The following article was written by ATFX Chief Analyst of Asia Pacific, Martin Lam.
Last week, US President Trump once expressed concern about the strong dollar and the Fed’s interest rate hike, and believed that the strength of the dollar may damage the US economy. This kind of interventionary speech caused the dollar to fall. Following the White House spokesperson and other Fed policy officials clarified, but could not change the market, the US dollar index closed lower. At the weekend, U.S. Treasury Secretary Nuchin attended the summit of the Laos Group and tried to explain the president again. However, the Asian trading sentiment remained unresolved and the US dollar continued to open lower.
When the European trading session beginning, the market will focus on the European Central Bank meeting on Thursday, and the US announced the second quarter GDP initial expectations on Friday. It is estimated that the European economy is only stable at present, no outstanding performance, and the European Central Bank has maintained a loose monetary policy, and said that the policy will remain until the second half of next year. Moreover, the European Central Bank has no intention to end the long-term bond purchase schedule. Under the situation that Euro has not seen any surprises, I believe it is difficult to go to a higher level. It is estimated that Euro has pressure in the range of 1.1745 and 1.1770.
Moreover, the market expects that the US second-quarter GDP will reach 4% growth on Friday, which is higher than the 2% announced last month. It is estimated that investors are more interested in investing in the US dollar. Will be bullish dollars, bearish European currencies and gold. At the same time, it is estimated that the offshore RMB and other national currencies are also negative.
There is no European data released this afternoon, and there are Canadian, Eurozone and US data released at night. The market expects US existing home sales data to rise from the previous value, which is bullish for USD.
The European data was weak, and the Fed’s comments increased the interest in investing in the dollar, which is estimated to be bad for the euro. European data is only for reference at night, and US data has a greater impact on market significance. It is possible that the euro will adjust to decline. Coupled with the European Central Bank’s interest rate meeting on Thursday, it is estimated that there is no surprise for the market, and the chances of bearish EUR.
The US president’s remarks led to a lower dollar, and the UK’s agreement with the EU was in good progress, which should have been more than a pound. But after the news was digested, the price reflected. Now the market expected a strong US GDO in the second quarter, and the US dollar will be bullish, the pound will have a chance to be suppressed.
With the US president’s remarks to suppress the dollar’s rise, European currencies have risen in an all-round way. The US dollar against the Swiss franc not only fell below the expectations of 0.9960 and 0.9930 support, but also seen the 0.99 edge. Technically, the US dollar against the Swiss franc did not fall below 0.9890 or 0.9870, and will have the momentum to rebound to the 0.9960 range. If the market expected strong second-quarter US GDP forecast on Friday, the US dollar will have a chance to be suppressed and the US dollar will rebound against the Swiss franc.
Japan Nikkei index fell, and the dollar fell against the yen. Coupled with last week’s US presidential remarks, the Asian market is digesting relevant news and continues to benefit from the yen. Similarly, the Chinese renminbi is rising and is supporting the yen. But the opening of the European market in the afternoon, the market may reverse. If the Nikkei rebounds or the dollar rebounds, the dollar will rise again against the yen. Because the market expects the US second-quarter GDP growth to be strong on Friday, the US dollar will have a chance to be suppressed. The stock market may also rise, the low-yielding currency yen, more funds turned to stock market investment, bearish on yen.
Australia has announced important data this week. The market expects Australia’s economic growth, which is bullish Australian dollar. Unfortunately, if the Chinese renminbi falls or the US economic data is strong, it will suppress the magnitude of the Australian dollar. Therefore, it is recommended to pay more attention to the performance of the Chinese renminbi and observe more US economic data, which is a change for the Australian dollar.
The performance of the Australian dollar has always indirectly affected the New Zealand dollar. Recently, the trend of the RMB exchange rate has affected the trend of the two currencies. In addition to important data from Australia and New Zealand this week, it is more important to pay attention to the initial US GDP in the second quarter released on Friday. The market expects strong growth, USD may be bullish. The New Zealand dollar will have a chance to be suppressed.
In the evening, Canada announced wholesale sales data, while the United States announced existing home sales data, the market expects US data to be better, or negative for the Canadian dollar. Technically, the US dollar against the Canadian dollar established initial support at 1.3115 and 1.3105. If there is no breakthrough in the lower part of the support zone of 1.3105, the US dollar has a chance to rebound against the Canadian dollar, with an initial target of 1.3165. However, if it falls below the support, it will go to 1.3065.
The US president’s remarks suppressed the dollar’s rise and European currencies rose across the board. The euro rose more than the pound, and the euro fell against the pound. Technically, the euro fell below 0.8935 against the pound, initially confirming a reversal of the trend and having the opportunity to test 0.8900.
According to the analysis of the previous week, the technical trend of the euro against the Swiss franc will be tested to 1.1620. The situation is still supported. However, there is still a chance to test the 1.1605 support in the short term. If the breakthrough will be tested 1.1585.
The US president’s remarks have suppressed the dollar’s rise, and after the remarks, the gold has seen 1235. But the market is digesting and may be completed after the European market. Note that the gold adjustment may fall. Technically important resistance is at 1237, but if the European market still fails to rise after the afternoon, the momentum is gradually weakening and there is a chance to test the lower support.
US crude oil futures:
Both the peak period of fuel consumption gradually passed, and the US crude oil inventory report increased last week. After the oil price rebounded, the momentum slowly weakened. According to last week’s technical estimate, the current resistance is above 68 and 68.4 USD, although the resistance breaks through. However, it is necessary to pay attention to the risk of reversing and falling, estimate of 67.45 and 66.85 as short-term support.
7670 / 7840 resistance
7250 /7020 support
The US president’s remarks have suppressed the dollar’s rise, and after the remarks, the Bitcoin broke the resistance at 7550, the trend should be upward. However, 7670 as a very strong resistance. If the resistance can not over, it maybe reverse.
The above is for reference only; the market is risky and investment needs to be cautious. Trading must include risk management! Wish Happy trading!
Information provided by ATFX, Chief Analyst of Asia Pacific: Martin Lam
Registered Australian Accountant/ Certified Professional Manager / Certified Financial Advisor Experienced Investor / Media Market Commentator Martin Lam has Over 17 years’ experience in global investment market. Familiar with the worldwide stock indices, precious metals such Gold and Silver, Crude oil and Forex. He operated Martin Currency Trading Company and had partnership with a number of well-known international financial corporations and institutions. Before he join ATFX, he was TeleTrade Greater China development and Sales Director. Mr. Lam attends Hong Kong Now TV and China CCTV finance channel once a week. He also had regularly invited by different media, such as DBC Digital Financial Channel, Hong Kong Economic Times, The Standard, Ming Pao to share his experience to trade in Forex, Precious metals, Crude oil and worldwide stock indices. Contact: [email protected] or wechat: ATFX_China
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