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Dec 22, 2017

EURO OUTPERFORMS AS U.S TREASURY BONDS YIELDS START TO MOVE HIGHER

EURO DEMAND

The single currency moved higher this, as broad-based demand for euros was underpinned by risk-on trading sentiment, causing a surge in U.S Treasury bond yields. Strong demand for riskier assets sent the euro towards the 1.1900 level against the U.S dollar, with the EURUSD initially starting the week on the back-foot towards the 1.1750 mark. The EURJPY pair was a top performer, trading towards 135, while the EURGBP pair edged towards the 0.8900 level.

  • The EURJPY pair remains bullish while trading above the 134.20 level, further upside towards 135.40 and 136.30 seems possible

  • Should the EURJPY pair moved below the 134.20 level, sellers may target the 133.66 and 132.80 levels.

DOLLAR MIXED

The U.S dollar suffered a mix week of fortunes in the foreign exchange markets, with the greenback losing and gaining against its G-7 counterparts. The U.S dollar moved higher against the Japanese yen and Swiss franc, as the FED tightens policy, while the BOJ and SNB keep monetary policy ultra-loose. The U.S dollar remained on the backfoot against commodity currencies and the euro, despite U.S congress passing the Trump administrations tax reform plan.

GOLD RECOVERS

The value of spot gold versus the U.S dollar continued to recover this week, as commodity prices and mining stocks outperformed. Spot gold reached a high of $1,268 per troy ounce this week, after finding strong monthly support just above the $1,235 level. Gold had previously suffered, as cryptocurrencies gain wider acceptance, with some analysts speculating that popular digital currencies such as Bitcoin, Dash and Ripple may replace gold as a safe haven.

  • Gold remains bullish while trading above the $1,260 level, further upside towards $1,271 and $1,289 remains possible above the key $1,260 level.

  • Sellers may re-test the $1,257 and $1,240 support zones if price-action falls below the $1,260 level.

LOONIE GAINS

The Canadian dollar recovered hard earned gains against the U.S dollar this week, with USDCAD pair crashing back towards the 1.2700 level. The USDCAD pair was trading above the 1.2900 mark during the early half of the week, but slipped lower as Canadian macroeconomic data smashed economist's expectations. Monthly inflation in Canada was seen rising more than expected, while Canadian Retail Sales surged 1.5 percent in November, which was much better than the expected 0.3 percent rise.

  • The USDCAD pair remains bearish while trading below the 1.2840 level, further declines towards 1.2690 and 1.2640 remains possible.

  • Should price move above the 1.2840 level, upside targets remain 1.2910, and the psychological 1.3000 level.

 

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