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USD/JPY aims for extra gains

FOREX_USDJPY-aims-for-extra-gains_FXPIG

FX Strategists at UOB Group expects the pair’s upside momentum to remain supported while above 111.35.

Key Quotes

24-hour view: “The sudden acceleration higher in USD that hit an overnight high of 111.99 was clearly not expected. Upward momentum has improved by considerably and from here, a move above the August’s peak of 112.14 would not surprise at all. However, the next resistance at 112.60 could be just out of reach for today. On the downside, we expect 111.35 to be strong enough to hold any intraday pull-back (minor support is at 111.60)”.

Next 1-3 weeks: “While we indicated on Wednesday (12 Sep, spot at 111.60) that the “the probability for a test of last month’s 112.15 peak has increased”, the solid gain made by USD yesterday was not exactly expected (the +0.60% gain is the largest 1-day rise in 3 weeks). After the solid advance, a move above 112.15 would not be surprising but at this stage, it is unclear if any up-move can be sustained. However, as long as USD can hold above 111.35 within the next couple of days (‘key support’ previously at 110.85), the prospect for further USD strength to 112.60 would continue to improve”.

Source: fxstreet.com

24-hour view: “The sudden acceleration higher in USD that hit an overnight high of 111.99 was clearly not expected. Upward momentum has improved by considerably and from here, a move above the August’s peak of 112.14 would not surprise at all. However, the next resistance at 112.60 could be just out of reach for today. On the downside, we expect 111.35 to be strong enough to hold any intraday pull-back (minor support is at 111.60)”.

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EUR/USD keeps tight

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The shared currency remained apathetic after the ECB decision today, with EUR/USD a tad lower in the 1.1715/10 band.

EUR/USD now focused on Draghi’s presser

The pair remains in the upper end of the weekly range after the ECB’s Governing Council left its monetary conditions unchanged at today’s meeting, falling in line with market expectations.

In fact, the ECB left intact the interest rate on the main refinancing operations at 0.00%, the interest rate on the marginal lending facility at 0.25% and the deposit facility at -0.40%.

Later in the session, President Mario Draghi will hold his usual press conference followed by the Q&A session.

EUR/USD levels to watch

At the moment, the pair is up 0.02% at 1.1628 and a break below 1.1508 (low May 29) would target 1.1449 (50% Fibo of the 2017-2018 up move) and finally 1.1299 (2018 low Aug.15). On the upside, the next hurdle aligns at 1.1659 (high Sep.6) seconded by 1.1734 (high Aug.28) and finally 1.1745 (high Jul.31).

Source : www.fxstreet.com


The shared currency remained apathetic after the ECB decision today, with EUR/USD a tad lower in the 1.1715/10 band. EUR/USD now focused on Draghi’s presser The pair remains in the upper end of the weekly range after the ECB’s Governing Council left its monetary conditions unchanged at today’s meeting, falling in line with market expectations.

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GBP/USD expected to test

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Cable remains neutral although there is still scope for a test of 1.3170, according to FX Strategists at UOB Group.

Key Quotes

24-hour view: “GBP traded between 1.2980 and 1.3083 yesterday, higher than our expected 1.2960/1.3065 consolidation range. While upward momentum is not strong, there is room for GBP to edge above the overnight high of 1.3083 even though a break of the next resistance at 1.3105 would come as a surprise. Support is at 1.3020 but only a break of 1.2990 would indicate that a short-term top is in place”.

Next 1-3 weeks: “There is not much to add as GBP touched a ‘fresh’ high of 1.3087 before easing off. As highlighted yesterday (11 Sep, spot at 1.3025), while it is too soon to expect a shift to a bullish phase, the current GBP strength could extend higher and test the strong 1.3170 resistance. For now, we view any up-move as part of a corrective rebound and do not expect a sustained break above 1.3170. On the downside, only a break of 1.2900 would indicate that the prevalent upward pressure has eased”.

Source: www.fxstreet.com

Cable remains neutral although there is still scope for a test of 1.3170, according to FX Strategists at UOB Group. Key Quotes 24-hour view: “GBP traded between 1.2980 and 1.3083 yesterday, higher than our expected 1.2960/1.3065 consolidation range. While upward momentum is not strong, there is room for GBP to edge above the overnight high of 1.3083 even though a break of the next resistance at 1.3105 would come as a surprise. Support is at 1.3020 but only a break of 1.2990 would indicate that a short-term top is in place”.

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ECB and BoE to be the key

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Analysts at Danske Bank suggest that the key event today is the ECB meeting, in addition to the BoE meeting.

Key Quotes

“Albeit we do not expect big communication changes, the ECB will present new staff projections. We expect a marginal downward revision of the 2019 and 2020 projections, but no new policy signals as the central bank has been content with the current economic path and the market reaction to the recent increased forward guidance in June.”

“In addition, we have the Bank of England (BoE) meeting. This is unlikely to be a major market mover, as it is one of the interim meetings without updated projections and no press conference. After the August hike, we believe the BoE is on hold until next year. We do not think it is necessary for the BoE to send any new signals now.”

Source : www.fxstreet.com

Analysts at Danske Bank suggest that the key event today is the ECB meeting, in addition to the BoE meeting. Key Quotes “Albeit we do not expect big communication changes, the ECB will present new staff projections. We expect a marginal downward revision of the 2019 and 2020 projections, but no new policy signals as the central bank has been content with the current economic path and the market reaction to the recent increased forward guidance in June.”

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USD/CAD stays bullish

FOREX_USDCAD-bullish1209_FXPIG

USD/CAD managed to heave itself from its August low at 1.2888 to its early September high at 1.3225 before coming off again”.

“While the 1.2997/30 early May high and six month support line underpin on a daily chart closing basis, we will retain our medium-term bullish forecast”.

“Once the 1.3175 mid-August high and current September high at 1.3225 have been exceeded, the 1.3532/97 November and December 2016 as well as the March 2017 highs will be in focus. Still further up sits the May 2017 peak at 1.3791”.

“En route the June and July highs are to be found at 1.3289 and at 1.3386”.

Source: fxstreet.com

“USD/CAD managed to heave itself from its August low at 1.2888 to its early September high at 1.3225 before coming off again”.

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EUR/USD fails once again

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  • On the back foot ahead of ECB’s staff projections, trade woes.
  • Upbeat US PPI data could knock-off EUR/USD to 1.1550 level.

The EUR/USD pair extends its choppy trend into the European session, unable to sustain the bounce once again above the 1.16 handle, as the bulls remain unnerved ahead of the ECB’s monetary policy meeting due tomorrow.

EUR/USD: All eyes on trade and ECB

Persistent demand for the US dollar amid looming US-China trade concerns and uncertainty over the trade talks between the US and Canada continues to keep the EUR/USD pair under pressure so far this Wednesday, with every upside attempt sold-off just ahead of the 1.1600 level.

The subdued trading seen in the spot is also driven by increased cautiousness heading into the European Central Bank (ECB) monetary policy meeting due tomorrow. According to the latest Bloomberg headlines, the ECB is likely to make downward revisions to the economic growth forecasts at its policy meeting.

On the other hand, stronger US fundamentals reinforced the Fed’s tightening plans and kept the sentiment around the buck somewhat buoyed. Looking ahead, attention now turns towards the US PPI data, which is likely to add to the USD strength, as a bigger-than-expected drop in the Eurozone industrial figures weighed further on the common currency. Eurozone July industrial production arrived at-0.8% versus -0.5% m/m expected.

EUR/USD Technical Levels

According to Slobodan Drvenica at Windsor Brokers, “upside potential exists and is supported by rising bullish momentum, with 30SMA required to hold. Break above 55SMA would generate an initial bullish signal, with break and close above thin daily cloud (spanned between 1.1649 and 1.1678 and is turning lower on Thursday) and falling 100SMA (1.1685), is needed to open way for attack at key barriers at 1.1733/50 (28 Aug high/late Aug lower platform). Alternatively, a bearish signal could be expected on close below 30SMA, which would unmask 1.1526 (10Sep low) and open way for further retracement of 1.1300/1.1733 ascend. Res: 1.1612; 1.1644; 1.1659; 1.1685. Sup: 1.1570; 1.1557; 1.1526; 1.1466.”


Source: fxstreet.com

The EUR/USD pair extends its choppy trend into the European session, unable to sustain the bounce once again above the 1.16 handle, as the bulls remain unnerved ahead of the ECB’s monetary policy meeting due tomorrow.Persistent demand for the US dollar amid looming US-China trade concerns and uncertainty over the trade talks between the US and Canada continues to keep the EUR/USD pair under pressure so far this Wednesday, with every upside attempt sold-off just ahead of the 1.1600 level.

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EUR/USD neutral although

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The likeliness of further downside in the short-term horizon remains well on the cards, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We indicated yesterday that the strong up-move in EUR “has room to move above the overnight high of 1.1615 but a break of last week’s top of 1.1659 is not expected” and added, “1.1640 is already a strong level”. EUR subsequently rose to a high of 1.1643 before easing off quickly. Upward pressure has eased and we view the current movement as part of a consolidation phase. In other words, we expect EUR to trade sideways for today, likely within a 1.1560/1.1630 range”.

Next 1-3 weeks: “EUR tested the top of our expected 1.1470/1.1640 consolidation range yesterday as it touched a high 1.1643. The swift pullback from the high reinforces our current neutral view even though we continue to see chance for EUR to probe the bottom of the expected consolidation range. Overall, the current movement is viewed as part of consolidation phase that could last for another couple more weeks. In other words, we do not expect EUR to embark on a sustained directional move anytime soon”.

