Daily economic digest from Forex.ee

Daily economic digest from Forex.ee

Stay informed of the key economic events

Tuesday, August 29^th

The EUR/USD pair broke through its psychological resistance level of 1.20 in European morning, extending its multiyear highs. Currently the main currency pair is trading in the region of 1.2050, having refreshed its tops at 1.2070, which is the highest level since January 2015. The offered tone behind the greenback, triggered by disappointing speech of Fed Chair J.Yellen, remains one of the key navigators across the market, thereby supporting the pair. Adding to this, recent speech by ECB President M.Draghi at the Jackson Hole Symposium was perceived by markets as hawkish, as the head of the regulator was talking about plans of the ECB regarding tapering the QE program, that has strongly boosted speculations on divergence between the Fed and ECB, which, in turn appear, supportive to the pair. Moreover, persisting risk-off moods, ignited by escalated North Korean tensions, are also positively affecting the shared currency. Looking ahead, today we have another light data calendar, as only US CB Consumer Confidence numbers will offer fresh impetus to the pair, so widespread US dollar’s retreat and risk-off market trend will continue to lead the pair throughout this trading session.

The dollar/yen pair refreshed its 4-month lows at 108.33 spot in Asia in wake of recent headlines that N.Korea missiles entered Japanese air space. Tonight several missiles were fired from the Korean peninsula, which passed over Japan and fell into the waters of Pacific Ocean near Japanese island Hokkaido. Japanese policymakers have already named this incident as an unprecedented and a grave threat. These recent events have strongly boosted demand for safe-haven assets, thereby supporting the yen across the market. However, the pair managed to correct higher and by the time of writing was trading in the region of 108.80. Later today, it is expected that the pair will remain under pressure, as weaker US dollar also weights the pair in the first half of this working week. On the data front, today investors will focus their attention on US CB Consumer Confidence numbers, which will be released in the NA session, while risk-off trend and selling interest around the greenback will continue to remain as key driving factors across the market throughout this Tuesday.

The GBP/USD pair extends its winning streak for the fourth consecutive session, recovering from multimonth lows, touched last week, despite weaker demand for higher-yielding instruments. Pair’s strong bullish rally is mainly driven by ongoing sell-off of the US dollar, triggered by Friday’s uninformative speech of Fed Chair J.Yellen, which was perceived by the markets as “dovish”. On the other hand, accelerated flight to safety, fueled by overnight reports of the North Korean missile launch, and increased concerns, surrounding upcoming Brexit negotiations, may limit pair’s further upside, since the pound is a highly volatile tool. Now market participant are shifting their focus on the US data, which are expected later today, while weak sentiments surrounding the US dollar and low risk appetite will continue to drive the pair on Tuesday.

The NZD/USD the pair was trading southward during the Asian trading session, as broad risk aversion was dominating the market. Escalation of political relations between the US and North Korea remains the main driving factor across the market on Tuesday, as news about another missile test launch by N.Korea spooked market participants once again. These latest developments negatively affected all higher-yielding assets, including the Kiwi. On the other hand, ongoing weakness of the US dollar, backed by Fed Chair J.Yellen’s disappointing speech, will continue to support the pair during this trading session. Today we will have another quiet data session, with only US consumer confidence data scheduled in the today’s economic calendar, so broad risk sentiments and US dollar price dynamics will continue to determine pair’s further development course.

The main events of the day:

US CB Consumer Confidence – 17.00 (GMT +3)

Support and resistance levels for the major currency pairs:

EURUSD               S. 1.1892 R. 1.2074

USDJPY                 S. 108.84 R. 109.62

GBPUSD               S. 1.2845 R. 1.2985

USDCHF               S. 0.9501 R. 0.9603

AUDUSD              S. 0.7899 R. 0.8005

NZDUSD               S. 0.7217 R. 0.7281

USDCAD               S. 1.2419 R. 1.2553

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