The USD strengthened against a number of its peers on Friday as worries about a possible global growth slowdown grew. The safe haven qualities of the greenback provided it with some support even against a number of other safe haven currencies as the Yen. Main reasons for such a development could include an interest rate differential of the Fed and the BoJ, as they keep opposing monetary policies. Analysts point out that the US-Sino trade relationships could be playing a major part in this week’s fundamentals, as the G20 meeting is drawing near and a meeting between US president Trump and Chinese president Xi could take place. Volatility could emerge once again for the greenback, after a possibly extended Thanksgiving holidays.
USD/JPY during the Asian session today teasing the 112.25 (R1) resistance line. Should the risk aversion sentiment continue to dominate the market, we could see the pair trading in a bullish market today. Should the pair find fresh buying orders along its path we could see it breaking the 113.25 (R1) resistance line and aim for the 113.95 (R2) resistance hurdle. Should the pair come under the selling interest of the market we could see it dropping and aiming if not breaking on the 112.72 (S1) support line.
EU ratifies draft Brexit deal
Despite some turbulence on Friday, EU leaders ratified the Brexit deal and named it the best possible deal the UK could get. The pound got little support against the USD, as market focus continues to be on whether the UK parliament will vote the Brexit agreement. A vote in the UK parliament, could be expected before the next EU summit on December 13th and the big question is whether UK PM Theresa May will be able to gather the necessary votes. Analysts expect the pound to remain under pressure until the vote in the UK parliament as uncertainty remains.
Cable dropped on Friday, breaking the 1.2850 (R1) support line (now turned to resistance) and remained relatively stable during the Asian session today. If the pound remains under pressure as Brexit uncertainty persists, we could see the pair trading in a bearish market today. Should the bulls take over, we could see the pair breaking the 1.2850 (R1) resistance line and aim for the 1.2920 (R2) resistance level. Should on the other hand the bears continue to reign over cable, we could see it breaking the 1.2780 (S1) support line and aim for the 1.2700 (S2) support zone.
In today’s other economic highlights:
In the European session today, we get Germany’s Ifo business climate indicator for November and after the American session we get New Zealand’s trade balance figure for October. As for speakers, please bear in mind that ECB’s Peter Praet (09:00, GMT), Benoit Coeure (12:00, GMT), president Mario Draghi (14:00,GMT) and BoE’s governor Mark Carney (18:30, GMT) speak.
The week ahead:
On Tuesday, we get the US CB Consumer Sentiment for November. On Wednesday, from Germany the GfK Consumer Climate for December and from the US the GDP for Q3 as well as the new home sales figure for October. On Thursday, Japan’s retail sales for October are to be released as well as Germany’s unemployment data for October, Eurozone’s Industrial sentiment for November, Eurozone’s final consumer for November, Germany’s preliminary HICP rate for November and the finally the FOMC will be releasing the minutes of its last meeting. On Friday, we get Japan’s unemployment rate and industrial output for October, China’s MBS manufacturing PMI for November, Germany’s Retail Sales for October, France’s and Eurozone’s preliminary HICP rates for November and Canada’s GDP growth rates for Q3.
USD/JPY H4
Support: 112.72 (S1), 112.15 (S2), 111.60 (S3)
Resistance: 113.25 (R1), 113.95 (R2), 114.50 (R3)
GBP/USD H4
Support: 1.2780 (S1), 1.2700 (S2), 1.2600 (S3)
Resistance: 1.2850 (R1), 1.2920 (R2), 1.3015 (R3)
