Euro crosses 1.117 level and Turkish Lira drops again against the Dollar to reach the level of 6.29
The Dollar ended mixed against its Main Rivals in quiet trading. US Consumer Confidence beat expectations, climbing to an 18-year high. The yield on the US 10-year bond climbed 3 basis points to 2.88%. Meantime, the deficit in the US international trade in goods rose on weaker exports and stronger imports.
Outlook: The rise in the US 10-year yield, boosted by strong consumer confidence halted the Dollar’s fall. Traders may also have read too much into Jerome Powell’s speech at Jackson Hole. Economists from US investment bank, Goldman Sachs wrote that they think the market is wrong about Powell’s dovishness. Bond traders must have taken notice given the rise in US yields. Which will support the Greenback today.
Trading View: Higher US yields saw Emerging Market currencies reverse gains. The Mexican Peso and Chinese Yuanreversed gain to end lower. The Turkish Lira fell further.
The Dollar Index (USD/DXY) finished little-changed at 94.709 (94.756) yesterday. Which was the result of a modestly higher Euro. The other Majors, Sterling, Yen, Swiss Franc and Aussie ended with small losses against the Dollar. Watch the EM markets, they ignited the Dollar’s rally against the Majors, and with yield support, can do it again. Market positioning, which we highlighted earlier this week, is the main headwind to Dollar gains. The US-China trade relationship remains an issue.
The second reading of US Q2 GDP is due out later today, which is the big one for traders today.
USD/DXY – The Dollar Index closed virtually flat at 94.709 after trading to a low of 94.434. Immediate support remains at the 94.40 level. The strong support level remains at 94.00 which doesn’t look threatened in the short term. Overnight high traded was 94.912. Immediate resistance lies between 94.90 and 95.00. The next resistance level is found at 95.20. Likely trading range today 94.50-95.00. Preference is still to buy on dips with US yields higher.
EUR/USD – The Euro jumped to trade at 1.17335 overnight high before settling at 1.1695 (1.1685 yesterday). Germany’s 10-year bond yield was up one basis point to 0.38%. There are no major European area data due today. Tomorrow sees German Employment and inflation data. Immediate resistance for EUR/USD lies at 1.1720/30. Immediate support can be found at 1.1660 (overnight low 1.16626). The next support level is at 1.1630. Look to trade a likely range today of 1.1660-1.1710.
AUD/USD – rallied to an overnight high of 0.73624 before easing to close at 0.7339 in New York. Metals were higher, Silver was up 1.47%, while Copper rose 1.4%. The Chinese Yuan and most Asian EM currencies ended lower against the Greenback. Immediate resistance for the Aussie is found at 0.7360, followed by 0.7380. Immediate support can be found at 0.7320 (overnight low 0.73212), followed by 0.7300. Likely range today 0.7310-60. Just trade the range shag.
GBP/USD – Sterling slipped to close at 1.2870, down 0.22% from 1.2895 yesterday. UK Trade Secretary Liam Fox said yesterday in Singapore that Britain is still prepared to walk away from negotiations if the country did not get a fair deal on Brexit. In an interview for CNBC, Fox also said that the UK and the US are moving forward to a trade deal. Brexit will remain a headwind for the Pound. Sterling has immediate resistance at 1.2900, followed by 1.2930 (overnight high 1.29317). Immediate support can be found at 1.2860 (overnight low 1.28618), followed by 1.2830.. Likely range today 1.2850-1.2910.
USD/JPY – The Dollar managed modest gains, closing at 111.20 (111.07 yesterday). The rise in the US 10-year yield will keep the USD/JPY bid. Japanese bond yields were flat (Japan 10-year JGB 0.09%). Immediate resistance for USD/JPY lies at 111.40. Overnight high traded was 110.355. The next resistance level can be found at 111.60. Immediate support can be found at 111.00, followed by 110.70. Likely range today 111.00-111.60. Just trade the range shag on this one too.
Events and economic data releases today: Australia HIA New Home Sales; Japan August Consumer Confidence Index; German GFK Consumer Climate; UK Nationwide Housing Prices; Swiss ZEW Economic Expectations Index; Canada Current Account; Second Reading of Q2 US GDP, US GDP Price Index, US Q2 Headline and Core Personal Consumption Expenditure, US Pending Home Sales.
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