Euro is recovering ahead of the EU summit meeting in Brussels today, which will decide the future of the euro

The Dollar ended mixed as risk sentiment stabilized amidst unclear US-China trade strategy

Euro is recovering ahead of the EU summit meeting in Brussels today, which will decide the future of the euro

Euro is recovering

The Dollar ended mixed as risk sentiment stabilized amidst unclear US-China trade strategy. The Dollar Index (USD/DXY) finished flat at 95.531 (95.50 yesterday). The Offshore Chinese Yuan (USD/CNH) extended losses, closing at its weakest in 7 months. Wall Street stocks rebounded on strong energy prices.

Outlook: Market uncertainty saw the Dollar put in a mixed performance. A lack of negative headlines on global trade tensions gave risk sentiment breathing space. Traders will keep the currencies stuck in current ranges with a close eye on USD/CNH today. The European Union Summit in Brussels that could shape the future of the Eurozone opens later today.

Trading View: EUR/USD recovered to close flat while USD/JPY rallied on improved risk sentiment. The Kiwi fell following a slightly dovish leaning RBNZ.  Asian EM Currencies recovered off their lows but sentiment remains shaky.

Global yields extended their fall. The yield on the benchmark US Ten Year-bond closed at 2.84%. Germany’s 10-year Bund yield was at 0.32%.
Data released saw a downward revision on US Q1 GDP while Claims for Unemployment benefits rose in the latest week.

Events and economic data releases today: Australian Private Sector Credit, Tokyo Core CPI, Japanese Unemployment Rate, Industrial Production, Consumer Confidence. German Retail Sales, UK Current Account, Final Q1 GDP, Euro Zone Flash Headline and Core CPI, US Core PCE Price Index, Personal Spending, Chicago PMI and University of Michigan Consumer Sentiment.

USD/DXY – The Dollar Index traded to 95.531 before easing to close at 95.321, little-changed from yesterday. Immediate resistance lies at 95.50/60. The next resistance level is at 96.00 which is strong. Immediate support can be found at 95.00 and then 94.70. Expect a likely trading range today of 95.00-95.50. Prefer to sell rallies.

EUR/USD – the shared currency rallied off its lows at 1.1527 to close at 1.1565. A gauge of German Consumer Sentiment rose a tad higher than forecast. EUR/USD traded to a high of 1.1600 overnight which remains immediate resistance. Immediate support can be found at 1.1540 and then 1.1520. Today’s European Union summit will be closely monitored with such topics as Italy’s current political set-up, Germany’s coalition government, and Brexit negotiations with the UK. Euro Zone Flash Headline and Core CPI are also released later. Likely trading range today 1.1520-1.1620. Look to trade this range.

EUR/USD

USD/JPY – improved risk sentiment saw a rally to 110.65 before easing to 110.53 at the close. The Dollar fell to a low of 109.97. USD/JPY has immediate resistance at 110.65/75 and then 111.00. Immediate support lies at 110.20 and then 109.90. Today sees the release of Tokyo Core CPI as well as Japan’s Jobless rate and Industrial Production.  Likely range 110.00-110.70. Look to trade this range.

USD/JPY

AUD/USD – closed little-changed but off its lows at 0.7350. Overnight low traded was 0.7330. Which remains immediate support. AUD/USD traded to a high of 0.7362. Immediate resistance is at the 0.7360/70 with further resistance coming in at 0.7400. The Aussie has been weighed by weak Asian EM currencies and a soggy New Zealand Dollar. Likely trading range today 0.7330-80. Prefer to buy dips on this one.

AUD/USD

GBP/USD – extended losses to 1.3078 at the close, down 0.3%. Brexit uncertainty will continue to weigh on the Pound. GBP/USD has immediate support at 1.3050 which was overnight lows. Immediate resistance lies at 1.3100 and then 1.3120. Today sees UK Current Account and Final Q1 GDP data. Likely range 1.3050-1.3100. Look to trade this range shag.

GBP/USD

NZD/USD – worst performing currency among the Majors, closed at 0.6755, down 0.5%. The RBNZ kept their Official Cash Rate at 1.75% which was expected. The RBNZ reiterated that they expected the OCR to remain low but gave no guidance on the timing or direction of the next move. The New Zealand central bank stressed uncertainty due to the trade war spat between the US and China and it’s other trading partners. NZSD/USD has immediate resistance at 0.6800. Immediate support can be found at 0.6740. The 10-year NZD bond yield is currently at 2.83%. The yield on the US Ten-year bond is at 2.84%, which is basically a flat differential. A month ago, the differential between the US Ten-year yield (2.93%) and the Kiwi Ten-year yield (2.73%) was 20 basis points wide in favor of the USD. NZD/USD was then trading at 0.6920. Now the differential is virtually flat, and the Kiwi is lower. Likely trading range today 0.6740-0.6820. Prefer to buy dips.

NZD/USD

USD/ZAR – The rand threatened to break through R14 to the dollar on Thursday as the US dollar continued to draw strength from struggling world economies.

By 10:15 the local unit was trading 0.13% weaker at R13.87 against the US unit after hitting R13.9975/$ earlier on Thursday.

USD/ZAR

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***Information contained in this newsletter are gathered from third parties and should not be regarded in any way as trade advice or recommendations by CM Trading. CM Trading does not recommend or advise traders or investors in their decision making but merely provides information from the market for its clients as additional information is made available as per the events occurring in the financial markets.

 

HIGH-RISK WARNING:

Trading Forex (Foreign Exchange) and Contracts for Differences (CFD’s) is highly speculative, carries a high level of risk and may not be suitable for all investors. You may sustain a loss of some or all of your invested capital, therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin.

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