Source: www.fxstreet.com

The likeliness of further downside in the short-term horizon remains well on the cards, suggested FX Strategists at UOB 24-hour view: “We indicated yesterday that the strong up-move in EUR “has room to move above the overnight high of 1.1615 but a break of last week’s top of 1.1659 is not expected” and added, “1.1640 is already a strong level”. EUR subsequently rose to a high of 1.1643 before easing off quickly. Upward pressure has eased and we view the current movement as part of a consolidation phase. In other words, we expect EUR to trade sideways for today, likely within a 1.1560/1.1630 range”.

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USD/JPY trades

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•  Global trade tensions continue to underpin JPY and capped gains.
  •  A follow-through USD buying helps limit immediate sharp downside.
  •  Traders now eye US PPI print for some short-term opportunities.

The USD/JPY pair was seen consolidating overnight strong gains to near one-week tops and traded with a mild negative bias through the Asian session on Wednesday.

The pair found some fresh buying ahead of the 111.00 handle on Tuesday and was supported by a combination of positive factors. Renewed US Dollar demand, coupled with surging US Treasury bond yields and positive mood around the US equity markets pushed the pair beyond mid-111.00s.

However, escalating global trade worries kept investors on edge and kept a lid on any further up-move, at least for the time being. The risk-off mood was evident from the ongoing fall in Asian stocks, which benefited the Japanese Yen's safe-haven status and exerted some downward pressure on Wednesday.

Meanwhile, a follow-through buying seen around the greenback continued extending some support. This coupled with today's disappointing release of BSI Manufacturing Index from Japan further collaborated towards limiting any immediate sharp downside, albeit a softer tone around the US bond yields failed to provide any fresh bullish impetus.

Moving ahead, today's release of the US PPI print will now be looked upon for some short-term trading opportunities later during the early North-American session. The key focus, however, would be on this week's other important US macro data - Thursday's consumer inflation figures and monthly retail sales data on Friday, which should help investors determine the pair's next leg of directional move.

Technical levels to watch

Immediate resistance is pegged near the 111.70-75 region, above which the pair seems all set to reclaim the 112.00 handle and test 112.15-20 supply zone. On the flip side, any meaningful retracement is likely to attract some buying near the 111.35-30 region and is followed by a strong support near the 111.00 handle.


Source: fxstreet.com

The USD/JPY pair was seen consolidating overnight strong gains to near one-week tops and traded with a mild negative bias through the Asian session on Wednesday. The pair found some fresh buying ahead of the 111.00 handle on Tuesday and was supported by a combination of positive factors. Renewed US Dollar demand, coupled with surging US Treasury bond yields and positive mood around the US equity markets pushed the pair beyond mid-111.00s.

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EUR/JPY Technical Analysis

FOREX_EUR-YEN_FXPIG

he euro is rising for the second day in a row against the yen but retreated significantly from the top, signaling difficulties to the upside.

The move higher lost strength slightly below 130.00 and a consolidation on top would clear the way to more gains. Before that level, it needs to break and hold above 129.75.

The current short-term bias is not clear, the key support is seen around 128.75 (20-SMA in 4 hour chart) and then at 128.50 (also the 20-day moving average). A daily close under 128.50 would increase the odds of a test of 128.00 and of September lows at 127.84.


Source: www.fxstreet.com

he euro is rising for the second day in a row against the yen but retreated significantly from the top, signaling difficulties to the upside. The move higher lost strength slightly below 130.00 and a consolidation on top would clear the way to more gains. Before that level, it needs to break and hold above 129.75.

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USD/JPY to break above

FOREX_USDJPY-brake-above_FXPIG
  • USD/JPY main bull trend is taking a breather since mid-July as the market has entered a trading range.
  • USD/JPY bulls are trying to break above the bear trendline from July 17 but they will also have to break above the 112.00-112.17 zone (figure and August 1, swing high) if they wish to resume the bull trend. The RSI, MACD and Stochastics indicators remain constructive to the upside.
  • However, the 50, 100 and 200-period simple moving averages are flat suggesting that there is not yet convincing momentum in the market.

Spot rate:                 111.53
Relative change:      0.38%    
High:                        111.58
Low:                         110.05

Main trend:               Bullish
Short-term trend:      Neutral

Resistance 1:    111.54 August 6, high
Resistance 2:    111.84 August 29 swing high
Resistance 3:    112.00-112.17 zone, figure and August 1, swing high
Resistance 4:    112.40 supply level
Resistance 5:    113.18, 2018 high

Support 1:    111.45 August 8 high
Support 2:    111.00 figure
Support 3:    110.75, July 23 swing low
Support 4:    110.00 figure
Support 5:    109.37 June 25 low


Source: fxstreet.com

USD/JPY main bull trend is taking a breather since mid-July as the market has entered a trading range. USD/JPY bulls are trying to break above the bear trendline from July 17 but they will also have to break above the 112.00-112.17 zone (figure and August 1, swing high) if they wish to resume the bull trend. The RSI, MACD and Stochastics indicators remain constructive to the upside. However, the 50, 100 and 200-period simple moving averages are flat suggesting that there is not yet convincing momentum in the market.

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Oil rises

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Oil prices rose on Tuesday as U.S. sanctions squeezed Iranian crude exports, tightening global supply despite efforts by Washington to get other producers to increase output.

Benchmark Brent crude oil was up 40 cents at $77.77 a barrel by 0950 GMT. U.S. light crude was up 5 cents at $67.59.

Washington has told its allies to reduce imports of Iranian oil and several Asian buyers, including South Korea, Japan and India appear to be falling in line.

But the U.S. government does not want to push up oil prices, which could depress economic activity or even trigger a slowdown in global growth.

U.S. Energy Secretary Rick Perry met Saudi Energy Minister Khalid al-Falih on Monday in Washington, as the Trump administration encourages big oil-producing countries to keep output high. Perry will meet with Russian Energy Minister Alexander Novak on Thursday in Moscow.

Russia, the United States and Saudi Arabia are the world’s three biggest oil producers by far, meeting around a third of the world’s almost 100 million barrels per day (bpd) of daily crude consumption.

Their combined output has risen by 3.8 million bpd since September 2014, more than the peak output Iran has managed over the last three years.

Russian Energy Minister Alexander Novak said on Tuesday that Russia and a group of producers around the Middle East which dominate the Organization of the Petroleum Exporting Countries may sign a new long-term cooperation deal at the beginning of December, the TASS news agency reported. Novak did not provide details.

A group of OPEC and non-OPEC producers have been voluntarily withholding supplies since January 2017 to tighten markets, but with crude prices up by more than 40 percent since then and markets significantly tighter, there has been pressure on producers to raise output.

With Middle East crude markets also tightening, many Asian refiners are seeking alternative supplies, with South Korean and Japanese imports of U.S. crude hitting a record in September.

U.S. oil producers are seeking new buyers for crude they used to sell to China before orders slowed because of the trade disputes between Washington and Beijing.

Source:reuters.com

Oil prices rose on Tuesday as U.S. sanctions squeezed Iranian crude exports, tightening global supply despite efforts by Washington to get other producers to increase output.

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FOREX Trading Wisdom

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...Good traders liquidate when they are wrong, great traders reverse when they are wrong...

-JACK D.SCHWAGER

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GBP on hopes for Brexit deal

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The yen slipped on Tuesday on news a Japanese chipmaker was buying a U.S. peer for $6.7 billion, while sterling held onto overnight gains after the European Union’s top negotiator raised hopes a Brexit deal can be struck in the coming weeks.

Most other major currencies stayed in tight ranges as investors awaited developments in international trade disputes, in particular on any U.S. move to slap fresh duties on China amid heightened tension between the two economic giants.

Monday's reports that Michel Barnier, the EU's top negotiator, told a forum in Slovenia that it was "realistic" to expect a Brexit deal in six to eight weeks helped send the pound sharply higher to $1.3052 GBP=D3, its highest level since Aug. 2.

Barnier’s comments were seized on by markets as a signal the UK may avoid a disorderly no-deal Brexit. In recent weeks, sterling had been under pressure on worries that Britain would exit from the EU without any formal trading agreement.

On Tuesday, sterling rose about 0.1 percent to $1.3041.

The euro was almost flat at $1.1601 EUR=. It advanced about 0.4 percent during the previous session, helped in part by an easing in concerns over Italian debt.

Against sterling, the single currency traded at 88.94 pence EURGBP=D3 after slipping to a fresh one-month low of 88.91.

Policymakers at the Bank of England and European Central Bank are widely expected to leave their policy settings unchanged at their respective meetings on Thursday.

The dollar index .DXY, which tracks the greenback against a basket of six currencies, was nearly flat at 95.140, after losing 0.2 percent overnight.

News that Japanese chipmaker Renesas (6723.T) was buying U.S. counterpart Integrated Device Technology (IDTI.O) for about $6.7 billion in cash weighed on Japan’s currency.

The dollar rose 0.3 percent to 111.41 yen JPY= as investors also reduced some of their safe-haven holdings of the Japanese currency as the benchmark Nikkei 225 stock index .N225 rose more than 1 percent and on hopes of a Brexit deal.

The Australian dollar AUD=D3 was 0.15 percent higher at $0.7123, hovering near a more than two-and-a-half year low of $0.7097 reached during the previous session.

Source:reuters.com

The yen slipped on Tuesday on news a Japanese chipmaker was buying a U.S. peer for $6.7 billion, while sterling held onto overnight gains after the European Union’s top negotiator raised hopes a Brexit deal can be struck in the coming weeks.

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Forex Today

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Forex today witnessed a recovery in risk appetite, despite looming US-China trade concerns, as the renewed optimism on the Brexit deal and NAFTA lifted market sentiment. As a result, the safe-haven Yen was broadly sold-off, driving the USD/JPY pair closer towards 111.50 barrier while the Antipodeans attempted a tepid recovery, as the Aussie shrugged off a dip in the Australian NAB business confidence gauge.  Moreover, the commodity-currencies also derived support from positive commodities’ prices and a risk-on rally seen in the Asian equity markets.

