WILLIAM DUDLEY CONFIRMED THE HAWKISH INTENTIONS OF THE FED
Today’s trading session started off with neutral sentiments by investors. The main factors that will influence the course of trading over the next few days will be the negotiations between the UK and EU on the terms of Britain’s withdrawal from the union. News on the Brexit may lead to a sharp rise in volatility at any moment. After the fall of the previous weeks, we may see a price correction caused by profit taking, but we do not see any fundamental reasons for GBP/USD trend to change to positive. The support for the USD has come from statements by FOMC member William Dudley in which he backed the hawkish rhetoric of Janet Yellen, chairwoman of the Fed. We should note that this evening at 23:00 GMT another FOMC member – Charles Evans is due to speak and that may bring more volatility to the market.
The pressure on the Japanese yen today was provided by weak macro data on the trade balance where the surplus declined to 0.13 trillion yen in May, compared to a forecasted 0.35 trillion yen. The growth of USD/JPY may switch to its decline in case of increased interest in safe haven assets which include the yen, gold, and Swiss franc.
Oil quotes tried to regain some of their previously lost positions but the news from the Baker Hughes pointed to the continued growth of oil rigs count in the US for twenty-two weeks in a row. The number increased by 6 to 747 last week.
The EUR/USD quotes could not gain a foothold above the inclined line and the important level of 1.1200. In the case of a further decline, the immediate targets will be 1.1160 and 1.1100. If the price falls below the local minimums, 1.1140 may become a trigger for an acceleration of the downward movement. Potential of growth today is likely to be restrained by the levels 1.1230 and 1.1280.
The British pound price tested the level of resistance at 1.2800 but failed to fix above it. Fears of investors concerning political instability in the UK after parliamentary elections and possible consequences of different scenarios of Brexit are still affecting the markets. After the current consolidation, the price may show a strong impulse. A signal for opening long positions with potential targets at 1.3000-1.3050 may come from gaining a foothold above 1.2800. But, more likely will be the decline to the next support lines at 1.2680 and 1.2635.
The dollar strengthening is positive for the USD/JPY quotes. A slight upward impulse for the pair came from weak data on the Japanese trade balance. The closest objectives within the current upward trend are 111.70 and 112.00. On the opposite side, the trigger for a trend change may come from breaking through the lower boundary of the rising channel and the support at 110.75. In this case, closest objectives may become 109.60 and 109.00.
The quotes of American crude oil benchmark WTI keep testing the 45.00 mark. Currently, the price is moving within the descending channel that started in May and for it to change to positive one, the price needs to break through the resistance at 45.20 and the upper limit of the channel. This scenario may become the trigger for growth up to 46.00 and 47.00. We do not exclude the resumption of a decline with the first target at 44.25 and after breaking through this the price fall may accelerate.
On the price chart of AUD/USD has formed the “triangle”. Price is moving between the resistance at 0.7635 and the lower boundary of the rising channel. The decline in amplitude of fluctuations within the triangle usually points to the possibility of a sharp movement in either direction. The reason for the start of a new powerful impulse may come from the publication of minutes of the previous RBA meeting that will be released tonight at 01:30 GMT. We should also note that AUD/USD is getting some support from the rise in iron ore prices that is one of the main export units for the country.