GEOPOLITICAL TENSIONS INCREASED DEMAND FOR SAFE HAVEN ASSETS
The focus of the market today was on geopolitical tensions concerning the statement of Donald Trump promising “fire and fury” to North Korea in response to the threat of an attack on American territory. As a result, we have seen an increased demand for the safe haven assets like the Yen, gold, and the Swiss franc. The influence of news about the threat from North Korea usually has a short-term impact. Some influence on the USD/JPY quotations had the news on the slowing growth of machinery orders in Japan to 26.3% in July, according to preliminary report, compared to 31.1% in the previous month. If there is a lack of news on the crisis between North Korea and the US, USD/JPY may restore previously lost positions.
The EUR/USD price today was under a slight influence of preliminary report on non-farm productivity in the US which increased by 0.9% in the second quarter compared to zero change in the previous period. Investors are waiting for the news on inflation changes in the US, which will be published on Friday and may have a significant influence on the sentiment concerning the third rate hike by the Fed till the end of the year.
The USD/CAD demonstrates the confident growth on the back of positive housing market data. Thus, the building permits number increased by 2.5% in June against forecasted decline by 1.8% and the number of housing builds has grown to 222.000 in July which is 18.000 more than predicted. Investors today will also be paying attention to the RBNZ statement on monetary policy at 21:00 GMT that may trigger the rise of volatility.
The single currency price continued to fall after some consolidation around 1.1750. Breaking through the level of 1.1700 may open the way for the price drop till 1.1620 and 1.1500. In case of an upward rebound from the support at 1.1700 we may see the quotes hitting the range 1.1760-1.1800. Volatility is likely to remain elevated till the end of the week.
The USD/JPY rebounded upwards after an unsuccessful attempt to overcome the support at 109.60. In case of a repeated decline and fixing below 109.60, we may see further drops to 109.00 and 108.50. On the other side, crossing the SMA 100 on 15-minute chart may force the bulls to push the quotes up to 110-70-111.00. Gaining a foothold above these lines may become a signal about trend switching to positive.
The USD/CAD continues its growth above 1.2667. In the case of a continuation of this current upward impulse, we may see the price hitting 1.2800 and the psychologically important level of 1.3000. On the other hand, breaking through the lower limit of the ascending channel and the local minimum near 1.2650, we may see the local trend switching to negative with the immediate goals at 1.2550 and 1.2470.