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Dean's Daily FX Update – 16 August 2017
In the Zone
- USDCAD
- GOLD
- SILVER
Noteworthy News
- There were comments that the Republicans are close to releasing a new tax reform. The House, Senate and White House seem united on this and I suspect that they will look to get this passed ASAP after the fail of Obamacare.
Recap
The summer months have really dried up liquidity in the markets of late and so we are in desperate need of anything to create a little bit of volatility and with it some trading opportunity. The US economic data provided that yesterday as both the US retail sales and later the Empire State manufacturing index beat expectations – retail sales actually more than doubled expectation. This was the catalyst that led the dollar to session highs.
The EURUSD tested the lows of 1.1688, this is an area of support that we highlighted in the report yesterday and the bounce led to the pair trading closer to 1.1710 last night. Today the level to watch will be 1.1724, the dollar bulls will want to see that level broken before it trades higher.
Cable closed below a major support level at 1.2860 which was also the 100 day MA, the market then started to drift sideways around the 61.8% fib and remains in that trading pattern. This morning sees the pair still trading sideways and so we are at critical levels for the GBPUSD, there is a cluster of support levels here and the buyers will have to move this pair higher, if not we can then define these levels for something to trade a lot lower.
Late last night President Trump announced an executive order proposing a major infrastructure build that will attempt to cut all the red tape, considering the Democrat reaction to anything he does – this is not a bad idea. The debate on this subject was lively, but I actually believe that it is a good idea. I mentioned yesterday that I am nervous to trade off a long dollar base just yet and so I continue to look to fade any dollar moves.
Keep an eye out for the afternoon video that tries to tie everything together.
Important Economic Data out today
10:30 GBP Average Earnings Index
Consensus: 1.8%
Effect: Actual higher than expected is good for the GBP
14:30 USD Building Permits
Consensus: 1.25M
Effect: Actual higher than expected is good for the USD
14:30 USD Housing Starts
Consensus: 1.22M
Effect: Actual higher than expected is good for the USD
16:00 USD Crude Oil Inventories
Consensus: -3.0M
Effect: No consistent effect on the USD
20:00 USD FOMC Meeting Minutes
Consensus: None
Effect: More hawkish than expected is good for the USD
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