POLITICAL TENSIONS IN THE UK EASED AFTER THE WEEKEND

The US dollar has weakened today after the release of data on durable goods orders which in May declined by 1.1% against the expected reduction by 0.6%. This supported EUR/USD quotes which had previously increased on positive news from Italy. Two Italian banks avoided collapse as non-toxic assets were transferred to Intesa Sanpaolo. Today the mood of the market may be influenced by the speech of ECB President Mario Draghi at 17:30 GMT. Any hints on the possibility of cuts to the asset purchasing programme or interest rate hikes in the Eurozone may lead to a sharp rise of the EUR/USD, but this scenario is unlikely. The activity of investors will be restrained due to the Fed’s chairwoman Janet Yellen speech tomorrow night.

Positivity for the Sterling came on the back of news about the agreement between DUP and Conservative party being reached allowing them to form a coalition in the UK. The impact of this event was limited and traders turn their attention to negotiations on the Brexit deal.

The attention of oil traders is turned to OPEC countries and possible confrontation of Saudi Arabia and Iran within the OPEC countries. At the same time, an increase of oil production in the US, Libya, and Nigeria offsets the effect of the production cuts deal.

Increased risk appetite results in the fall of interest to defensive assets like gold and the Japanese yen. Currently we see consolidation in the stock markets and in the case of continued increase, the demand for gold will keep declining, but on the other hand, the possibility of a downward correction remains on the stock markets that may turn the attention of investors towards safe-haven assets. Increased volatility of the NZD/USD is likely to stay high due to the publication of important statistics on the trade balance in New Zealand at 22:45 GMT.

EUR/USD

The common currency is trying to change the local negative trend to positive on the background of weak data on durable goods orders in the US. Now the quotes are above the important level of 1.1200 and its overcoming may lead to a continued increase up to 1.1230 and 1.1280 and then to 1.1350 and 1.1400. The current consolidation around 1.1200 may continue until tomorrow’s speech by the Fed’s chief Janet Yellen. The closest targets within the decline will be 1.1160 and 1.1100.

GBP/USD

The GBP/USD keeps consolidating below 1.2750 after some advances caused by the depreciation of the USD and positive news concerning the agreement between the Tories and DUP in forming a coalition government. The stimulus for the sharp upward movement may come from breaking through 1.2750 and in this case, the immediate goals will be at 1.2800 and 1.2890. On the other hand, breaking through the local minimum near 1.2700 may force the bears to pull the price further down to 1.2600.

USD/JPY

The USD/JPY quotes were slightly supported by the lower demand for defensive assets in the world. The Japanese yen is considered a safe haven asset, the interest in which traditionally rises during the periods of turmoil. Currently, the quotes are moving between the inclined support line and the resistance at 111.70, the breaking of which may become a signal for opening long positions with the stop below 110.90 and objectives at 113.10, 114.00 and 114.70. In order to resume falling, the USD/JPY needs to break through the support level at 110.90.

WTI

The decline in the price of WTI oil benchmark resumed after the report on the active drilling rigs count published by oil service company Baker Hughes on Fridays. The growth in rig count by 8 during last week to 941 in the US stimulated the bears to pull oil prices down. The RSI on the 15-minute chart approached the oversold zone that points to a possible correction after reaching the local inclined support line, but an increase is likely to be limited by the upper boundary of descending channel. The next goal in case of a fall will be 42.20 and 40.00.

Gold

The sharp decline of gold quotes was due to a decrease in demand for defensive assets. Growth on the stock market usually puts pressure on gold. A slight rebound was due to fixing positions after hitting the strong support at 1240 and from the decline in durable goods orders in the US by 1.1% in May that disappointed investors. The potential of an upward correction is likely to be limited by the descending channel and the next targets in case of breaking through the support at 1240 will be 1230 and 1215.

NZD/USD

The NZD/USD sharply increased after rebounded from the lower limit of the local ascending channel. As a result, price broke through the strong resistance at 0.7300 that may become a trigger for the further increase to 0.7375 and 0.7415. There is a possibility a high level of volatility for the kiwi tonight following the publication of the trade balance report in New Zealand at 22:45 GMT. The signal of a fall resumption, with the immediate targets at 0.7220 and 0.7150, may come from breaking through the local minimum at 0.7260.