Meanwhile, the pound consolidated the overnight gains just under the 1.3050 level while the common currency wavered around the 1.16 handle. The Canadian dollar also traded firmer near 1.3150 versus its American counterpart amid ongoing NAFTA talks.

Main topics in Asia

US mulls China sanctions over Muslim abuses - The New York Times

North Korea's Kim looking for fresh Trump meeting - Reuters

Brexit could cost London billions - The UK Times

Fitch ratings affirm Singapore at 'AAA', outlook Stable

Japan’s Motegi: Japan, US have some differences in views on trade, but will try to resolve

Russia’s Novak: OPEC and allies can keep output quotas in place even after 2018

Asian stocks see gains, emerging markets remain shaky

BoJ seen willing to raise its ETF target if buying jumps a lot - Bloomberg

FT report: Tory Eurosceptics fail to agree on Brexit plan B

Key Focus ahead

Heading into Europe, markets eagerly await the release of the UK labor market report at 0830 GMT, as the Kingdom’s wage growth numbers remain the main focus, which is expected to inch higher to 2.8% in July versus 2.7% booked in June. Also, of relevance remains the German ZEW economic surveys that will be reported at 0900 GMT alongside the Eurozone ZEW surveys and employment data.

The NA session appears data-light, with the second-liner Canadian housing starts and the US JOLTS job openings due on the cards at 1215 GMT and 1400 GMT respectively. Meanwhile, markets will continue to take cues from the Brexit and trade-related developments for some trading impetus.

EUR/USD: 20-day MA support intact despite solid USD wage growth figure, eyes ZEW survey

The EUR looks set to gain altitude in the near-term. The rally could gather pace if the German ZEW survey indices, due for release at 09:00 GMT, beats estimates and ...

GBP/USD looking to firm up over 1.30 ahead of UK earnings

Pound bulls have been seizing on the good news and pumping up the GBP on Brexit hopes for the second time in two weeks, and Tuesday sees another iteration of the UK's q/y Average Earnings at 08:30 GMT.

Week ahead: volatility should remain elevated

It is going to be a busy week in the markets, particularly for the pound with the upcoming release of key UK economic data, BoE’s rate decision and perhaps more importantly Brexit-related headlines.

BOE to reiterate its "gradual and limited" rhetoric this Thursday - Barclays

Analysts at Barclays offer a sneak peek at what to expect from the Bank of England (BOE) monetary policy meeting due later on Thursday.

Source:fxstreet.com

Forex today witnessed a recovery in risk appetite, despite looming US-China trade concerns, as the renewed optimism on the Brexit deal and NAFTA lifted market sentiment. As a result, the safe-haven Yen was broadly sold-off, driving the USD/JPY pair closer...

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PAMMs Daily Update

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Find out more about our Managed PAMM Accounts here.

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USD/CHF Technical Analysis

FOREX_USD-CHF-TECH_FXPIG

USD/CHF bulls have been lifting the market for two consecutive days as they are creating a pullback in the main bear trend.

USD/CHF rose to the 200-day simple moving average where it is finding resistance. In the near term more sideways to down price action is expected as the market is in a range between 0.9768 (September 4 high) and 0.9640 (2018 low).

A bull breakout above 0.9768 would invalidate the bearish bias.

Spot rate :                      0.9736
Relative change:            0.46%    
High:                              0.9749
Low:                               0.9685

Main trend:                    Bearish

Resistance 1:                0.9745-47, August 28 low, 200-day simple moving average
Resistance 2:                0.9788 June 7 swing low (key level)
Resistance 3:                0.9807 August 22 low
Resistance 4:                0.9820 August 25 low

Support 1:                     0.9700 figure
Support 2:                     0.9651 August 29 low
Support 3:                     0.9600 figure
Support 4:                     0.9580 April 17 low

Source www.fxstreet.com

USD/CHF bulls have been lifting the market for two consecutive days as they are creating a pullback in the main bear trend. USD/CHF rose to the 200-day simple moving average where it is finding resistance. In the near term more sideways to down price action is expected as the market is in a range between 0.9768 (September 4 high) and 0.9640 (2018 low).

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Sterling edges up

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Sterling edged higher on Monday after posting its biggest weekly drop in a month last week against a broadly stable dollar as investors cut some large short positions, but Brexit concerns checked the gains.

On Monday, the pound edged a fifth of a percent higher at $1.2935 after falling 0.3 percent last week, its biggest drop since early August.

On the broader market, dollar bulls pared some of their aggressive long positions before strong U.S. jobs data last week, with the main beneficiaries being sterling and the euro.

Against the euro, the British currency was broadly flat at 89.40 pence.

Prime Minister Theresa May’s Conservative Party faces a catastrophic split if she persists with her “Chequers” proposals, a former junior minister said. Steve Baker, an-ex Brexit minister who resigned over May’s proposals for negotiating Britain’s departure form the European Union and its future relationship with the bloc, said 80 or more of her lawmakers are prepared to vote against the plan.

Such public criticism, just a day after her former foreign minister, Boris Johnson, cast part of the plan as “a suicide vest” wrapped around the British constitution, indicates the level of opposition within the party.

The British currency had a volatile week as headlines on the progress of Brexit negotiations forced traders to switch positions rapidly in a currency market that is broadly short on the pound, based on positioning data.

A Reuters poll showed that sterling could rise as much as six percent in a year, but a Brexit without any deal between London and Brussels could see it falling as much as eight percent from current levels.

Source:reuters.com

Sterling edged higher on Monday after posting its biggest weekly drop in a month last week against a broadly stable dollar as investors cut some large short positions, but Brexit concerns checked the gains.

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FOREX Trading Quote

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...Losing because of a new situation is fine, losing again is the beginning of the end...

-PIG INSIDER

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USD edges higher

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The dollar traded higher against a basket of currencies on Monday amid fears of a potentially major escalation in the China-U.S. trade conflict, while Sweden’s crown rose following the previous day’s election.

U.S. President Donald Trump warned on Friday that he was ready to slap tariffs on virtually all Chinese imports into the United States, threatening duties on another $267 billion of goods in addition to the $200 billion already facing the risk of duties.

The dollar index .DXY, which measures the greenback against a basket of six currencies, traded about 0.1 percent higher at 95.472, not far off a three-week high of 95.737 hit on Tuesday last week.

The index also found support after data showed U.S. jobs growth accelerated in August and wages notched their largest annual increase in more than nine years, boosting the prospect of faster interest rate rises by the Federal Reserve.

Still, markets remained on edge about a possible new round of U.S. tariffs on imports from China.

Investors have been waiting for a fresh salvo to be fired in the Sino-U.S. trade war after a public comment period for proposed U.S. tariffs on a list of $200 billion worth of Chinese imports, which includes some consumer products, ended late last week.

An emerging market currency index .MIEM00000CUS dipped more than 0.4 percent on Monday after booking its biggest weekly loss in three weeks last week.

The Swedish crown strengthened after an election in the country on Sunday that saw support for the nationalist Sweden Democrats surge.

One of the negative drivers for the Swedish crown before the election has been hedging activity against a strong showing by the Sweden Democrats, but the outcome avoided the worst of the market’s fears even as the nation headed for a hung parliament.

The Swedish crown rose about 0.6 percent against the euro EURSEK= to 10.43 crowns.

The pound was flat at $1.2915 after Steve Baker, a former junior Brexit minister told the Press Association that British Prime Minister Theresa May’s Conservative Party faces a “catastrophic split” if she persists with her so-called Chequers proposals on Brexit.

The euro EUR= was 0.1 percent lower at $1.1544 after falling more than half a percent during the previous session in the wake of the U.S. job data.

The Australian dollar AUD=D3 edged lower, last trading at $0.7100, pinned near a 2-1/2-year low of $0.7097 touched earlier in the day.

Source:reuters.com

The dollar traded higher against a basket of currencies on Monday amid fears of a potentially major escalation in the China-U.S. trade conflict, while Sweden’s crown rose following the previous day’s election.

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FOREX Tech Targets

FOREX_Technical-analysis_daliy-tech-targets-10-09-2018_FXPIG

EUR/USD: Neutral (since 21 Aug 18, 1.1485): Immediate bias is for EUR to probe the bottom of the expected 1.1470/1.1640 range.

Our recent expectation for EUR to extend its rebound was proven wrong as it plummeted last Friday and hit a low of 1.1548. While the low was just above the 1.1530 ‘key support’, the weak daily closing in NY is enough to indicate that the recent mild upward pressure has eased. From here, the underlying tone has weakened but it is premature to expect the start of a sustained decline in EUR. The outlook is still deemed as neutral even though the immediate bias is for EUR to probe the bottom of the expected 1.1470/1.1640 consolidation range.

GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): Still neutral; GBP expected to trade within a broad range.

GBP rose to a high of 1.3029 last Friday, relatively close to the top our expected 1.2800/1.3050 consolidation range before falling sharply back to a low of 1.2910. As highlighted in recent updates, the immediate outlook for GBP is unclear after the recent volatile price actions and we continue to hold a neutral stance and expect GBP to trade sideways, likely within a broad 1.2800/1.3050 range.

AUD/USD: Bearish (since 03 Sep 18, 0.7185): Outlook is still clearly bearish, expect further AUD weakness to 0.7035.

We have been bearish AUD since early this month (see update on 03 Sep, spot at 0.7185) but indicated that we are mindful of the longterm 0.7145/60 support zone. AUD held above this support zone for several days and we warned last Thursday (06 Sep, spot at 0.7195) that “AUD has to break the major support soon”. The support zone finally cracked last Friday as AUD plunged to a low of 0.7099. From here, the outlook is still clearly bearish and we anticipate further AUD weakness to 0.7035, with decent odds for further extension to 0.7000. That said, in view of the oversold conditions, AUD may not be able to maintain the current pace of decline. On the upside, the ‘stop-loss’ level is adjusted to 0.7195 from 0.7260. On a shorter-term note, 0.7160 is already a strong resistance.

