Mexico is also expected to see levies lifted, paving the way for a new North American trade agreement.
US lifts steel and aluminium tariffs on Canada
Mexico is also expected to see levies lifted, paving the way for a new North American trade agreement.
US lifts steel and aluminium tariffs on Canada
NZD/USD questions the strength of 0.6828 resistance-line early on Tuesday. Positive sentiment surrounding the US-China trade deal and probe into Trump “obstruction of justice” please the pair buyers. Break of 0.6828 can flash 0.6855 and 0.6870 with 0.6790 being nearby support to watch during pullback. NZD/USD is trading around 0.6825 as traders look to handover to the early Asian session on Tuesday. The pair is near to the descending trend-line resistance that joins highs marked on February 28 and March 01. The recent news report that the US Democrats have launched an “abuse of power” investigation against President Donald Trump strengthened initial upbeat sentiment backed by optimism surrounding a trade-deal between the US and China. While early Monday news report from Wall Street Journal pleased global trade watchers as it pointed to the US-China trade deal with more positive notes. The sentiment grew stronger during follow-on news that near-zero tariffs from the US and strong IPR protection assurance from China likely paving the way for a successful deal. Additionally, the US President Donald Trump’s jawboning of the Fed’s monetary policy and strength of the US Dollar also played their role in propelling the quote upwards. Positivity among Kiwi buyers got a boost before Tuesday’s NZ session on announcements from Reuters and Washington Post claiming 81 individuals and entities, including the president’s family, businesses and administration have got letters from the US Democrats demanding documents as the opposition launched an “abuse of power” investigation against the President. With the Democrats again trying to challenge Trump’s Presidency, probabilities of his resignation regained market attention and dragged the US Dollar further towards the south. As a result, commodities gained additional strength. However, there hasn’t been any comment from Donald Trump which is highly awaited for now. Given the recent improvements in signals favoring a trade deal between the world’s largest economies and challenges to the USD, traders will closely observe developments surrounding global trade and the US politics in order to determine near-term market moves. NZD/USD Technical Analysis Break of 0.6828 resistance-line can propel the quote towards 0.6855 and then to 0.6870 numbers to the north. In case prices refrain to surpass 0.6828, 0.6790 and 0.6760 can continue gaining sellers’ attention.
• The pair continued gaining positive traction for the third consecutive session on Friday and climbed to the 112.00 neighbourhood, or fresh YTD tops in the last hour. • The overnight move beyond the very important 200-day SMA, for the first time since Dec. 27 was seen as a key trigger behind the pair’s follow-through surge on Friday. • The pair is now testing a short-term ascending trend-line hurdle, which might now keep a lid on any subsequent up-move amid slightly overbought conditions hourly charts. • However, oscillators on the daily chart support prospects for an eventual bullish breakthrough, paving the way for additional gains towards testing the 112.25 level. USD/JPY daily chart USD/JPY Overview: Today Last Price: 111.91 Today Daily change: 44 pips Today Daily change %: 0.39% Today Daily Open: 111.47 Trends: Daily SMA20: 110.46 Daily SMA50: 109.8 Daily SMA100: 111.38 Daily SMA200: 111.32 Levels: Previous Daily High: 111.5 Previous Daily Low: 110.66 Previous Weekly High: 110.96 Previous Weekly Low: 110.42 Previous Monthly High: 111.5 Previous Monthly Low: 108.73 Daily Fibonacci 38.2%: 111.17 Daily Fibonacci 61.8%: 110.98 Daily Pivot Point S1: 110.92 Daily Pivot Point S2: 110.37 Daily Pivot Point S3: 110.08 Daily Pivot Point R1: 111.76 Daily Pivot Point R2: 112.05 Daily Pivot Point R3: 112.6
AUD/USD: Laggard now catching up with a risk-on market profile – Bulls eye 0.7259 200-DMA AUD/USD has popped on risk-on markets with the US benchmarks rallying in recent trade with the S&P 500 testing the 2800 psychological level on the upside, (+ 0.12%). AUD/USD is now catching up the lag in the rebound in EM assets and Chinese equities. AUD/USD was the laggard coming into the North American session, seriously lagging behind the risk on tone in Asian markets, dented by dollar strength reflected through USD/CNH – weighing on the Aussie. “Fears over Australia’s housing market have dominated recent developments, but labour market indicators suggest the RBA will be in no hurry to cut rates,” Greg Gibbs, Founder, Analyst, & PM at Amplifying Global FX Capital Pty Ltd explained, adding, “US real yields have fallen significantly since their peak in November last year and may reflect recent evidence of weaker economic activity. Prominent Fed members suggest the Fed may be moving to target average inflation, paving the way for lower US rates and a weaker USD outlook.” On the margin, Powell's first day in a two-day testimony on monetary policy today implies a soft USD tone on the margin. There is nothing there that he has communicated that is particularly troublesome for the dollar – A dirty shirt amongst the washing basket of other dirty laundries. Indeed, investors struggle to find better value elsewhere which is slowing-up the downside grind below the neckline of the DXY's bearish H&S pattern. Watching Dr. Copper, trade talk progress, Chinese manufacturing and Aussie trade Dr Copper, a specialist on the Chinese and global economy, should not be ignored, as the price remains elevated at multi-month highs, taking its cues from expectations of a U.S. trade deal with China and increasing confidence in a global economic recovery which should be a major benefit to the Aussie. The next cues for the Aussie, besides geopolitics, will come in Aussie trade and Chinese manufacturing. AUD/USD levels “AUD/USD continues to recover and has made back the losses from the outside day to the downside on Thursday,” analysts at Commerzbank noted: “It has held over the 0.7055/12th Feb low, and while above here scope for recovery will remain. Rallies will find initial resistance at 0.7207 and remain are likely to remain capped by the 0.7259 200 day ma. Price action in January was exhaustive – the market charted a hammer (reversal). We have a TD perfected setup on the daily chart and a 13 count on the weekly chart. This suggests the down move ended at 0.6738.”
