ATFX Market Outlook, 2019 Aug 13
Personal opinions today:
The U.S. government reported a $120 billion deficit in July. Yesterday this analysis had suggested that a deeper deficit would be bearish for the dollar. In addition, ratings agencies cut their forecasts for the global economy, raising fears of a global slowdown. Meanwhile, the Dow future closed down nearly 400 points after U.S. President Donald Trump mentions the U.S. trade talks with China failed to resolve the dispute. Safe-haven capital flows into gold, which rebounded from a low of $1,489 to above $1,510. The same is the impact of safe-haven capital flows, the USDJPY was close to 105 important support. OPEC has verbally intervened in oil production and oil prices have risen. Unfortunately, worries about a slowdown in the global economy and high crude prices have not caught up, limiting the gains.
Eurozone Germany and the United States released July CPl and core CPl inflation data, respectively, are the focus of the market today. In addition, European currencies looked at July unemployment rate and jobless claims in U.K. today, while Germany and the Eurozone released their ZEW economic sentiment indicators for August. Early data on the Eurozone and the UK are bearish for the euro and the pound forecast. It is worth noting that if CPl is flat or higher in July than expected, the dollar will strengthen, which could lead to declines in European currencies and gold prices, but oil prices could maintain their recent gains. Oil prices could be boosted by a drop in U.S. API crude stocks tomorrow morning. Otherwise, the price will be reduced.
[Important financial data and events]
14:00 Germany July CPI final value
16:30 UK unemployment rate and jobless claims in July
17:00 Germany ZEW economic sentiment index for August
18:00 US NFIB small business confidence index for July
20:30 US CPI and Core CPI rate in July
Next day at 04:30 US API crude oil stocks change
Earlier in the Eurozone, Germany trade balance and current accounts fell, bearish the euro. Markets are watching Eurozone CPl data from Germany. A weak reading of 0.5% below market expectations would be a negative for the euro. With US CPl inflation expected to rise this evening, it is now expected to limit the euro's gains ahead of the release of us CPl data, with key short-term resistance at 1.1235 and key support at 1.1170.
The U.K. prime minister has insisted on a deadline of the end of October to force the EU to accept a new Brexit deal. Investors are feeling the outlook for the UK is gloomy and bearish for the pound. The market remained on the sidelines after the UK's July unemployment rate and jobless claims figures were released today. A rise in unemployment rate and jobless claims would be bearish for pound. In addition, market expectations for a rise in US CPl inflation data are now expected to limit pound's rise ahead of the release of the US CPl data. Technically, if the pound breaks through the support of 1.2015, the pound may go down to 1.1970, and more likely to go down to adjust the 1.1945 wave of 150%. Watch for the UK unemployment rate and jobless claims figures in July.
Trade friction between China and the United States is heating up, global economic growth forecast is slowing down, which is not conducive to Australia's main income and resources export, hitting the Australian economy and the Australian dollar. The U.S. government's budget deficit deepened in July, raising speculation that the federal reserve might consider cutting interest rates, bullish the Australian and New Zealand dollars in the short term probably. There is no sign that the Fed is planning to cut interest rates, with US CPl inflation data key today. A lower-than-expected U.S. CPl of 0.3 percent could bullish the Australian and New Zealand dollars.
As China and US trade friction heats up and Britain faces the risk of hard Brexit, the global economic growth forecast slows, the Dow declines and some safe-haven funds flow into the yen. But in the past the bank of Japan has said the equilibrium price of the dollar against the yen is 105. If the dollar falls below 105, the central bank is likely to intervene either verbally or in action. It is worth being careful not to intervene to push the dollar back up to 106. It is worth noting that the market is expecting an increase in US CPl inflation data and is currently expected to limit the rise in the yen ahead of the release of the US CPl data. Technically, looking at the Dow and Nikkei, the dollar could hit 106.00 against the yen if the Dow or Nikkei rebounds.
The U.S. federal reserve may consider cutting interest rates if the deficit deepens following the release of the government's July budget, which could boost the Canadian dollar. Market expectations for a rise in U.S. CPl inflation data are now expected to limit the rise in the Canadian dollar ahead of U.S. CPl data and crude oil inventory results. Technically, the USDCAD will test the 1.33 trend is over and the adjustment target is testing the support range of 1.3205 or 1.3175. If the USDCAD stays below 1.3245, it can still dip lower. The US dollar is recommended against the Canadian dollar more direct reference to crude oil price trend.
US crude oil futures
The U.S. federal reserve may consider cutting interest rates to boost oil prices if the deficit deepens following the release of the government's July budget. Technically, crude oil futures are expected to test the $55 level after breaking through $53.30. Pay close attention to the trade war between China and the United States, and judge the trend based on good and bad news. In addition, US API crude oil inventory is worth watching. A increase in crude stocks would be bearish for crude prices. Currently, we are focusing on 55.20 and 55.70, two important resistance.
Argentina is politically unstable and its currency has tumbled by 30%. Tensions between China and the United States, a slowing global economic outlook, a 400 point drop in the Dow, and gold jump up above $1,510, testing resistance of 1,522 or 1,525. If the trade war between China and the United States improves, it could lift investor sentiment. In addition, the market is watching the U.S. CPl results today, if the data beat expectations, gold prices may adjust. The strong performance of the Dow and Nikkei will likely be negative for gold prices as well. But keep an eye on the Dow and global stocks, and gold has a chance to rise if it continues to fall.
U.S. Dow Jones industrial average futures US30
The U.S. government's budget deficit widened in July, Argentina's politics crisis and its currency depreciate 30 percent in one day. The Dow fell 400 points last night after negative comments from the US President, tensions between China and the US, possible fail to progress trade talks in September and a slowing outlook for global economic growth. The market is watching the U.S. CPl results today, which could give the Dow a lift if the data beat expectations. However, if China and US relations do not improve, it will affect the global economic slowdown. In addition, the Fed's failure to cut rates or talk of a rate cut will limit the Dow's gains. Technically, the Dow broke through 25860, possibly down to 25640 support.
12050 / 12300 resistance
10850 / 10600 support
As the trade war between China and US heats up, Dow and other major stocks fell, hedge fund inflows to other capital market, bearish US dollar and bullish bitcoin. However, the sentiment maybe change, bearish bitcoin and other crypto currencies. Recommend check out the trends of gold price and compares the bitcoin price.
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Information provided by AT Global Market, Chief Analyst of Asia Pacific: Martin Lam
Registered Australian Accountant/ Certified Professional Manager / Certified Financial Advisor Experienced Investor / Media Market Commentator Martin Lam has Over 17 years’ experience in global investment market. Familiar with the worldwide stock indices, precious metals such Gold and Silver, Crude oil and Forex. He operated Martin Currency Trading Company and had partnership with a number of well-known international financial corporations and institutions. Before he join ATFX, he was TeleTrade Greater China development and Sales Director. Mr. Lam attends Hong Kong Now TV and China CCTV finance channel once a week. He also had regularly invited by different media, such as DBC Digital Financial Channel, Hong Kong Economic Times, The Standard, Ming Pao to share his experience to trade in Forex, Precious metals, Crude oil and worldwide stock indices.
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ATFX Market Outlook, 2019 Aug 13