NZD/USD: Neutral (since 20 Aug 18, 0.6625): Scope for further NZD weakness to 0.6475.

We have held a negative view on NZD since last Wednesday (05 Sep, spot at 0.6550) and expect NZD to weaken to 0.6475. After coming close to taking out the ‘key resistance’ at 0.6620 (high of 0.6616 on Thursday), NZD plunged last Friday and registered a fresh year’s low of 0.6528 (albeit marginally below the previous low of 0.6530). While the immediate pressure is still on the downside, we are not convinced that the current weakness can move below 0.6475 in a sustained manner. That said, only a break back above 0.6590 would indicate that a short-term low is in place (‘key resistance’ previously at 0.6620).

USD/JPY:  Neutral (since 23 Jul 18, 111.20): Still neutral, USD could continue to trade in a choppy manner.

USD dipped to a low of 110.37 last Friday before rebounding sharply to end the day on a firm note. The volatile price action continues to cloud the immediate outlook and we are maintaining our neutral USD stance for now. Further choppy price actions would not be surprising and only a break out of last month’s 109.76/112.14 range would suggest that USD is ready for a directional move.

Source:efxdata.com

Our recent expectation for EUR to extend its rebound was proven wrong as it plummeted last Friday and hit a low of 1.1548. While the low was just above the 1.1530 ‘key support’, the weak daily closing in NY is enough to indicate that the recent mild upward pressure has eased.

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Market Events Ahead

FOREX_Pig-charts_FXPIG

Market events to watch this week:

Monday, September 10
4:30am GBP GDP m/m
4:30am GBP Manufacturing Production m/m
Tuesday, September 11
4:30am GBP Average Earnings Index 3m/y
Wednesday, September 12
8:30am USD PPI m/m
10:30am USD Crude Oil Inventories
9:30pm AUD Employment Change
Thursday, September 13
7:00am GBP MPC Official Bank Rate Votes
7:00am GBP Monetary Policy Summary
7:00am GBP Official Bank Rate
7:45am EUR Main Refinancing Rate
8:30am EUR ECB Press Conference
8:30am USD CPI m/m
8:30amUSD Core CPI m/m
Friday, September 14
6:00am GBP BOE Gov Carney Speaks
8:30am USD Core Retail Sales m/m
8:30am USD Retail Sales m/m

Source:marketpulse.com

Market events to watch this week

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FOREX WEEK AHEAD

FOREX_Week-ahead-0809_FXPIG

The US dollar rose on Friday against all major pairs after a strong U.S. non farm payrolls (NFP) report was published. The US added 201,000 jobs, but more importantly hourly wages beat expectations in August coming in at 0.4 percent. The market has priced in a rate hike by the U.S. Federal Reserve when Federal Open Market Committee (FOMC) members meet on September 25–26. Next up in the economic calendar are the releases of US inflation and retail sales data.

Fundamentals back the rise of the US dollar, but its the jitters triggered by the escalation of a trade war between the US and China that has made the greenback a safe haven. Emerging and developed markets continue to suffer effects of risk aversion as uncertainty about the new round of US tariffs.

  • Bank of England (BoE) to hold rates on Thursday
  • European Central Bank (ECB) to keep tapering pace steady
  • US inflation and retail sales could boost USD

ECB to Keep Tapering Steady This Week

The EUR/USD lost 0.35 percent in the last five days. The single currency is trading at 1.1561 after the August NFP report delivered on all fronts. The pace in job gains continues even as the slack has been reduced. Wages in the US are showing signs of life, but haven’t created inflationary pressures. The Fed is expected to deliver its third interest rate hike this month. The CME FedWatch tool shows a 99.8 percent probability of a 25 basis points upward change to the Fed funds rate.


The probability of rate lift in December rose from 70.9 percent a day ago to 77.6 percent after the release of the US jobs report.

The European Central Bank (ECB) will publish its rate statement on Thursday, September 13. Little surprises are expected from the central bank as its set to wrap up its QE program by the end of 2018.

The press conference hosted by ECB President Mario Draghi will be the highlight as he is sure to make comments on the headwinds the European economy is facing. Trade and political tensions will get a mention. Investors will be listening in to find some clues about the possible first rate hike by the ECB, but Draghi has said that it could come after the summer of 2019.

Canadian Dollar Falls Dragged Down by Disappointing Jobs Report

The USD/CAD gained 1.01 percent in the first week of September. The currency pair is trading at 1.3173 after a tale of two reports put downward pressure on the loonie. The Canadian and US jobs reports were published on Friday at the same time. While the US economy added 201,000 and saw wage growth. The Canadian economy lost 51,600 jobs in August and the unemployment rate rose to 6 percent.


The Canadian dollar was on the back foot most of the week given the uncertain future of the US-Canada trade negotiations. The silver lining came on Thursday after Bank of Canada (BoC) Deputy Governor Carolyn Wilkins said that a breakdown in the US-Canada trade talks would not keep the central bank from raising interest rates.

The Bank of Canada held rates unchanged in September and with the disappointing August jobs report probabilities of an October rate hike are now below 60 percent.

Next week in the Canadian economic calendar looks thin, with the new house price index on Thursday being the highlight. US data will continue to dominate as inflation indicators will be published. The producer price index PPI on Wednesday, September 12 and the consumer price index (CPI) on Thursday.

Canadian officials said that a deal with the US to replace NAFTA would not be reached on Friday. The market remains optimistic about a deal being struck, but given the two sides remain apart on key issues it could take more time for negotiations to reach a productive outcome.

Crude Falls on Trade Tension and Demand Jitters

Oil prices closed the week 2.9 percent lower. West Texas Intermediate was trading at $68.11 on Friday. The escalation of trade war rhetoric and its potential reality are impacting global energy demand forecasts. The weekly US crude inventory release showed slowing demand in gasoline and distillates with the end of the driving season in sight.


The upcoming US sanctions on Iranian exports have kept crude prices stable, but after weather disruptions did not materialize this week the black stuff remains under pressure as the US dollar rises.

Gold Lower After Strong Jobs Report Boosts Dollar

Gold had a volatile week and ended up lower on a weekly basis. The. Yellow metal closed slightly above the $1,200 price level. A solid jobs report, with a gain of 201,000 jobs and strong wage growth validates the September rate hike that is already priced in, and puts a December rate hike firmly on the table.


Trade tensions continue to worry investors as the Trump administration is considering a third round of tariffs on Chinese imports. The duties could add up to $267 billion, and this is on top of the $200 billion that are being finalized in Washington.

White House Advisor Larry Kudlow said on Friday that the US is waiting to China to agree to specific issue before the process can move forward.

Economic indicators in the US back up two rate hikes this year putting pressure on gold prices awaiting inflation data during the week.

Peso Drops as NAFTA 2.0 Deal Remains Out of Sight

The USD/MXN rose during the week. The currency pair is trading at 19.3213 after the peso dropped following the publication of the NFP jobs report. Dollar fundamentals were strong this week with lagging and leading indicators pointing to a solid economy and validating two more rate hikes by the U.S. Federal Reserve.


Canadian officials said on Friday that a deal with the US would not be reached at the end of week. Both sides remain optimistic but negotiations will continue as they are apart on key issues.

The threat of more US tariffs on China put pressure on emerging markets and the peso is beginning to shed some of the protection gained by reaching a deal with the US.

Source : marketpulse.com

The US dollar rose on Friday against all major pairs after a strong U.S. non farm payrolls (NFP) report was published. The US added 201,000 jobs, but more importantly hourly wages beat expectations in August coming in at 0.4 percent. The market has priced in a rate hike by the U.S. Federal Reserve when Federal Open Market Committee (FOMC) members meet on September 25–26. Next up in the economic calendar are the releases of US inflation and retail sales data.

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USD/JPY Technical Analysis

FOREX_USDJPY-Tech_FXPIG

The pair built on its steady recovery move from over two-week lows and has now climbed to fresh session tops, further beyond the 111.00 handle on the back of upbeat US monthly jobs report.

The up-move is likely to confront stiff resistance at a confluence region, comprising of 100/200-hour SMAs and 61.8% Fibonacci retracement level of the decline over the past 24-hours.

Beyond the mentioned cluster lies a previous ascending trend-line support break-point, now turned resistance, which if cleared should act as a key trigger for bullish traders.

SOURCE: www.fxstreet.com/

The pair built on its steady recovery move from over two-week lows and has now climbed to fresh session tops, further beyond the 111.00 handle on the back of upbeat US monthly jobs report.

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FOREX Trading Quote

FOREX_Trading-wisdom_quote-Eckhardt_FXPIG

...Good systems tend to violate abnormal human tendencies...

-WILLIAM ECKHARDT

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Dollar in check

FOREX_Dollar-in-check-august-jobs-report_FXPIG

The dollar edged lower against a basket of currencies on Thursday, as investors positioned themselves ahead of Friday’s highly anticipated jobs report for August. The dollar index .DXY, which measures the greenback against a basket of six currencies, was down 0.13 percent at 95.061. The index hit a two-week high on Tuesday. On Thursday, the ADP National Employment Report showed private payrolls increased by 163,000 jobs last month. Economists polled by Reuters had forecast private payrolls increasing by 190,000 jobs last month.

While the ADP report has a spotty record predicting the private payrolls component of the employment report, it was “perhaps a hint that employment growth has started to fade again after a very strong first half of the year,” said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.

While the Federal Reserve is on track to raise interest rates this month for the third time this year, Friday’s data will help shape the interest rate outlook, said Manimbo.

The dollar also came under pressure as investors sought the yen and the Swiss franc amid continuing uncertainties on the trade front, analysts said.

Trump could impose levies on $200 billion more of Chinese imports on Thursday when a public comment period on the new tariffs ends. That would represent a significant ramping up of the trade war between the world’s two largest economies.

