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Dean's Daily FX Update – 31 July 2017
In the Zone
- EURUSD
- GBPUSD
- NZDUSD
- Gold
Noteworthy News
- In a show of force, the US have flown two B-1B bombers over the Korean peninsula, could this affect the dollar this week.
Recap
The greenback spent last week once again in retreat as political turmoil continues to grip Washington, we had slightly softer data on Friday but in the interim this almost seems irrelevant. After a minor victory earlier in the week, the Republicans took tried to take the opportunity to pass a repeal bill only to be let down by John McCain. McCain is known as a bit of a renegade within the Republican party, and is known to not be a big fan of Trump, I said it a couple months ago but you get the sense that the Democrats and some liberal Republicans are voting against change only because of their hate towards Trump – in the end of the day it is the people that are losing out.
We were also witness to the circus that continues to run the White House, the new communications director was evident of that when he felt nothing to use some rather colourful language with a prominent New York reporter. In this interview he was scathing of the White House Chief of Staff Priebus – by the end of the day Priebus was fired and replaced by General John Kelly, hopefully his military discipline rubs off on the rest of the staff. I am not certain the fiasco is done though, judging by tweets by Trump, I would not be surprised if both Stephen Bannon and Attorney General Sessions are the next out the door.
This of course all puts major pressure on the dollar, what can save the dollar? I have been calling for a mean reversal for a couple of weeks now, but politics are standing in the way, something needs to unite the US and US bombers flying over the Korean Peninsula in retaliation to missile testing out of North Korea could be the tonic.
The EURUSD fell just shy of the 1.1775 high last week but did not close higher than major resistance at 1.1735. This level coupled with 1.1710 will remain as the line in the sand for both the bulls and bears this week. Staying above these levels will target 1.1795 which was the high seen in 2014.
The USDJPY is another interesting pair as it closed below the 200 week MA at 111.00 and closed around 110.50. This leaves the pair in a precarious position, the pair looks to be forming double bottom and poised to rally, but there is a feeling that the JPY is starting to show some signs of getting stronger, this means that the risk is for the pair to drift a little lower this week.
Keep an eye out for the afternoon video that tries to tie everything together.
Important Economic Data out today
15:45 USD Chicago PMI
Consensus: 60.8
Effect: Actual higher than expected is good for the USD
16:00 USD Pending Home Sales
Consensus: 0.9%
Effect: Actual lower than expected is good for the USD
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