AETOS Market Commentary
Global markets had been subdued by unstable political sentiments throughout this week with continuous escalation of the trade war between U.S. and China, sanctions on Iran, and British Prime Minister Theresa May’s resignation. Most recently Sterling fluctuated in a range before settling higher after May announced she will step down as party leader June 7th.
Ahead of a long weekend for both the U.S. and U.K., concerns are mounting that the trade dispute could cripple global growth, with disappointing American factory data Thursday hinting at the fragility of the expansion. After the close on Wall Street, President Donald Trump said that Huawei Technologies Co., which was put on a U.S. blacklist earlier this month, could be part of any trade pact with China.
Elsewhere, Australia’s 10-year bond yield reached another all-time low amid calls for as many as three central bank interest-rate cuts this year. Australian Dollar rose 0.3% to 0.68970, Euro remained flat and closed at 1.11814 whereas the British Pound increased 0.2% to $1.26583, the biggest increase in three weeks.
In a short run, we are expecting that AUDUSD will rebound to 0.6980 against the greenback as positive election results will bring hopes on revitalizing the Australia slowing economy. On the other hand, in a median term, with signals on further rate cuts from the RBA, the Aussie will remain under pressure where primary support would be 0.6750 against USD.
AUDUSD 4 Hour Chart
With the imminent departure of the British Prime Minister, both the Euro and Sterling are likely to remain subdued as uncertainty mounts on the future path between the EU and U.K. The Euro is seen meeting its resistance at 1.1193 and selling pressure continues to build pushing the currency down towards its primary support at 1.1100 against the greenback in the short term.
EURUSD 4 Hour Chart
Similar to the Euro, Sterling will continue to be under pressure due to the unknown fate of the Brexit deal and also its own political environment. In a short run, strong resistance is seen at 1.2800 however the currency had already encountered gusty headwind at 1.2700 which seems to be bringing the currency down further to the likely of 1.2500 level. Rebound of both the Euro and British Pound weighs heavily on the upcoming British PM policy on the economy and direction over the Brexit agenda.
GBPUSD 4 Hour Chart
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