HOUSING DATA FROM THE US DAMPENS USD
Traders are trying to review their portfolios after the important events of this week and ahead of the weekend. Today’s release of data from the Consumer Price Index in the Eurozone did not surprise investors. CPI for May remained at the level of 1.4% which was in line with the average forecasts. Despite the recent rebound of the EUR/USD, its potential is limited by statements coming from the central banks in the US and Eurozone which may see the divergence in monetary policy widen further this year. The Fed is looking for another rate hike this year while the ECB aims to maintain its low rate.
Some support for the EUR/USD quotes was provided by the weak data from the US where the number of building permits in May declined to 1.17 million against the expected increase to 1.25 million. Also, the amount of housing starts was just 1.09 million, significantly worse than the forecasted 1.23 million. This data led to profit taking in the USD/JPY. The fall of the pair may accelerate amid growing fears concerning a possible correction on the US stock markets. The yen is known as a defensive asset and its price usually rises during the periods of instability.
At the end of the week, the price of gold is correcting upwards due to profit taking and the dollar’s decline. Current correctional growth may continue today but investors are likely to stay away from building up new positions in the precious metal.
Oil prices are still moving within the falling trend and may continue on Monday. The dynamics of trading may be influenced by the data on active rigs count in the US that is usually released on Friday nights. The growth in American oil production has helped the bears to pull the price down. This factor also influences quotes of commodity currencies like the USD/CAD and AUD/USD.
The common currency quotes rebounded upwards after testing the 1.1135 level a number of times. Currently, the price is trying to return within the boundaries of the rising channel which it has left before. In the case of success, the next target levels will become 1.1200, 1.1230 and 1.1280. The growth potential is likely to be restrained because the price is still moving within the descending channel and in the case of fall resumption the immediate goals for the EUR/USD will be 1.1100 and 1.1020.
The USD/JPY is fell sharply after the publication of the weak report on the housing market in America. The negative impulse strengthened after the preliminary report on consumer sentiment index in the US from the University of Michigan showed a decline to 94.5 in June against the expected figure of 97.2. We recall that traders ignored the statement from the Bank of Japan released this morning. Investors keep monitoring the dynamics of tech stocks in the US and in the case of their massive decline, we may see the fall of the pair amid the increased demand for the yen as a safe haven asset.
Gold quotations are consolidating after a significant decline during the previous days. Currently, the price is above the support of 1252. Breaking through it may become a signal about the trend continuation with the closest targets at 1244 and 1230. In the near future quotes may keep moving within the limits of the descending channel, and switch to a positive trend bullion has to overcome resistance at 1270. After the end of consolidation, we are likely to see the strong movement.
The WTI, which is the benchmark for crude oil in America, rebounded from 2017 lows. Potential for price growth will be restrained by the upper boundary of the downward channel and the fact that on the oil market we see an imbalance between the levels of supply and demand. Volatility growth is anticipated after the news from Baker Hughes on the rig count in the US and Canada. The trend remains negative and the next targets in case of breaking through 44.25 will become 43.00 and 42.50.
The USD/CAD price keeps following the price of crude oil. Currently, the quotes are moving along the upper boundary of the local descending channel. Breaking through it and overcoming the resistance level at 1.3300 may become the trigger for a further price increase to 1.3380 and 1.3420. On the other hand, in the case of further strengthening of the US dollar and the fall of oil, we are likely to see the resumption of a price fall with the next targets at 1.3160 and 1.3100.