Investors gave more weight on Trade war between the United States and China after Trump prepared second tariff plan on 200 billion dollars of Chinese import goods. This trade tariff will be on the public hearings at the end of July. However, China still does not have any reaction so the worries are easing now. Investors are attracted by second quarter earnings.
Fed chairman Jerome Powell affirmed the expectation to hike interest rate 2 more times this year. His announcement supported U.S. dollar on Thursday. Trade war is another factor of increasing demand of the U.S. dollar so the U.S. dollar rose 1-year high against Chinese yuan this week. In my opinion, strengthening of dollar may slightly decline because there is no support factor on Friday. As the result, EUR/USD may swing in the frame 1.1600-1.1700 points and GBP/USD may move in flat around 1.300-1.31000 points.
The pair currency which may have high volatility today is USD/CAD because Canadian dollar might get positive support from its economic data in May and June. From my point of view, world economic growth in June is still good as trade war still did not affect. As the result, loonie may fall to the support line at 1.3100 or lower, if indices are positive.
Fed chair said crypto currencies are not really currency and the cryptocurrency market is not big enough to threaten financial stability. Moreover a U.S. lawmaker had called for a blanket ban on cryptocurrency buying during Powell’s testimony on Wednesday.
Economic indices in focus:
• Canada: CPI and Core CPI (Jun) Retail sales and Core Retail sales (May) at 19.30 p.m.
By Niramon Nitnitiphruet
Financial analyst, Olymp Trade.