Amana FS Daily Market Reports
- USD/CAD pair trades around the 1.3150 level ahead of the release of key Canadian CPI data
- Better than expected Canadian inflation data may help boost chances of another rate hike from the Bank of Canada
The U.S. Dollar is trading close to the best levels of the month against the Canadian Dollar, ahead of the release of key inflation data from the Canadian economy for the month of July. The Canadian Dollar has been hit recently from falling oil prices and worsening relations between the Canadian and Saudi Arabian governments.
The Canadian consumer price index is forecasted to expand by +0.1% month-on-month, while the year-on-year CPI figure is expected to rise +2.5%. Core CPI data and the Bank of Canada's own CPI index are also worth watching today.
This months figure takes on extra significance as the Bank of Canada are currently in a rate hike cycle, while Canadian data has also been outperforming most market expectations. Ultimately, the Bank of Canada may choose to hike interest rates further if inflation in the Canadian economy starts to run hotter.
Technically the USD/CAD pair is trading above key support and has a neutral to slightly bullish short-term trading bias headed into today’s inflation report. I suspect we will see further upside in the USD/CAD pair if price continues to hold above the 1.3123 support level.
The 1.3123 level is a key area that from earlier this summer and once price broke above this level, the pair eventually advanced towards the 1.3380 level. Key resistance for the USD/CAD pair is currently found at the 1.3220 and 1.3270 levels, with extended resistance at 1.3310.
Key support below the 1.3123 level is found at the 1.3058 level, which is former key swing-low from July. The psychological 1.3000 level also offers strong support before the 1.2960 level starts to come into focus again.
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- GBP/USD pair falls back towards the 1.2700 level as risk-off sentiment returns
- Turkish lira trading heavily in the red alongside other EM currencies
The British pound has moved back towards the 1.2700 support level against the greenback as risk-off trading sentiment returns to broader financial markets. Despite earlier green shoots across the emerging currency space, the Turkish lira has now taken a turn for the worse, while the greenback has firmed across the board.
It appears that investors have started to take the United States latest threat of more U.S. sanctions against Turkey seriously. Yesterday the U.S government warned that Turkey should expect sanctions unless it handed over detained American pastor Andrew Brunson.
Sterling sentiment was already fragile on Friday, as Brexit minister Dominic Raab starts to prepare UK businesses and households for a potential Brexit no-deal, before his meeting with EU negotiators next week.
The GBP/USD pair started to feel the pressure of yesterday’s rejection from the 1.2570 level with price continually struggling around the 1.2730 region this morning.
Key support under 1.2700 is now found at the 1.2665 and 1.2590 levels, while key intraday resistance above the 1.2750 level is found at 1.2780 and 1.2800 levels.
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After almost four weeks of immense selling pressure in Bitcoin prices, it is now showing signs of life. The price dropped from the July 24 high of $8508 to the August 14 low of $5867, and it is now starting to gain bullish momentum after the price made a possible false breakout at the August 14 daily candle. The price tried to decline deeper but it quickly pulled back making the August 14 daily candle looks more bullish than bearish which may indicate possible bullish reversal.
I wouldn’t confirm any bullish reversal at this stage because looking into the overall trend, it remains extremely bearish. I am looking at the July 24 high as my trend-defining level. A successful breach to this high might confirm a bullish reversal and the price might target the next resistance level at the May 10 high.
On the downside, if the price breaks the August 14 low, then it could resume the overall bearish momentum and it may open up a rally towards the June 29 low of $5747.
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The second largest cryptocurrency “Ethereum” currently holds a total market capitalization of $30.2B with a 24-hour exchange-traded volume of $1.67B according to Coinmarketcap.com.
In just 30 days, Ethereum (ETH) price has gone down significantly from the July 18 high of $515 to the August 14 low of $250 (last seen during September 2017) without any substantial price correction along the way. However, during the late trading hours of August 14, the price started to trade higher which looks like a bullish reversal in play.
The ETH/USD pair is currently trading at $300 and I am not surprise if the price can go higher to maybe around the $351 to $413 range (38.2% to 61.8% Fibonacci levels) when we measure the decline from July 18 high down to August 14 low using a Fibonacci retracement tool. I suspect that the traders are probably shorting ETH/USD aiming for August 14 low and potentially September 14 low of $198.
On the upside, a clear breach to the July 18 low will invalidate the bearish outlook and the price might continue to drift higher towards the June 21 high of $545.
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Over the past two days, the Australian Dollar is trying to recover its losses against the US Dollar after the price collapsed last week. The AUD/USD pair has been in range-bound trading since July 2 to August 9, and finally found a direction on August 10 when the price breached the July 2 low of 0.7311, which ended the range-bound trading pattern.
At this point, I think that the price will continue to rally higher in the short-term as a sign of a price correction. If we draw a Fibonacci retracement level from the July 9 high of 0.7483 down to Wednesday’s low of 0.7201, we can get the 0.7311 to 0.7377 range (38.2% to 61.8% Fibonacci levels). Thus, I think that traders might be willing to short AUD/USD in this Fibonacci range, aiming for December 29, 2016 low of 0.7161. For me, the trend remains a solid bearish as we are seeing lower and lower highs, at the same time, the 200-day moving average is still pointing lower.
This bearish view will still be intact as long as the price trades below the July 9 high.
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- Core CPI -0.5% Vs -0.5% reading expected
- Year-on-year Core CPI up +1.1% Vs 1.1% rise forecasted
Eurozone inflation turned negative during the month of July, with the core consumer price index meeting market expectations of a dissapointing -0.5% decline. The core consumer price index for the same period last year came in as expected with a 1.1+ increase across the trading block.
The EUR/USD pair has fallen back below the 1.1400 level after the CPI report, however, the move lower can largely be attributed to a recovery in the U.S. Dollar Index and a general lack of interest to take the euro above the 1.1430 resistance level at present.
Key support for the EUR/USD pair is currently found at the 1.1370 and 1.1335 levels, with critical support found at the 1.1300 level. Key resistance is now found at the 1.1410 and 1.1430 levels.
If we see the EUR/USD failing to overcome the 1.1430 level over the course of the day, bulls may start to capitulate as it will be a third technical rejection from this key resistance region.
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