The EUR moved higher in Asia with risk assets on US-China trade optimism. The downward sloping 5-week MA is capping gains. Implied volatility has hit the lowest level since November 32017, so a big move could happen soon. The EUR/USD pair is currently trading at 1.1340, having hit a high of 1.1349 in Asia, courtesy of US-China trade optimism. On Sunday, Trump offered a clear hint of a breakthrough US-China trade deal via Twitter. The risk assets, therefore, picked up a bid in Asia and the US dollar, a preferred safe haven during the height of the trade war, ran into offers. Even so, EUR/USD failed to cut through the 5-week MA, currently placed at 1.1348. That average could be scaled in Europe if German bond yields rise on trade optimism. The bulls, however, need a break above 1.1370, as discussed earlier today. That would signal a continuation of the recovery rally from the recent low of 1.1234. Stuck in a $1.12-$1.15 range EUR/USD has been largely restricted to a narrow range of $1.12-$1.15 since October. Amid the lack of clear direction, the one-month at the money implied volatility has dropped to 6.02 percent – the lowest level since November 2017. The volatility gauge stood at 7.95 in mid-November. A low volatility period often ends up paving the way for a big move. As a result, EUR/USD could soon see a convincing break of the 1.12-1.15 trading range. The upper edge could be breached if the US and China sign a trade deal ending the year-long period of uncertainty. That would alleviate the fears of the German recession, forcing markets to pencil in an ECB rate hike. Technical Levels
• The commodity built on the previous session's goodish bounce and now seems to have found acceptance above a short-term descending trend-line resistance on the 4-hourly chart. • The bullish momentum defied some renewed USD buying interest and the prevalent risk-on mood, supporting prospects for an extension of the ongoing positive momentum. • Moreover, technical indicators on the mentioned chart have been gaining positive traction and add credence to the constructive outlook, paving the way for a retest of multi-month tops. • Hence, a follow-through up-move, towards challenging the $1326 supply zone, now looks a distinct possibility amid absent relevant market moving economic releases from the US. Gold 4-hourly chart XAU/USD Overview: Today Last Price: 1317.76 Today Daily change %: 0.40% Today Daily Open: 1312.5 Trends: Daily SMA20: 1303.65 Daily SMA50: 1283.74 Daily SMA100: 1253.63 Daily SMA200: 1232.17 Levels: Previous Daily High: 1314.55 Previous Daily Low: 1303.15 Previous Weekly High: 1322.3 Previous Weekly Low: 1300.1 Previous Monthly High: 1326.25 Previous Monthly Low: 1275.9 Daily Fibonacci 38.2%: 1310.2 Daily Fibonacci 61.8%: 1307.5 Daily Pivot Point S1: 1305.58 Daily Pivot Point S2: 1298.67 Daily Pivot Point S3: 1294.18 Daily Pivot Point R1: 1316.98 Daily Pivot Point R2: 1321.47 Daily Pivot Point R3: 1328.38
In light of flash figures for JPY futures markets from CME Group, open interest rose for the second session in a row, this time by nearly 8.7K contracts on Wednesday from Tuesday’s final 216,224 contracts. Volume also rose by around 106.5K contracts, reverting two consecutive drops. USD/JPY remains under pressure Risk-off trade has given a boost to the demand for the safe haven JPY in past hours, dragging USD/JPY to sub-106.00 levels for the first time since March 2018 and paving the way for the continuation of the leg lower. This view is reinforced by rising open interest and volume.
