- June 18, 2018
- Posted by: Joey Benedid
- Category: Market News
The Dollar made strides towards the end of last week, seeing the DXY rise 1.33% over he course of the week. The main push for Dollar bulls was the diverging monetary policy outlooks between the US and Europe. The Fed was hawkish and alluded to two more hikes throughout 2018, while the ECB took a dovish tone stating that they would begin to ease the bond buying program in December and would not consider a rate hike until at least Summer 2019. Trade tensions appear to be escalating as neither China or the US is willing to back down. China has noted that the US is facing a midterm election and believes it can outlast the Trump administration as he may have to appease fellow party members for support. Commodity linked currencies struggled last week as oil prices fell following a report that oil production could be increased as much as 1.5M barrels/day, as suggested by the Russian Energy Minister. The actual number that is being discussed at this week’s OPEC meeting is likely between 300-600K barrels/day. EUR is down as is recovers from dovish sentiment. Trouble may be brewing for Angela Merkel as her position may be threatened by an allied political party over immigration policy. The Christian Social Union party is given Merkel two weeks to overhaul current policy before reevaluating their support. Sterling is soft as Brexit policy still dwells over May’s minority government. Lawmakers are working on the final wording of the legislation that would terminate Britain’s membership with the EU. The BoE also has a rate decision this week, with expectations being that Carney will hold rates at 0.5%.
Various Fed members and Draghi will be making speeches throughout the week as we lead into the BoE Rate Decision on Thursday. Friday will show CAN CPI (2.6% vs 2.2%) to round out the week. Short term support and resistance is 1.3120 and 1.3260 respectively, while RSI is 62 and the 200-day moving average residing at 1.2700