Slobodan Drvenica
Windsor Brokers
The dollar index fell to new multi-month low on Tuesday, moving in a steep bear-leg which extends into third consecutive day.
Near-term sentiment remains negative on renewed risk appetite, while markets fully price in 25 basis points rate cut by the US central bank in September, but with growing talks about possibly more aggressive action by Fed.
Minutes of July FOMC meeting (due on Wednesday) to show the opinion of Fed policymakers while speech of Fed Chair Powell in Jackson Hole symposium (Friday) to provide more clues about the pace of Fed’s easing cycle, which is widely expected to start in September.
Technical picture on daily chart is firmly bearish and adds to expectations for further weakness towards key supports at 100.29/18 (Dec 28 low / 200WMA) and psychological 100 level, with repeated close below Fibo level at 101.73 (76.4% of 100.29/106.36) to further weaken near-term structure.
Meanwhile, a partial profit-taking on oversold daily studies should be anticipated in coming sessions.
Res: 10173; 101.94; 102.48; 102.86
Sup: 101.01; 100.29; 100.18; 100.00
The information contained in this document was obtained from sources believed to be reliable, but its accuracy or completeness cannot be guaranteed. Any opinions expressed herein are in good faith, but are subject to change without notice. No liability accepted whatsoever for any direct or consequential loss arising from the use of this document.
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Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
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Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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