BULLS PUSH THE USD HIGHER AHEAD OF JACKSON HOLE
US dollar bulls were active today due to speculations about possible hawkish rhetoric from the Fed’s chairwoman Janet Yellen on Friday at the economic symposium in Jackson Hole. An increase in the possibility of a third rate hike by the Fed for this year should be able to offset some of the pressure the greenback is feeling due to the political tensions in the US. The euro declined today also due to weak data from the ZEW Economic Sentiment index for the Eurozone that showed a decline to 29.3 for August against the expected fall to 34.2.
The pound sterling was unable to show positive dynamics despite the fall in public net borrowings in the UK by 0.8 billion pounds in July versus the growth of 5.7 billion pounds in June. Further news from the UK showed the CBI industrial order expectation index came in at 13 which is 5 better than forecasted. Negotiations on the Brexit terms is still holding back the bulls from buying the GBP/USD. The Richmond manufacturing index release had little effect on traders’ mood as it remained at 14 for August despite the forecasted decline to 11.
Traders ignored the strength of the US dollar and continued buying the Canadian dollar after the release of the core retail sales report in Canada which showed an increase of 0.7% for June against the expected zero change. Additional pressure on the USD/CAD came from positive dynamics from oil prices which traditionally impact the pair’s quotes.
The EUR/USD price was not able to gain a foothold above the important 1.1800 level and to fix beyond the limits of the descending channel. As a result, the price tested the 1.1750 mark and its breaking may lead to further price falls to 1.1700 and 1.1620. We do not rule out the possibility of fixing above 1.1800 and that may become a trigger for continued growth to 1.1900 and 1.2000.
After some price consolidation of the GBP/USD near 1.2900 we have seen a confident decline with quotes approaching support at 1.2800. Its breaking may be the push the pair needs for a continued decline to 1.2660. In order to reverse the current negative trend, the price has to break through 1.2900. In this scenario, increases may continue up to 1.3050 and 1.3250.
The USD/CAD demonstrates a high level of volatility but the amplitude of price fluctuation is reducing. The RSI on the 15-minute chart is near the oversold zone, and that, together with the approach to the angled support line, may point to an upward correction soon due to profit taking. The next target level within the fall may be at 1.2470. Overcoming the local high at 1.2600 may lead to growth acceleration with goals at 1.2665 and 1.2800.