The greenback was 0.54 percent lower against the Japanese yen and fell 0.56 percent against the Swiss franc.

The Swiss and Japanese currencies are often sought in times of global tension partly because the countries have big current account surpluses.

The British pound, which rose on optimism about the chances of a Brexit deal following a Bloomberg report on Wednesday, added to gains despite Germany appearing to shoot down the report.

Sterling was up 0.21 percent against the dollar.

To be sure, the greenback is likely to be well supported in coming days as investors grapple with trade-related uncertainties, analysts said.

The Canadian dollar rose against its U.S. counterpart after a senior Bank of Canada official indicated the central bank may be forced to raise interest rates if talks to renegotiate the NAFTA trade pact fail, saying protectionist measures could spur inflation.

Source:reuters.com

The dollar edged lower against a basket of currencies on Thursday, as investors positioned themselves ahead of Friday’s highly anticipated jobs report for August.

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FOREX Tech Targets

FOREX_Technical-analysis-for-07-09-2018_FXPIG

EUR/USD: Neutral (since 21 Aug 18, 1.1485): Still neutral but scope for rebound to extend higher. EUR closed little changed in NY and there is not much add to yesterday’s update (see below).

We have held the same view since Monday (03 Sep, spot at 1.1595) wherein “EUR could drift lower but any weakness is viewed as part of a 1.1520/1.1675 consolidation range and not the start of a sustained decline”. EUR subsequently touched a low of 1.1527 on Tuesday (04 Sep) and has since rebounded quite strongly. While we continue to hold a neutral stance, the improved underlying tone suggests that there is scope for the rebound in EUR to extend higher within the next several days. However, it is premature to expect the start of a bullish phase even though a move higher towards last month’s 1.1733 top would not be surprising. At this stage, we do not anticipate a clear break above this level. On the downside, only break of 1.1530 would indicate the current mild upward pressure has eased.

GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): Still neutral; GBP expected to trade within a broad range.

GBP registered an ‘inside day’ yesterday, which is not surprising after Wednesday’s (05 Sep) outsized range. As indicated, despite the sharp bounce in GBP, we are not convinced that GBP has moved into a bullish phase. The immediate outlook is clouded and we prefer to hold a neutral stance and expect GBP to trade sideways, likely within a broad 1.2800/1.3050 range.

AUD/USD: Bearish (since 03 Sep 18, 0.7185): Still bearish but AUD has to break major support soon. There is not much to add as AUD ended largely unchanged in NY and registered an ‘inside day’ (see update from yesterday below).

We have been bearish AUD since Monday (03 Sep, spot at 0.7185) but indicated that we are mindful of the long-term 0.7145/60 support zone. AUD tested this support zone with a low of 0.7158 on Tuesday (04 Sep) and 0.7145 yesterday (05 Sep). The ‘failure’ to crack through this major support has resulted in a loss in downward momentum, especially from a short-term perspective. That said, until the ‘stop-loss’ level at 0.7260 is taken out, we are not ruling out further attempts to break the major support. However, this has to happen within these few days as a prolonged consolidation would lead to further loss in momentum and increase the risk of an interim bottom.

NZD/USD: Neutral (since 20 Aug 18, 0.6625): Scope for further NZD weakness to 0.6475.

NZD touched a high of 0.6616 yesterday, just a few pips below our 0.6620 ‘key resistance’. As highlighted in recent updates, as long as this level is intact, we would continue to hold a ‘negative’ NZD view and see scope for NZD weaken towards the 0.6475 support. At this stage, the odds for a clear break of this level are not high.

USD/JPY: Neutral (since 23 Jul 18, 111.20): Still neutral, USD could continue to trade in a choppy manner.

We indicated on Wednesday (05 Sep, spot at 111.45) that “USD could advance further but August’s 112.14 peak is likely out of reach”. USD subsequently touched a high of 111.75 before plunging suddenly during overnight trade and hit a low of 110.51. The choppy price actions over the past several days have resulted in an unclear outlook and we prefer to continue to hold a neutral stance for now. Looking ahead, USD could continue to trade in a whippy manner and only a break out of last month’s 109.76/112.14 range would suggest that USD is ready for a directional move.

Source:efxdata.com

We have held the same view since Monday (03 Sep, spot at 1.1595) wherein “EUR could drift lower but any weakness is viewed as part of a 1.1520/1.1675 consolidation range and not the start of a sustained decline”.

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PAMMS DAILY UPDATE

FOREX_PAMDAILY_FXPIG

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EUR/USD Initiates Bullish

FOREX_EUR-USD_FXPIG

EUR/USD climbs to a fresh weekly-high (1.1659) even as data prints coming out of the euro-area instill a weakened outlook for the monetary union, and recent price action warns of a larger advance as the exchange rate initiates a fresh series of higher highs & lows.

EUR/USD appears to be unfazed by the 0.9% decline in German Factory Orders, and the resilience in the single currency may persist ahead of the next European Central Bank (ECB) meeting on September 13 as the Governing Council appears to be on course to wind down the quantitative easing (QE) program ahead of the December deadline.

Even though the ECB remains in no rush to remove the zero-interest rate policy (ZIRP), President Mario Draghi and Co. may show a greater willingness to conclude its easing-cycle as the central bank pledges that ‘after September 2018, subject to incoming data confirming our medium-term inflation outlook, we will reduce the monthly pace of the net asset purchases to €15 billion until the end of December 2018 and then end net purchases.’ In turn, the ECB may adopt a less-dovish tone as ‘underlying inflation is expected to pick up towards the end of the year,’ and the Governing Council may unveil a more detailed exit strategy as the ‘uncertainty around the inflation outlook is receding.’

With that said, a material change in the ECB’s forward-guidance may generate a further shift in EUR/USD behavior, with the exchange rate at risk of extending the recovery from the 2018-low (1.1301) as it carves a fresh series of higher highs & lows. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

  • The rebound from the 2018-low (1.1301) may continue to unfold as bothprice and Relative Strength Index (RSI) threaten the bearish trends from earlier this year, with a move above the 1.1640 (23.6% expansion) to 1.1680 (50% retracement) region raising the risk for a run at the 1.1810 (61.8% retracement) hurdle, which largely lines up with the July-high (1.1791).
  • Need a closing price above the stated region to open up the topside targets, with the next region of interest coming in around 1.1960 (38.2% retracement) to 1.1970 (23.6% expansion).

    Source: www.dailyfx.com

EUR/USD climbs to a fresh weekly-high (1.1659) even as data prints coming out of the euro-area instill a weakened outlook for the monetary union, and recent price action warns of a larger advance as the exchange rate initiates a fresh series of higher highs & lows.

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FOREX Trading Quote

FOREX_Quote-trading-wisdom_FXPIG

.... Avoid the temptation of wanting to be completely right...

-PHILIP FISHER

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Sterling to float up

FOREX_Brexit_FXPIG

Sterling will make solid gains on the dollar in the coming year, a Reuters poll found, but that climb is based on the assumption that Britain leaves the European Union next year with a deal.

Median forecasts in the Aug.31-Sept 5 poll of 50 foreign exchange specialists put cable at $1.28 in a month, $1.32 in six and $1.37 in year - which would mark around a 6 percent rise from where it was trading on Wednesday.

But that still won’t be where it was before the June 2016 referendum and those forecasts were weaker than ones given just a month ago, highlighting market doubts as a deadline approaches for when the two sides want to have thrashed out a deal.

But the pound will instead fall 8 percent in the immediate aftermath if Britain leaves the EU without a deal in March 2019, the median forecast from an extra question suggested. The most pessimistic response was for a 15 percent slide.

A separate Reuters poll earlier this week gave only a one-in-four chance of a no-deal Brexit - despite there being less than two months before the UK and EU are hoping to agree on the terms of Britain’s departure with the two sides still looking a long way apart.

Soon after Brexit happens, the Bank of England is expected to raise its Bank Rate by 25 basis points to 1.0 percent, offering some support to the pound, but then hold off on any further moves until 2020.

The United States Federal Reserve has been steadily raising borrowing costs since late 2015, which alongside investors seeking safety in U.S. assets on concerns over the impact of trade tariffs, has lent support to the dollar.

So with those factors already priced in, any further dollar rise is expected to be limited.

Against the common currency, the pound will move little, which has been the case for a long while. In a month, one euro will get you 90.0 pence, in six months 89.0 pence and in a year 88.0 pence, not far from the 89.6p it was at on Wednesday.

The European Central Bank, which plans to end its 2.6 trillion-euro stimulus programme this year, is expected to raise its interest rates in the quarter after the BoE does.

Source:reuters.com

Sterling will make solid gains on the dollar in the coming year, a Reuters poll found, but that climb is based on the assumption that Britain leaves the European Union next year with a deal.

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FOREX Tech Targets

FOREX_tech-targets_daily-technical-analysis_FXPIG

EUR/USD: Neutral (since 21 Aug 18, 1.1485): Still neutral but scope for rebound to extend higher.

We have held the same view since Monday (03 Sep, spot at 1.1595) wherein “EUR could drift lower but any weakness is viewed as part of a 1.1520/1.1675 consolidation range and not the start of a sustained decline”. EUR subsequently touched a low of 1.1527 on Tuesday (04 Sep) and has since rebounded quite strongly. While we continue to hold a neutral stance, the improved underlying tone suggests that there is scope for the rebound in EUR to extend higher within the next several days. However, it is premature to expect the start of a bullish phase even though a move higher towards last month’s 1.1733 top would not be surprising. At this stage, we do not anticipate a clear break above this level. On the downside, only break of 1.1530 would indicate the current mild upward pressure has eased.

GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): Still neutral; GBP expected to trade within a broad range.

