US puts new sanctions on Russia, ruble drops 4.5%
The Dollar slipped against the Majors but rose versus Emerging Market Currencies in volatile headline trading. News of a fresh FBI probe on Donald Trump’s personal lawyer weighed on the Greenback. Stocks reversed strong gains to end marginally higher. The Russian Ruble slumped 4.5% against the Dollar as the US imposed fresh sanctions against Russia for their suspected role in the Syrian gas attack. Trade war tensions remained high as China mulled a Yuan depreciation as a tool in its spat with the US.
Risks are all around us. It’s difficult to focus on any one thing with all the headlines coming in fast and furious. Equities reflected the volatility, rising one minute and falling the next. The Dollar’s move against its Main Rivals was, once again, more measured. The Emerging Market currencies though were volatile, as they often are.
The robust 4.5% rally in the (USD/RUB) Dollar Ruble due to the sanctions saw a broad-based fall in EM currencies against the Greenback. The USD/ZAR (Dollar South African Rand) was up 0.51%. USD/TRY (Dollar Turkish Lira) rose 0.71%.
“Let the currency wars begin”. It was a matter of time before the trade issue became a currency issue. Donald Trump and his administration have been trying to keep the US Dollar weak. It wasn’t long ago when the Asian countries were gradually depreciating their currencies to buoy their exports. It will be interesting to see how this dynamic plays-out in the currency markets. Chinese President Xi Jinping gives a keynote speech at the Boao Asia Forum today. (no specific time).
The Dollar remained pretty much range-bound against the Majors. Economic data releases yesterday saw Euro Zone Sentix Investor Confidence fall while UK Halifax House Prices beat forecasts in March.
The Dollar Index (USD/DXY) closed 0.34% down at 89.85 (90.07 yesterday). The immediate resistance level for today lies at 90.20 (overnight high was 90.27). The strong resistance now comes in at 90.50/60 (90.60 double top) and we need to see a break of that to challenge 91.00. Immediate support lies right here at 89.80 and then 89.60. Likely range today 89.80-90.20. Prefer to buy dips.
GBP/USD – lifted by the strong Halifax House Price data in March (+1.5% versus a forecast of +0.15%). The overall weaker Dollar against the Majors also supported the Pound. GBP/USD traded to an overnight high of 1.41644 before settling to close in New York at 1.4130. Immediate resistance lies at 1.4150/60. The next resistance level is between 1.4190/1.4200. Immediate support can be found at 1.4100 and 1.4080. Bank of England’s MPC member and Chief Economist gives a speech today in Melbourne, Australia on the role of central banks. Haldane is a known hawk. Likely range today 1.4070-1.4170. Prefer to sell rallies.
EUR/USD – The EUR/USD Finished marginally higher at 1.2318 (1.2285 yesterday). The Euro held its lows overnight at 1.2260 due to the overall US Dollar weakness against the Majors. Euro area economic data once against under-performed with a fall in Euro Zone investor confidence. Mario Draghi sought to play down recent market volatility saying that policymakers remain calm. The Euro is range-bound for now in a bigger 1.22-1.25 range. Immediate resistance lies at 1.2330 (overnight high) and then 1.2350. Immediate support can be found at 1.2300 and 1.2280. Likely range today 1.2290-1.2340. Just trade the range for now shag.
USD/JPY – closed mildly lower at 106.75 (106.95 yesterday). USD/JPY traded to an overnight high of 107.20 before slipping as risk sentiment soured. BOJ President Kuroda said that the BOJ eventually needs to consider how to normalize policy. That said, the yield on the US Ten Year JGB bond slipped 2 basis points to 0.02%. The US Ten Year bond yield closed up 1 basis point to 2.78%.USD/JPY has immediate resistance at 107.00 and 107.20. Immediate support can be found at 106.60 and then 106.40. Look to buy USD dips with today’s likely range 106.60-107.20.
AUD/USD – buoyed by strong metals prices, the Aussie held the 0.7650 level well once again and had a strong bounce. AUD/USD traded to an overnight high of 0.7711 before settling at it’s current 0.7700. The Battler was looking down and out at one stage yesterday but as often is the case, it’s always looking heaviest near its base. From here though expect the immediate resistance that lies at 0.7710/20 to hold. Immediate support can be found at 0.7680 and then at 7660. National Australia Bank releases its Business Conditions and Confidence data later today. Any pressure on the Asian Emerging Market currencies (due to a CNY depreciation) will weigh on the Aussie. So watch that space. Likely range today 0.7670-0.7720. Prefer to sell rallies to 0.7720.
USD/ZAR – The rand's weakening of over 1% to the US dollar just after noon on Monday has economists puzzled.
At least one analyst attributed the spike to a knee-jerk reaction to comments made by Finance Minister Nhlanhla Nene on Monday morning.
By 12:53 the local unit was trading 0.85% weaker at R12.13, after hitting an intraday low of R12.15/$.
Now is your chance to make a profit!
Open an account here!
***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.
© Copyright 2015 – CM Trading – All rights reserved