Kantox currency update: trade tensions continue gripping the market
The major currencies remained moving within previous ranges on Tuesday. The dollar lost ground on reports that Canada is open to making concessions to relaunch the NAFTA agreement, but China’s request to the World Trade Organisation to impose sanctions on the US. dampened risk appetite again and boosted the greenback.
In the UK, the pound reached fresh 5-week highs but it was unable to hold at those levels and has retreated on Wednesday’s early trading, with the enthusiasm about the possibilities of a Brexit deal with the UK ebbs.
EUR/USD: upside limited at 1.1645. Euro recovery attempt from Monday’s lows at 1.1525 was capped at 1.1645 on Tuesday and the pair retreated below 1.1600, weighed by US dollar strength as risk appetite dwindles. As at London market opening times, the EUR/USD is trading at 1.1575.
GBP/USD peaks near 1.3100. The pound extended its rally from last week lows at 1.2800 area, to reach 5-week highs at 1.3085, before pulling back on Wednesday, to hit session lows right below 1.3000. As at London market opening times, the GBP/USD is trading at 1.3000.
USD/JPY extends gains and approaches 112.00. The US dollar appreciated for the third consecutive day on Tuesday, to reach intra-day highs at 111.65, approaching resistance area around 112.00. As at London market opening times, the USD/JPY is trading at 111.50.
In the Calendar Today
Today in the Euro Zone, Eurostat will release July’s Industrial Production, which is expected to have picked up after a significant contraction in June. A second consecutive disappointment on industrial activity might increase concerns about an economic slowdown in the third quarter, which could increase euro shorts.
In the US, The conferences of Federal Reserve officials Bullard and Brainard might gather special interest, as the bank is expected to approve its third interest rate hike of 2018 at the end of the month.
09:00 GMT EUR: Industrial Production (YoY) (Q2)
Previous: -0.7% Expected: 0.8%
09:30 GMT FED: Bullard’s speech
16:45 GMT FED: Brainard’s speech