We indicated yesterday that there is “room for GBP to test the 1.2740 support”. GBP subsequently dipped to a low of 1.2787 before rocketing higher and took out the ‘key resistance’ at 1.2975 (overnight high of 1.2983). The recent mild downward pressure has clearly eased but despite the sharp bounce, we are not convinced that GBP has moved into a bullish phase. We prefer to continue to hold a neutral stance and expect GBP to trade sideways, likely within a broad 1.2800/1.3050 range.

AUD/USD:  Bearish (since 03 Sep 18, 0.7185): Still bearish but AUD has to break major support soon.

We have been bearish AUD since Monday (03 Sep, spot at 0.7185) but indicated that we are mindful of the long-term 0.7145/60 support zone. AUD tested this support zone with a low of 0.7158 on Tuesday (04 Sep) and 0.7145 yesterday (05 Sep). The ‘failure’ to crack through this major support has resulted in a loss in downward momentum, especially from a short-term perspective. That said, until the ‘stop-loss’ level at 0.7260 is taken out, we are not ruling out further attempts to break the major support. However, this has to happen within these few days as a prolonged consolidation would lead to further loss in momentum and increase the risk of an interim bottom

NZD/USD: Neutral (since 20 Aug 18, 0.6625): Scope for further NZD weakness to 0.6475. No change in view. A break of 0.6620 would indicate that yesterday’s 0.6530 is a short-term low.

We have held the same view since Monday (03 Sep, spot at 0.6610) wherein we expect NZD to “grind lower towards the year-to-date low of 0.6545”. While expectation for a lower NZD was correct, the rapid and sharp decline of -0.72% yesterday came as a surprise. Despite the large drop, we have doubts about the sustainability of any further down-move in NZD. All in, we hold a ‘negative’ view now and see scope for further NZD weakness to 0.6475. At this stage, we apportion low odds for a clear break below this level. On the upside, only a break of the ‘key resistance’ at 0.6620 would indicate that a short-term low is in place

USD/JPY: Neutral (since 23 Jul 18, 111.20): USD could advance further but August’s 112.14 peak is likely out of reach. No change in view.

While USD closed on a relatively strong note yesterday (NY close of 111.44, +0.33%), we are not convinced that the current price action is the start of a bullish phase. However, further advance in USD is not ruled out but last month’s 112.14 peak is a solid resistance and is likely out of reach (at least for the next one week or so). On the downside, 110.75 is acting as a solid support now.

Source:efxdata.com

We have held the same view since Monday (03 Sep, spot at 1.1595) wherein “EUR could drift lower but any weakness is viewed as part of a 1.1520/1.1675 consolidation range and not the start of a sustained decline”.

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Sterling edges lower

FOREX_STERLING-LOWER_FXPIG

An overnight bounce in the pound after a report that the European Union could offer new guarantees to Britain to win London’s support for a solution aimed at avoiding a hard Irish border after Brexit faded on Wednesday as investors focused on the spreading selloff in emerging markets.

On Wednesday, the British currency GBP = D3 edged 0.2 percent lower at $1.2829, falling for the fifth consecutive day and taking its cumulative losses to more than 1 percent so far this month.

The pound has weakened after hitting a near one-month high at $1.3043 at the end of August on weak economic data, doubts over Prime Minister Theresa May’s leadership and opposition from the European Union to Britain’s proposals for exiting the bloc.

Data this week has also weighed on sterling with a survey showing weaker than expected growth in Britain’s construction sector in August also hurting demand. Services PMI is due on Wednesday.

SOURCE:www.reuters.com

An overnight bounce in the pound after a report that the European Union could offer new guarantees to Britain to win London’s support for a solution aimed at avoiding a hard Irish border after Brexit faded on Wednesday as investors focused on the spreading selloff in emerging markets.

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FOREX Trading Quote

FOREX_Trading-quote_PIG-INSIDER_WISDOM_FXPIG

...All trading results are insignificant unless it is your last...

-PIG INSIDER

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GBP plunges vs EUR

FOREX_Trading-news_BREXIT_FXPIG

The British pound was set on Monday for its biggest daily drop against the euro in more than three months as concerns grew about the progress of Brexit negotiations.

Sentiment was also further sapped by manufacturing data that underscored the weak state of the British economy.

Traders bought sterling last week after the European Union’s chief Brexit negotiator, Michel Barnier appeared to strike a conciliatory note. That raised hopes a Brexit breakthrough was imminent as Britain and the EU try to agree what a post-Brexit trade deal would look like.

But developments on the British political front dashed those expectations after Prime Minister Theresa May’s former foreign secretary Boris Johnson said her Brexit strategy meant disaster for Britain.

The prospect that May’s government could fail to reach an agreement that would gain parliamentary approval at home, and that Britain could potentially crash out of the EU in March with no deal in place, has worried financial markets.

Against the dollar GBP=D3, the British currency sank 0.8 percent to $1.2855 while there were bigger losses against the euro EURGBP=D3 with sterling on track to post its biggest daily drop in more than three months.

The pound recovered partially in late London afternoon trading, with U.S. markets closed for a holiday.

The EU’s Barnier told a German newspaper on Sunday that he strongly opposed Britain’s latest proposal.

The British currency was the weakest among the major currencies with U.S. markets shut for a holiday, and it is set to fall for a third consecutive day.

Derivative markets were flashing amber with implied gauges of market volatility jumping to a six-month high GBP1MO= as investors grow wary about the prospects of a deal.

Latest data indicates investors have ramped up their short positions on the British currency, with overall net short bets reaching their highest level since early May 2017.

Economic data provided no relief. British manufacturers had their weakest month in over two years and export orders suffered a rare decline in August, a survey showed.

Source:reuters.com

The British pound was set on Monday for its biggest daily drop against the euro in more than three months as concerns grew about the progress of Brexit negotiations.

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FOREX Tech Targets

FOREX_Technical-anlaysis-04-09-2018_FXPIG

EUR/USD: Neutral (since 21 Aug 18, 1.1485): EUR could drift lower but any weakness is viewed as part of a consolidation range.

EUR rebounded slightly after touching a low of 1.1582 yesterday. We continue to view last week’s 1.1733 peak as a short-term top and expect this level to remain intact for the next one week or so. The sharp decline from last Friday has room to extend lower but at this stage, we view any weakness as part of a 1.1520/1.1675 consolidation range and not the start of a sustained down-move.

GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): GBP to trade sideways to slightly lower.

We indicated yesterday that last week’s high of 1.3043 is likely a short-term top and expected GBP to trade sideways to ‘slightly lower’. That said, the relatively large drop of -0.68% by end of NY (close of 1.2872) was not exactly expected. For now, we continue to hold the same view but it appears that GBP could trade at a lower range than the 1.2800/1.3010 currently expected.

AUD/USD: Bearish (since 03 Sep 18, 0.7185): Bearish but mindful of the long-term 0.7145/60 support zone. We turned bearish on AUD yesterday and there is no change to the view (see update from yesterday below).

While we indicated last Friday (31 Aug, spot at 0.7265) the “the year-to-date low of 0.7203 appears to vulnerable”, the manner of which AUD sliced through this strong support was not exactly expected as it plummeted to a low of 0.7177. The break of key support coupled with the rapidly improving downward momentum suggests that the 2-weak neutral phase has ended. While we hold a bearish AUD view now, we are mindful of the long-term support zone of 0.7145/60, being the low in 2017 as well as the 10-year rising trend-line support (visible on the monthly chart). Such strong levels may not yield so easily, at least not on the first attempt. In order to maintain the current momentum, AUD has to stay below 0.7260 as a break of this ‘stop-loss’ would indicate that AUD has made a short-term bottom. Looking further out, a break of 0.7145 would shift the focus to 0.7100.

NZD/USD:  Neutral (since 20 Aug 18, 0.6625): NZD is expected to grind lower to 0.6545. No change in view.

The rapid pace and extent of pull-back from last week’s 0.6728 peak was not exactly expected. However, it is too early to anticipate a sustained decline even though the weakened underlying tone suggests NZD could grind lower towards the year-to-date low of 0.6545. The odds for a break of this level are not high at this stage but would continue to improve unless NZD can move back above the 0.6675 ‘key resistance’

USD/JPY:  Neutral (since 23 Jul 18, 111.20): USD has moved back into a consolidation phase. No change in view.

There is not much to add to last Friday’s (31 Aug, spot at 111.05) update. We continue to view the current movement as part of a neutral consolidation phase and expect USD to trade sideways for now, likely between 110.35 and 111.80.

Source:efxdata.com

EUR rebounded slightly after touching a low of 1.1582 yesterday. We continue to view last week’s 1.1733 peak as a short-term top and expect this level to remain intact for the next one week or so.

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US Dollar above

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The greenback, gauges by the US Dollar Index, remains on the defensive at the beginning of the week although it manages well to keep business above 95.00 the figure for the time being.

US Dollar looks to trade, data

The index is reverting two consecutive positive sessions amidst thin trade conditions and marginal volatility, all in response to the inactivity in the US markets due to the Labor Day holiday.

Despite the knee jerk, the buck is managing to keep the trade above the 95.00 milestone, as jitters on the US-China trade front and EM FX instability are somewhat limiting occasional dips.

Moving forward, a slew of Fed-speakers later in the week should leave the Dollar in centre stage in light of the upcoming FOMC meeting and the likelihood of another rate hike. In addition, US Non-farm Payrolls are also expected at the end of the week, also keeping the buck under the miscroscope.

US Dollar Index relevant levels

As of writing the index is losing 0.03% at 95.08 and a breakout of 95.22 (high Aug.31) would open the door to 95.53 (21-day SMA) and finally 95.71 (high Aug.23). On the other hand, the next support emerges at 94.45 (low Aug.28) seconded by 94.20 (38.2% Fibo of the 2017-2018 drop) and then 94.08 (low Jul.26).

