SLOWDOWN OF INFLATION IN THE EUROZONE WEAKENED THE EURO
The EUR/USD price retreated today after the publication of the preliminary report on consumer price index in Eurozone that in June was 1.3% compared to 1.4% in May. The slowdown in inflation will restrain the ECB from tightening monetary policy. We should mention that the index was 0.1% better than expected and its slowdown can be partly explained by the fall in oil prices. A slight influence on the course of trading today was the news on personal income which increased by 0.4% in May against expected increase by 0.3%. At the same time, personal spending increased by 0.1%, in line with the average forecast.
The USD/CAD price was able to overcome the psychologically important level of 1.3000. Support for the Canadian dollar was an improvement in oil prices during the week and today’s report on GDP growth in Canada that in April expanded by 0.2%. We can see profit taking today ahead of a long weekend in Canada due to banking holiday on Monday. We also cannot exclude the rollback of oil prices after the recent rally with no strong supportive factors.
The British pound has corrected downward after it was unable to gain a foothold above the level of 1.3000. The final data on GDP growth in the UK showed its expansion by 0.2% in the first quarter that is much worse compared to the increase of 0.7% in the fourth quarter of 2016. In the first quarter business investment increased by 0.6% but this may worsen during the next months due to uncertainty over the outcome of Brexit talks.
Strengthening of the US dollar and rise in yields in Europe and Japan put pressure on gold quotes. The Australian dollar also retreated downward despite the positive data on China’s manufacturing PMI growth to 51.7 in June, compared to an expected 51.0. We are reminded that China is the main consumer of Australian export and the state of its economy influences the aussie.
The EUR/USD price resumed the growth within the limits of the local rising channel after the rebound from its lower boundary. For continuation of negative dynamics, the price has to overcome the resistance at 1.1450 that will open the way to a psychologically important level of 1.1500. On the other hand, breaking through the local minimum near 1.1400 may become a reason for the start of a downward price correction with the first objectives at 1.1350 and 1.1300.
The GBP/USD was unable to stay above the psychologically important resistance at 1.3000. Today the growth potential is likely to be limited by the 1.3050 mark, the overcoming of which will be a strong buy signal with potential targets at 1.3150 and 1.3200. The closest targets within the correction will be 1.2890 and 1.2800. Previously the quotes intersected the SMA100 on the 15-minute chart that may be another factor in favor of a further descending correction.
The USD/JPY quotes are consolidating after the rollback in the morning caused by the strong macro statistics in Japan. After hitting the lower boundary of the ascending channel and the support at 111.70, we see the sideways movement above these levels, the overcoming of which may be a strong signal to sell with immediate goals at 110.90, 109.60 and 109.00. Potential upside today is likely to be limited by 113.10.
The Canadian dollar shows a confident appreciation against the US dollar which is explained by positive dynamics in the oil market during the week and growth of the Canadian GDP by 0.2% in April which was in line with the expected figure. After breaking through the psychologically important support at 1.3000, the closest objective will be 1.2900. Ahead of the weekend, we may see fixing positions that will lead to the growth up to 1.3050 and 1.3165.
After a slight rebound yesterday, the price of gold resumed decline and again tested the strong support near 1240. Breaking through this mark may provoke fixing of long positions and will support the bears in their intentions to pull the bullion to 1230 and 1215. On the opposite, there is a possibility of building up positions by the buyers around current level and after the end of consolidation, we may see a strong upward movement to 1270 and 1280. The signal to buy may become breaking through the resistance at 1252.
The American crude oil benchmark WTI keeps consolidating near 45.25. The next targets in case of continued increase within the local upward trend will be at 46.00 and 47.00. After a strong growth during the week, we may see a price correction and the signal for its start may be leaving the limits of the local rising channel. Volatility increase is expected after the release of the report on active oil rigs count in the US from oil service company Baker Hughes, this evening.