FUNDAMENTAL OUTLOOK
The UK Queen approved a request on Wednesday by Prime Minister Boris Johnson to suspend House of Commons for over a month right before Brexit. Johnson’s latest trick led to an uproar of condemnations from across the political spectrum as the opposition led by the Labour Party called it a coup and affront to democracy.
As such Queen’s speech which would start parliamentary legislative term after the summer holiday was postponed from September to October 14, making it almost impossible for the opposition to prevent a no-deal Brexit via legislation.
The US Trade Representative’s office said in an announcement Wednesday that the Trump administration’s extra tariffs of 5% on 300 billion dollars-worth Chinese imports from September 1 and December 15, were made official. The extra tariffs are likely to hit the US retailers as kids’ toy and technology companies warn of price hikes.
Iranian Foreign Minister Mohammad Javad Zarif said on Thursday the US must oblige by the 2015 nuclear deal between the world powers and Iran if it wanted to meet for talks. Zarif also accused the US of engaging in “economic terrorism” against the Iranian people and asked it to stop. Speaking in Malaysia, he said Iran was willing to meet but only if there is a result.
An outgoing ECB policymaker, Ewald Nowotny, said in a Thursday-published interview that the European Central bank should be able and prepared to disappoint market expectations sometimes. Speaking to the Austrian Wiener Zeitung, Nowotny criticized the bank for having gone too far in the past to meet what the markets wanted to hear.
EURUSD
The common European currency started to gain confidence after the losses in the first three days of the week, largely caused by the disappointing German data that now indicated a potential recession in the bloc’s largest economy and driving force. A new government formation in the political turmoil-stricken Italy has not helped the euro’s prospects as investors seek protections of the safe-haven assets such as gold and the yen. As such the pair price continues to trade near the lower band of the straight channel and getting closer to the lower band of the long-term descending channel in blue. US GDP data today, expected at 2.0 percent versus the previous 2.1 may weigh on the price if it turns out to be different. As for now, the price seems to be moving towards 1.1065 at the lower band of the straight channel. If crossed, then we will watch 1.1040. In the case of a rebound, we might see 1.1100 hit. If exceeded then 1.1120 and 1.1140 will come within range.
Support: 1.1065- 1.1040
Resistance: 1.1100 -1.1120 -1.1140
GBPUSD
High volatility in as the UK PM Johnson successfully lobbied the Queen to suspend the parliament from early September to mid-October, merely two weeks ahead of the Brexit date. The political turmoil that is unfolding adds to the threats against the British economy as the pound struggles. Thursday’s fall in the pair pulled it down, back into the long-term falling channel towards 1.2155 from the critical 50 percent Fibonacci retracement level at 1.2285. The pricing has now consolidated slightly above the upper band of the channel. As the risk of a no-deal Brexit looms larger, the pound’s losses are likely to extend into the next year - unless Johnson comes up with a magic solution to the disruption of supply chain and trade with the EU. As for today, the price might see 1.2180 and 1.2150 in the continuation of earlier falls. 1.2120 will be watched to witness if the drop hastens. Upward targets remain 1.2240 and 1.2260.
Support: 1.2180 -1.2150 -1.2120
Resistance: 1.2240 -1.2260
USDJPY
The safe-haven japanese yen gained on Thursday asia sessions due to an influx of risk-off traders fleeing the uncertainties in trade. This came alongside a warning by a former Bank of Japan board member Hitoshi Suzuki who said if the central bank further ramps up its already massive stimulus, then potential dangers would lay ahead. BoJ is seeking means to counter a potential recession amidst the intensifying global trade tensions, mainly between its two largest partners, China and the US. The yen is still moving inside the straight channel but outside the long-term descending one. If it manages to stay above 105.90, then we may see a surge for the earlier levels at 106.00 and later 106.40 to be followed by 106.65 near the upper band. In the event of a fall, 105.70 will provide support. Once broken, we will follow 105.40. The US GDP data will come into focus.
Support: 105.70-105.40
Resistance: 106.00- 106.40
GOLD
The precious metal’s impressive rise goes on as all the global risk factors, from Brexit to fears of a global recession to China-US trade war and Iran make a strong case for buying it. Once Friday trading is over, it is very likely that gold will have finished the 15th week of consecutive gains, interrupted only once by a black candle, inside the ascending channel that began to form in May. 1550 is in the current move an immediate target alongside the recently-seen high of 1550. Still above, we can watch 1560, a new multi-year high. In the case of a fall, 1540 and later 1534 along with 1530 will provide firm support lines.
Support: 1540 -1534- 1530
Resistance: 1550- 1550-1560
BRENT
The US Energy Information Administration revealed in its weekly report on Wednesday that the country’s crude oil inventories dropped last week by 10 million barrels versus the market expectations for a fall of 2.1 million barrels. The figures were largely in line with the steep decrease the earlier API data showed at 11 million barrel, as imports into the US slowed down. The oil continued its weekly rise upon the news. But the prices saw a moderate loss after San Francisco Federal Reserve President Mary Daly said the US economy had a “strong” momentum, but trade uncertainties and global growth slowdown were having an impact. The brent price trades within the green-delineated triangle, but getting close to the upper bands of both the triangle and the falling channel. Today’s fall could first test 66.50 and later 66.00, near the lower band of the narrowing formation. For the continuation of the weekly bullish bias, we might see a surge back to 67.15, if 67.00 is broken. Another upward target in that case will be 67.50.
Support: 66.50 -66.00
Resistance: 67.00-67.15- 67.50
DAX
The German index’s weekly rise was lightly hampered on Thursday, after the previous day’s rocky trades. The fears of an economic recession in Germany, the rising threat of a no-deal Brexit that has already proven to be hitting Germany automakers and the trade uncertainties at the US-China front weigh on the index. Deutsche bank will be in the focus as the US Congress tries to force it to share President Donald Trump’s tax returns after it turned out on Wednesday that the bank was in possession of the documents. If the sell-off pressure gets more appeal, the index will be heading for 11 640 and later 11 600. A third target in that direction can be designated at 11 580, near yesterday’s low. In the event of a rebound, we will see a rise towards 11 725 and later 11 780.
Support: 11 640 -11 600- 11 580
Resistance: 11 725-11 780
ECONOMIC CALENDAR
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