DOLLAR STRENGTH PUSHES AUSSIE TO 29-MONTH LOW
The GBP/USD pair jumped to above 1.3000 after chief EU negotiator, Michel Barnier, said that a Brexit deal with the UK looked realistic in a timeframe of 6 to 8 weeks. Just last week, it was reported that Germany and the UK had made key Brexit progress with such headlines being viewed as positive by traders who feared a hard Brexit. Today, the sterling will likely make more swings as the UK releases employment data for August.
Trade talks between the United States and Canada are set to resume today. This will be earlier than expected as the two countries try to find a middle ground on key issues. The Trump administration hopes that the deals with Mexico and Canada will be reconciled before the end of the month.
The euro will be a key currency to watch today as we receive the Zentrum für Europäische Wirtschaftsforschung (ZEW) confidence numbers for Germany and the EU. Traders expect that the confidence numbers for Germany will be minus 14.0, which will be worse than last month’s minus 13.7. This number turned negative in April this year and started to deteriorate, with many executives expressing their fears about the risk of losing the valuable US market. Data from the EU is expected to improve slightly from minus 11.1 to minus 10.9. Two weeks ago, the EU suggested that the US and the EU remove all tariffs on vehicles, a measure that the US president criticized for not being strong enough. Today’s data will tell us what the EU leaders think about the current state of affairs about trade.
The EUR/USD pair is little moved in the Asia-Pacific session as traders wait for EU sentiment data. It is now trading at 1.1598, which is higher than yesterday’s intraday low of 1.1526. It is also slightly above the 61.8% Fibonacci Retracement level and along the important support level shown below. It is also slightly above the 50 and 100-day EMA. The pair is likely to move sideways as traders wait for EU economic data and the ECB interest rate decision on Thursday.
In early August, the GBP/USD pair reached a low of 1.2660. This was the lowest level since June 2017. Since then, the pair has been moving up and today, it reached an intraday high of 1.3053. This was the one-month high for the pair. The RSI for the pair on the daily chart is at 58 and heading higher. The shorter-term EMA (50) is attempting to cross the longer-term EMA (100). If the crossover happens, the pair is likely to continue moving higher.
The AUD/USD pair declined to an intraday low of 0.7088. This was the lowest level in 29-months. The decline was associated largely with a stronger USD. It is now trading at 0.7121, which is lower than the 50 and 100-day EMA. The RSI on the hourly chart is at 53 and headed higher. The pair could continue the downward momentum and test the 0.7000 level.