Chair Powell signals US rate cut still on track this month

FED safety cut

Federal Reserve Chair Jerome Powell kept expectations alive that the US central bank will still cut interest on July 31st this week. Chair Powell delivered a largely dovish testimony to US Congress on Wednesday and Thursday, as he noted that the global economy remained uncertain and US inflation remained subdued. Better than expected US jobs data failed to prompt a more hawkish tone from Chair Powell, leaving markets convinced that a rate cut is likely to follow later this month. The US dollar fell after Jerome Powell deliver his pre-prepared policy statement, while US equity markets surged and gold prices rose sharply.

∙ The USDJPY pair is only bullish while trading above the 108.80 level, key resistance is found at the 109.00 and 109.80  levels.

∙ If the USDJPY pair trades below the 108.80 level, sellers may test towards the 107.80 and 107.40 support levels.

Bitcoin reverses

Bitcoin was sold heavily from the $13,000 level this week, as US lawmakers raised concerns about Facebook’s upcoming cryptocurrency, Libra. Bitcoin had a strong start to the week, as it advanced over thirty percent higher from the current monthly trading low. The broader cryptocurrency was also hurt by the negative comments from US lawmakers, as overall confidence towards cryptocurrency integration was dented. Ethereum tumbled below the $270.00 level, while Litecoin suffered heavy losses towards the psychological $100.00 support level.

∙ The BTCUSD pair is bullish while trading above the $11,800 level, key resistance is found at the $13,000 and $14,000 levels.

∙ If the BTCUSD pair trades below the $11,800 level, key support is located at the $10,800 and $9,600 levels.

Sterling slump

The British pound fell to a new 2019 trading low against the US dollar this week, as traders continued to shun sterling over UK economic fundamentals and Brexit. The GBPUSD pair fell to its weakest level since April 2017, as a number of key stop-losses order were triggered below the 1.2500 level. Sterling opened the week in a vulnerable position, due to the strong US monthly job report. The GBPUSD pair found support from the 1.2438 level before traders eventually guided the GBPUSD pair back above the 1.2500 level, following solid monthly GDP figures from the UK economy.

∙ The GBPUSD pair is only bearish while trading below the 1.2530 level, key support is found at the 1.2480 and 1.2438 levels.

∙ If the GBPUSD pair trades above the 1.2530 level, buyers may test towards the 1.2660 and 1.2770 resistance levels.

BOC unchanged

The Bank of Canada kept interest rates unchanged at 1.75 percent this week and failed to offer any hawkish relief to market participants. Expectations had been high going into the meeting that the central bank may start to shift policy language to a more upbeat tone, following the recent strong rise in wage prices. The Bank of Canada failed to sound upbeat, sending the Canadian dollar lower against the euro and Japanese yen currencies. The USDCAD remained entrenched in a bearish trend, with the pair being dragged lower by rising oil prices and overall greenback selling. 

∙ The USDCAD pair is only bullish while trading above the 1.3160 level, key resistance is found at the 1.3220 and 1.3285 levels.

∙  The USDCAD remains bearish while trading below the 1.3050 level, key support is located at the 1.3000 and 1.2950 levels.