Source: https://www.fxstreet.com

The greenback, gauges by the US Dollar Index, remains on the defensive at the beginning of the week although it manages well to keep business above 95.00 the figure for the time being.

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FOREX Tech Targets

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EUR/USD: Neutral (since 21 Aug 18, 1.1485): EUR could drift lower but any weakness is viewed as part of a consolidation range.

The recent upward pressure has eased as EUR staged a surprisingly sharp decline last Friday and took out the 1.1590 ‘key support’. We indicated on Friday (31 Aug, spot at 1.1670) that a break of 1.1590 would suggest that a short-term top is in place. In other words, we do not expect EUR to move above last week’s 1.1733 peak for the next one week or so. The weakened undertone suggests EUR could drift lower from here but at this stage, we view any weakness as part of 1.1520/1.1675 consolidation range and not the start of a sustained decline.

GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): GBP to trade sideways to slightly lower.

The sharp and rapid drop in GBP last Friday (and earlier this morning during Sydney hours) came as a surprise. Our previous expectation for a stronger rebound to 1.3150 was wrong. From here, last week’s 1.3043 peak is viewed as a short-term top and we expect GBP to trade sideways to slightly lower for the next 1 to 2 weeks, likely within a 1.2800/1.3010 range.

AUD/USD: Shift from neutral to bearish: Bearish but mindful of the long-term 0.7145/60 support zone.

While we indicated last Friday (31 Aug, spot at 0.7265) the “the year-to-date low of 0.7203 appears to vulnerable”, the manner of which AUD sliced through this strong support was not exactly expected as it plummeted to a low of 0.7177. The break of key support coupled with the rapidly improving downward momentum suggests that the 2-weak neutral phase has ended. While we hold a bearish AUD view now, we are mindful of the long-term support zone of 0.7145/60, being the low in 2017 as well as the 10-year rising trend-line support (visible on the monthly chart). Such strong levels may not yield so easily, at least not on the first attempt. In order to maintain the current momentum, AUD has to stay below 0.7260 as a break of this ‘stop-loss’ would indicate that AUD has made a short-term bottom. Looking further out, a break of 0.7145 would shift the focus to 0.7100.

NZD/USD: Neutral (since 20 Aug 18, 0.6625): NZD is expected to grind lower to 0.6545.

The rapid pace and extent of pull-back from last week’s 0.6728 peak was not exactly expected. However, it is too early to anticipate a sustained decline even though the weakened underlying tone suggests NZD could grind lower towards the year-to-date low of 0.6545. The odds for a break of this level are not high at this stage but would continue to improve unless NZD can move back above the 0.6675 ‘key resistance’.

USD/JPY: Neutral (since 23 Jul 18, 111.20): USD has moved back into a consolidation phase

There is not much to add to last Friday’s (31 Aug, spot at 111.05) update. We continue to view the current movement as part of a neutral consolidation phase and expect USD to trade sideways for now, likely between 110.35 and 111.80.

Source:efxdata.com

The recent upward pressure has eased as EUR staged a surprisingly sharp decline last Friday and took out the 1.1590 ‘key support’. We indicated on Friday (31 Aug, spot at 1.1670) that a break of 1.1590 would suggest that a short-term top is in place. In other words, we do not...

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...If you can’t do a thing better than others are doing it, don’t do it at all...

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Sterling falls

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Sterling fell on Monday as the latest Brexit headlines sapped investor sentiment, after the British currency gained to its highest in nearly a month last week.

Prime Minister Theresa May’s Brexit strategy means disaster for Britain, former foreign secretary Boris Johnson said, as critics at home and officials in Brussels stepped up their opposition to her plans for how to leave the European Union.

The pound has become more sensitive to the progress of Brexit negotiations, and the latest weakness largely reverses last week’s gains, which came after the EU’s chief Brexit negotiator, Michel Barnier, struck a conciliatory note in his comments.

The British currency was the weakest among the major currencies in early London trading on Monday and is set to fall for a third consecutive day in a market wary of risk.

Latest positioning data indicated investors ramped up their short positions on the British currency. Overall net short bets reached their highest level since early May 2017.

Sterling fell 0.4 percent against the dollar at $1.2892 and a similar margin against the euro at 89.98 pence.

EU’s Barnier told a German newspaper on Sunday that he strongly opposed Britain’s latest proposal.

Source:reuters.com

Sterling fell on Monday as the latest Brexit headlines sapped investor sentiment, after the British currency gained to its highest in nearly a month last week.

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Market Events Ahead

FOREX_Market-events-list_FXPIG

Sunday, September 2
9:30pm AUD Retail Sales m/m
Monday, September 3
4:30am GBP Manufacturing PMI
Tuesday, September 4
12:30am AUD Cash Rate
12:30am AUD RBA Rate Statement
10:00am USD ISM Manufacturing PMI
9:30pm AUD GDP q/q
Wednesday, September 5
4:30am GBP Services PMI
8:30am CAD Trade Balance
10:00am CAD BOC Rate Statement
9:30pm AUD Trade Balance
Thursday, September 6
8:15am USD ADP Non-Farm Employment Change
10:00am USD ISM Non-Manufacturing PMI
11:00am USD Crude Oil Inventories
Friday, September 7
8:30am CAD Employment Change
8:30am CAD Unemployment Rate
8:30am USD Average Hourly Earnings m/m
8:30am USD Non-Farm Employment Change
8:30am USD Unemployment Rate

Source:marketpulse.com

Market events to watch this week

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PAMMs Weekly Update

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FOREX Week Ahead

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The US dollar is mixed in the last week of August. Risk aversion has risen after the US-Canada deal is close, but not agreed and new US tariffs on Chinese goods could start next week lifting the greenback abasing emerging markets and the EUR and CAD with only the GBP still flying after potentially beneficial Brexit news and the safe havens CHF and JPY. Trade concerns guided the market with the US-Mexico and EU Barnier optimistic comments on Brexit giving way to a softer dollar earlier in the week but that was reversed as the weekend is near.

Next week the economic calendar is full to the brim. The Labour day holiday in the US and Canada will make it an even shorter week to get more done.

Central banks will be well represented with the Reserve Bank of Australia (RBA) to publish its rate statement on Tuesday September 4, expected at no change and a press conference with Governor Lowe. The Bank of England (BoE) Governor Mark Carney will testify before the Treasury Select Committee on Tuesday and the Bank of Canada (BoC) will publish its rate statement on Wednesday, September 5. The probabilities of a September rate hike by the BoC have decreased as monthly GDP missed the forecast and trade uncertainty could make Governor Poloz push a highly anticipated rate lift to October.

US jobs data releases will be crammed on Thursday and Friday with expectations the economy will keep the current solid pace and add 190,000 jobs with a 0.3 percent wage growth gain. The U.S. non farm payrolls (NFP) will be published on Friday, September 7

CANADIAN DOLLAR

The Canadian dollar fell 0.57 percent on Friday versus the USD. The NAFTA 2.0 negotiations between Canada and the US continue but comments from both sides makes it seem that a deal is not close.

The remarks have been positive and both leaders and head negotiators have praised the potential benefits of reaching a deal but some issues are still unresolved. Both parties agreed not to discuss the details of the talks to the press while in the midst of negotiations so for the time being there has been little information on how far apart they really are.

The issues are not new as they also came up during the trilateral talks earlier in the year. Dairy is a big sticking point as the US is pressing Canada to open up the market to more competition.

Dairy employs a large number of people and making some concessions could have a political cost to the Liberal party.

Canadian Premier Justin Trudeau has emphasized that Canada is not seeking a deal at any costs as it would be better to have no deal than a bad one.

Mexico awaits in the sidelines and has repeated time and time again the need for Canada to join and to make a trilateral agreement. The US preferred the bilateral agreement and moved into a high gear as the presidential transition after the Mexican elections allowed for an expedited deal.

EURO

The EUR/USD fell on Friday by 0.68 percent as the looming end of the comment period on China tariffs expires next week. US President Donald Trump has been said to support an additional $200 billion in tariffs after China retaliated to July round of extra duties. The trade tension between the US and the European Union put pressure on the EUR.

Economic data in Europe was divided on Friday with the higher than expected losses in German retail sales and slightly lower inflation estimates edging out lower unemployment rate and higher inflation in Italy.

After a couple of quiet weeks on the release front, the week ahead present a deluge of data around the globe. Trade talk will once again dominate headlines, but fundamentals will have a say with leading indicator PMIs in Europe and the US being released. US jobs will wrap the week with another solid NFP report expected but with all eyes scanning for the inflation component. Wages have dragged behind the number of jobs but are still expected to continue gaining at the same subdued pace.

STERLING

Sterling is lower on Friday, but still has some of the Brexit optimism keeping it above 1.30. The remarks by the EU’s chief negotiator Michel Barnier of a special deal for the UK appreciated the pound almost 1.2 percent. Today the currency has fallen by 0.35 percent as risk aversion grips the market. The US decision to pursue additional tariffs on Chinese goods has put growth concerns front and center and has taken the wind out of emerging markets. The Friday deadline on the US-Canada imposed by US president Donald Trump could come and go with no deal although

GOLD
The yellow metal advanced versus the USD on Friday but will still end the week in the red. Risk aversion triggered by a tougher US stance on trade has appreciated the USD. Investors are looking for safe havens and the USD, CHF and JPY have been preferred destinations.

The Labor Day weekend in the US and Canada will make the North American session specially short and given the amount of data to be released investors should keep their eyes on the calendar and any trade announcements.

OIL

Brent and West Texas Intermediate rose this week against the USD. Metals were under pressure as risk appetite dwindled, but lower inventories in the US and the impacts of the upcoming start on US sanctions against Iran took crude to a two week gain. Crude is not immune from trade worries and lost ground on Friday as global growth could be threatened if tensions do not ease between the largest economies.


