3130 and touched a one year low after it fulfilled a seven- week decreased, which is the longest stretch in more than a decade. The USD/JPY was near a seven-month high around 104.16 and the EUR/JPY traded at 136.76. Today due to Labor Day holiday the U.S. market will remain closed.
The Reserve Bank of Australia meets tomorrow, and economists estimated that rates will be held at a record low, while data this week might show that economic growth slowed last quarter. The AUD/USD traded at 0.9328. The USD/CAD was close to a one month low after a report showed that Canada’s economy expanded at the fastest pace in three years.
Daily Technical Analysis
XAU/USD (Daily)
Since the beginning of July the metal tumbled nearly 60 USD and is close to a three month low. Currently it is trading even below the bearish Fibonacci fan and according to the OSMA more losses even below its last support is possible.
Support & Resistance (Daily)
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Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
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GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
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Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
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