LABOR DAY CELEBRATIONS IN THE US DAMPEN MARKETS
Trading volumes in the markets are lower today due to the bank holiday in the US as they celebrate Labor Day. The main attention of investors was turned to the latest nuclear bomb test in North Korea that is putting financial markets on tenterhooks and leading to the selloff in risky assets like the US dollar. The euro received positive news today from the Sentix Investor Confidence Index report which increased to 28.2 in September against the expected 27.4. On the other hand, we saw disappointing data from Spain, where the number of unemployed increased by 46,400 in August compared to the decline of 26,900 in July.
Investors are waiting for the speech from the ECB’s President Mario Draghi on Thursday following the ECB meeting where they are likely to discuss cuts to the asset purchasing program to 40 billion euro compared to the current volume of purchases of 60 billion euro. At the same time, the program may be extended for a further 6 months until mid-2018.
The British pound keeps consolidating after it was unable to continue its upward direction and eventually rolled back. Additional stimulus for the sterling bears came from weak statistics from the construction PMI that fell to 51.1 in August versus predicted growth of 52.1. Growth potential for the pound continues to be limited due to the lack of progress in the Brexit negotiations.
The aussie demonstrated a confident descending correction due to its inability to overcome important resistance at 0.8000. At the same time, traders are fixing positions ahead of the RBA statement on interest rates and monetary policy tomorrow that may provoke descending dynamics.
The EUR/USD keeps moving above the inclined support line and in case of breaking through the local resistance at 1.1925 we may see further price growth up to 1.2000 or even 1.2070. On the other side, breaking through this angled line and the local minimum near 1.1850 may become a trigger for the price drop to 1.1750 and 1.1620.
The GBP/USD is moving near the 1.2950 mark. In order to resume growth, the quotes need to overcome the psychologically important level of 1.3000 and in this case the first targets will be at 1.3050 and 1.3150. The current local rising trend may change to negative only after the price fixing below the closest low at 1.2900.
The AUD/USD quotes are gradually falling after the bulls failed to push them above an important resistance at 0.8000. The volatility level is likely to rise tomorrow and in case of new hints about the negative influence of the strong Australian dollar on the economic expansion of the country, we may see a sharp fall to 0.7870. Recent crossing of SMA100 on the 15-minute chart points to a possible decline in soon.