Source:marketpulse.com

The US dollar is mixed in the last week of August. Risk aversion has risen after the US-Canada deal is close, but not agreed and new US tariffs on Chinese goods could start next week lifting the greenback abasing emerging markets and the EUR and CAD with only the GBP still flying after potentially beneficial Brexit news and the safe havens CHF and JPY.

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...I would say that risk management is the most important thing to be well understood...

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GBP: fifth monthly drop

FOREX_Brexit_FXPIG

Sterling held near a one-month high on Friday as hopes of a breakthrough on Brexit this week prompted some traders to cut back on aggressive short bets on the British currency.

In early London trading, sterling edged higher to $1.3013, close to Thursday’s $1.3043, the highest since Aug. 3.

The European Union was ready to offer Britain an unprecedentedly close relationship after it leaves, the EU negotiator, Michel Barnier, said on Wednesday. British Brexit minister Dominic Raab is due to meet Barnier in Brussels on Friday in an attempt to speed up their talks.

Despite this week’s gains, sterling is set to register its fifth consecutive monthly. Foreigners’ net holdings of British government debt fell by a record amount last month, a move partly driven by a large volume of maturing bonds but one that also revived concerns about the effect of Brexit on investor demand.

Against the euro, the British currency slipped to 89.71 pence, well below the 2018 high of 86.2 pence hit in April.

Despite Brexit talks hopes, investors were wary of buying the currency aggressively as underlying economic weaknesses remained.

Britain has one of the highest current account deficits as a percentage of GDP in the developed world, and data this week showed companies growing more worried about a no-deal Brexit.

Source:reuters.com

Sterling held near a one-month high on Friday as hopes of a breakthrough on Brexit this week prompted some traders to cut back on aggressive short bets on the British currency.

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Dollar edges up

FOREX_USD_edges-up_FXPIG

The dollar edged up against its peers on Friday, finding support as the latest episode of U.S.-China trade tensions dulled investor risk appetite, with weakness in emerging market currencies also helping lift the greenback.

The dollar index against a basket of six major currencies .DXY was a shade higher at 94.748. The index had nudged up about 0.15 percent overnight, ending a four-day losing streak.

The greenback, which tends to attract safe haven bids in times of market turmoil and political tensions, drew its latest swell of support as investors braced for the next round of the U.S.-China trade conflict.

Bloomberg News reported on Thursday that U.S. President Donald Trump is prepared to quickly ramp up a trade war with China and has told aides he is ready to impose tariffs on $200 billion more in Chinese imports as soon as a public comment period on the plan ends next week.

The euro was down 0.1 percent at $1.1662 EUR= after losing about 0.3 percent overnight when a rise in Italian government bond yields put additional pressure on the currency.

Italian bond yields spiked on Thursday amid concerns that tax cuts and welfare spending proposed by the country’s ruling coalition could worsen its debt situation. The Italian/German bond yield spread reached its widest since 2013 as a result.

The Turkish lira weakened for its fifth day, last down 1.5 percent at 6.7495 per dollar TRYTOM=D4 and creeping back towards the record low of 7.24 per dollar plumbed on Aug. 13.

Argentina’s peso lost nearly one-fifth of its value on Thursday and fell to a record low versus the dollar.

The peso ARS=RASL has slid as investors' faith in President Mauricio's ability to tackle the economic crisis his country faces has evaporated. A huge hike in interest rates from Argentina's central bank did little to arrest the peso's fall.

The South African rand dipped 0.35 percent to 14.76 per dollar ZAR=D4 after retreating more than 2 percent in overnight trade.

China's yuan was about 0.15 percent firmer in onshore trade at 6.8344 per dollar CNY=CFXS after shedding 0.35 percent the previous day.

The Japanese yen stood little changed at 111.000 JPY=. The yen, another perceived safe haven along with the dollar and Swiss franc, had advanced 0.6 percent on Thursday.

The Swiss currency rose for the sixth successive session to reach 0.9680 franc per dollar CHF=, its strongest since mid-April.

The pound stood little changed at $1.3009 GBP=D4. Sterling surged 1.2 percent this week, touching a four-week peak of $1.3043 on Thursday, boosted by reduced risk of a no-deal Brexit for Britain.

Source:reuters.com

The dollar edged up against its peers on Friday, finding support as the latest episode of U.S.-China trade tensions dulled investor risk appetite, with weakness in emerging market currencies also helping lift the greenback.

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FOREX Tech Targets

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EUR/USD: Neutral (since 21 Aug 18, 1.1485): EUR is ready to tackle the next resistance at 1.1745.

After touching a high of 1.1733 on Tuesday (28 Aug), EUR has not been able to make much headway on the upside. While upward pressure is starting to wane, there is still scope for EUR to make another run to test the major 1.1745 resistance. That said, this has to happen within these 1 to 2 days as a more prolonged consolidation at these levels would greatly increase the risk of a short-term top. Conversely, a break of the 1.1590 ‘key support’ would indicate that a EUR has made a short-term at 1.1733 on Tuesday.

GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): Room for GBP strength to 1.3150. No change in view.

We noted yesterday that further out, “it appears the current consolidation would be resolved by a break above 1.2960 but this is unlikely to happen so soon”. The break of 1.2960 happened way sooner than anticipated as GBP rocketed to a high of 1.3033 (after Barnier’s comments). Despite the strong surge, we are not ready to adopt a bullish stance just yet. That said, after the outsized rally, the pressure is clearly on the upside and we see room for further GBP strength to 1.3150. At this stage, the prospect for a clear break above this level is not high but it would continue to improve as long as GBP can hold above the ‘key support’ at 1.2930.

AUD/USD: Neutral (since 21 Aug 18, spot at 0.7335): Year-to-date low of 0.7203 appears to be vulnerable.

AUD dipped below the bottom of our expected 0.7250/0.7420 consolidation range yesterday (overnight low of 0.7249) before ending the day on a weak note (NY close of 0.7264, -0.62%). While the immediate pressure is on the downside and further AUD weakness is likely from here, it is unclear at this stage whether any decline is sustainable. That said, unless AUD can reclaim 0.7320 within the next couple of days, the year-to-date low of 0.7203 appears to be vulnerable. The next support at 0.7145/60 is a very major support zone, being the low in 2017 as well as the 10-year rising trend-line support. At this stage, a move to this major zone support would not exactly be surprising but we expect such strong levels to offer solid support.

NZD/USD: Neutral (since 20 Aug 18, 0.6625): NZD has moved back into a consolidation phase.

There is not much to add to yesterday’s (30 Aug, spot at 0.6685) update. As highlighted, the outlook remains neutral and NZD is expected to trade sideways from here, likely within a broad 0.6620/0.6730 range (there is another strong support at 0.6600). At this stage, the year-to-date low of 0.6545 appears to be ‘safe’, at least for the next week or so.

USD/JPY: Neutral (since 23 Jul 18, 111.20): USD has moved back into a consolidation phase.

One day after making a 4-week high of 111.82 on Wednesday (29 Aug), USD surrendered all its gains and more as it plummeted to end the day on a weak note (NY close of 110.93, -0.61%). The weak daily closing is enough to suggest that the recent upward pressure has eased (even though the overnight low of 110.93 was above the 110.90 ‘key support’). From here, the major 112.14 resistance is likely to remain unthreatened as USD has likely moved back into a consolidation phase. To put it another way, there is no change to the neutral outlook but USD is expected to trade sideways from here, likely between 110.35 and 111.80.

Source:efxdata.com

After touching a high of 1.1733 on Tuesday (28 Aug), EUR has not been able to make much headway on the upside. While upward pressure is starting to wane, there is still scope for EUR to make another run to test the major 1.1745 resistance.

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British pound pauses

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GBP/USD has recorded slight losses in the Thursday session, after sharp gains on Wednesday. In North American trade, the pair is trading at 1.2996, down 0.25% on the day. On the release front, British Net Lending to Individuals dropped to GBP 4.0 billion, missing the estimate of GBP 5.5 billion. This marked the lowest level since July 2016. Later in the day, the UK releases GfK Consumer Confidence, which is expected to come in at -10 points for a second straight month. In the U.S, Core PCE Price Index edged up to 0.2%, while Personal Spending remained pegged at 0.4%. Both indicators matched the forecasts. Unemployment claims rose to 213 thousand, just below the forecast of 214 thousand.

The British pound jumped on Wednesday, climbing 1.2% percent as it punched above the symbolic 1.30 line for the first time in three weeks.  Nervous investors, looking for some good news in the Brexit gloom, snapped up the pound after positive comments from Michel Barnier, chief Brexit negotiator for the EU. Barnier said that the bloc was prepared to offer Britain a special relationship, which could include foreign and security ties. At the same time, Barnier warned that “there is no single market a la carte”, referring to proposals by the U.K government to cherry pick, such as implementing new immigration rules while retaining access to the single market. With only seven months before the UK departs from the EU, there are a host of unresolved issues, including the Irish border. If there is no significant progress in the next few months, the pound could lose ground.

The U.S economy continues to sparkle. Preliminary GDP for Q2 was revised upwards to 4.2%, edging above the estimate of 4.0%. This reading was above the initial GDP release of 4.1% back in July. Growth in the second quarter was much stronger than in Q1, which posted a gain of 2.2%. Will the strong data continue in the third quarter? Consumer spending has been strong early in the quarter, but housing data has disappointed, with recent key indicators missing expectations. The strong GDP has not affected the likelihood of rate hikes in the second half of 2018. The Fed has already raised rates twice this year, and a September hike is practically a given, with the CME Group estimating the odds of a hike at 96%. The odds of a December hike currently stand at 70%.

Source: marketpulse.com

GBP/USD has recorded slight losses in the Thursday session, after sharp gains on Wednesday. In North American trade, the pair is trading at 1.2996, down 0.25% on the day.

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FOREX Trading Quote

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...A trader should look at a chart for what it is, and not for what he want it to be...

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