JPY futures: further strength likely
• The pair continued showing some resilience below 100-day SMA, with oversold conditions on hourly charts prompting some short-covering move in the last hour. • However, technical indicators on the daily chart have started gaining negative momentum and hence, any attempted recovery seems more likely to be short-lived. • The set-up clearly points to an eventual bearish breakthrough the mentioned support, paving the way for a test of sub-112.00 level in the near-term. USD/JPY daily chart USD/JPY Overview: Today Last Price: 112.4 Today Daily change: -35 pips Today Daily change %: -0.310% Today Daily Open: 112.75 Trends: Previous Daily SMA20: 113.21 Previous Daily SMA50: 112.99 Previous Daily SMA100: 112.39 Previous Daily SMA200: 110.79 Levels: Previous Daily High: 113.52 Previous Daily Low: 112.68 Previous Weekly High: 113.71 Previous Weekly Low: 112.24 Previous Monthly High: 114.25 Previous Monthly Low: 112.3 Previous Daily Fibonacci 38.2%: 113 Previous Daily Fibonacci 61.8%: 113.2 Previous Daily Pivot Point S1: 112.45 Previous Daily Pivot Point S2: 112.14 Previous Daily Pivot Point S3: 111.6 Previous Daily Pivot Point R1: 113.29 Previous Daily Pivot Point R2: 113.83 Previous Daily Pivot Point R3: 114.13
The index stays bid in the mid-97.00s on Wednesday. US New Home Sales contracted 8.9% in October. All eyes on Fed’s Chief Jerome Powell later in the day. The greenback keeps daily gains and the consolidative mood unchanged so far today around the 97.50 region when tracked by the US Dollar Index ( DXY ) following US releases and ahead of Powell’s speech. US Dollar Index now looks to Powell The index keeps its weekly march north unabated and is looking to consolidate the recent break above the critical barrier at 97.00 the figure, at the same time paving the way for a potential test of YTD highs near 97.70 (November 12). DXY stays bid despite advanced Q3 GDP figures left no room for surprises today, while October’s New Home Sales contracted 8.9% MoM, or to 544K units, missing forecasts. In the meantime, the mood around the buck should be determined by developments in Europe (Italian politics, Brexit) and the US-China trade spat. Moving forward, Chief J.Powell is due to speak at the Economic Club in New York, with attention on the future moves of the Federal Reserve. US Dollar Index relevant levels As of writing the index is gaining 0.13% at 97.49 facing the next hurdle at 97.54 (high Nov.27) seconded by 97.69 (2018 high Nov.12) and then 97.87 (61.8% Fibo retracement of the 2017-2018 drop). On the flip side, a break below 96.78 (21-day SMA) would open the door to 96.32 (low Nov.22) and finally 96.04 (low Nov.20).
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US Dollar Index sticks to gains near 97.50, Powell on sight
The European Commission shot down Italy's budget yesterday, still, the Italy-German yield differential eased back from 5.5-year highs, helping the EUR avoid a break below the Nov. 20 low of 1.1359. The EUR/USD could pick up a strong bid if the ECB minutes show the board members are unfazed by signs of economic slowdown and Italy concerns. The EUR/USD charted an inverted bullish hammer yesterday, squashing hopes of bearish outside-day reversal below 1.1359, as the Italy-German yield differential eased from 5.5-year highs. The spread between the 10-year Italian government bond yield and its German counterpart, which had reached a 5.5-year high of 327 basis points on Tuesday fell back to 311 basis points even though the European Commission (EC) rejected Italy's proposed budget, paving the way for disciplinary actions called “debt-based excessive deficit procedure.” While a bearish reversal has been avoided, the bulls are not out of the woods yet. Moreover, they are seen gaining control above 1.1472 (high of Tuesday's bearish outside-day). That move may happen before Friday's NY close if the ECB minutes due today, downplay the recent slowdown in the economy and Italy concerns and reaffirm commitment to end the QE program in December. The crucial support of 1.1359, however, would come into play if the ECB minutes show policymakers are worried about the rise in Italian bond yields and are considering abandoning plans to end the QE program in December. The selling could be intense if minutes squash expectations of late 2019 rate hike. EUR/USD Technical Levels EUR/USD Overview: Last Price: 1.1396 Daily change: 13 pips Daily change: 0.114% Daily Open: 1.1383 Trends: Daily SMA20: 1.1368 Daily SMA50: 1.1499 Daily SMA100: 1.1555 Daily SMA200: 1.1802 Levels: Daily High: 1.1426 Daily Low: 1.1364 Weekly High: 1.142 Weekly Low: 1.1216 Monthly High: 1.1625 Monthly Low: 1.1302 Daily Fibonacci 38.2%: 1.1402 Daily Fibonacci 61.8%: 1.1387 Daily Pivot Point S1: 1.1356 Daily Pivot Point S2: 1.1329 Daily Pivot Point S3: 1.1294 Daily Pivot Point R1: 1.1418 Daily Pivot Point R2: 1.1453 Daily Pivot Point R3: 1.148