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Dean's Daily FX Update – 28 August 2017
In the Zone
- EURUSD
- AUDUSD
- USDCAD
- USDZAR
- GOLD
Noteworthy News
- Hurricane Harvey continues to batter parts of Texas with the water now 17m deep, refineries are closing at a rapid pace but there are going to be far reaching consequences of this flooding. There will be have to be a relief package launched soon, could buoy equity markets.
Recap
The much anticipated Jackson Hole Convention and in particular the Yellen – Draghi combo proved to be a bit of a dud on Friday. It was not about what was said but more about what was not said, Yellen did not hint towards a December rate hike and nor did she indicate a September unbundling of the balance sheet. After the recent strength in the EUR it was though that Draghi would try and knock the currency down a little bit but instead he refrained, the result was that the market sold the dollar before the market closed, but not get the opportunity in the EUR as the Draghi speech was after market close – I wouldn’t be surprised if we saw a relief rally in the dollar today.
The EURUSD rallied this morning to 1.1960, this is the first resistance that I would place in the market ahead of 1.2000. I suspect that sellers will starting leaning against this psychological level of 1.2000 and use it to start building offers. This is also a level of interest for me today, as liquidity starting filtering into the Asian Pacific session, we saw some profit taking in this pair and I would not be surprised if we see something similar when the UK opens up this morning.
The USDCAD enjoyed some love on Friday as a combination of the weak dollar and rebounding oil prices buoyed the loonie. The pair is slightly lower again this morning, this was to be expected as the pair continues to be driven by both oil and Hurricane Harvey that is pummelling Texas at the moment and continues to bring with it flooding and damage. The rigs around the Gulf have been spared, but the oil refineries have been hit hard and this continues to weigh on the oil price as all products trade higher – this has led the CAD to strengthen against the dollar.
I am also keeping an eye on the NZDUSD, I have been warning for the best part of 6 weeks that this pair is bracing to see some action. I have highlighted on this morning’s video that we seem to be seeing a nice head and shoulders pattern playing out, another test of 0.7200 must surely be on the cards this week and I am waiting for a confirmation of the break to target 0.6815.
Keep an eye out for the afternoon video that tries to tie everything together.
Important Economic Data out today
16:00 USD CB Consumer Confidence
Consensus: 120.5
Effect: Actual higher than expected is good for the USD
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