Market Beat: Yen Continues Higher as Gold Rebounds

August 16, 2016

Today’s important CPI release might have a major impact on the Pound, as a weak reading could justify further monetary easing by the Bank of England in the coming months.

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Market Beat: Yen Continues Higher as Gold Rebounds

This article is originally referred from Daily FXGlobe

The Japanese Yen remained the strongest currency among the majors yesterday and this morning, as all of its major counterparts are trading lower, and it crossed above important resistance lines compared to several of its peers. The U.S. Dollar is broadly lower today in early trading, despite the recent positive surprises in the major economic indicators in the U.S. The Pound remained week for another session, although the battered currency recovered some of its losses today in early trading.

Commodities were mostly higher today, but oil is trading lower this morning after another bullish session. Precious metals bounced back from a period of weakness, helping commodity currencies in holding their ground against the USD. The Australian Dollar still trades close to its 1-year high, despite the recent rate cut by the local central bank and the Canadian Dollar also performs above average in recent weeks.

GBP/USD (current price: 1.2900)

Cable got very close to the Brexit lows yesterday but the pair recovered slightly above the 1.29 level this morning following a very negative week. The broader trend is still decisively bearish as the currency remains only a small margin above the last short-term support zone before its 30-year lows. Today’s important CPI release might have a major impact on the Pound, as a weak reading could justify further monetary easing by the Bank of England in the coming months.

Our assessment: GBP/USD could be headed below the 1.2850 level after breaking below 1.30 again, as the British economy continues to struggle.

GBP/USD trading near its 30-year lows on the Daily Chart, Created by FxGlobe MT4

GBP/USD trading near its 30-year lows on the Daily Chart, Created by FxGlobe MT4

AUD/USD (current price: 0.7689)

The Australian Dollar is still the strongest commodity currency of the past few weeks, and the Aussie trades just below its recent high near 0.77 after a slight correction towards the end of last week. The U.S. Dollar is trading weaker this week, and that seems to help the pair today in early trading, following a low-volatility consolidation on Monday. The RBA’s monetary policy meeting minutes were in line with expectations, hinting on no further rate cuts by the central bank in the near future.

Our assessment: AUS/USD might be headed higher again as only the 0.78 level stands in the way of the pair in the short-term, following two weeks of bullish trading.

AUD/USD still in a short-term advance on the Daily Chart, Created by FxGlobe MT4

AUD/USD still in a short-term advance on the Daily Chart, Created by FxGlobe MT4

EUR/JPY (current price: 112.35)

The weak Japanese GDP growth number of Monday wasn’t enough to stop the Yen as it continues to march higher against the other G10 currencies. The Bank if Japan is suddenly the most hawkish among the key central banks of the world, and that continues to put pressure on the pair, as the Yen pushes higher. The Euro had a quiet session yesterday, amid the public holiday in most of the Eurozone countries, but the cross is sharply lower today in early trading.

Our assessment: EUR/JPY is still in a strongly declining long-term trend, and the pair trades a few percent above its Brexit lows near the 110 level following more than a month of consolidation.

EUR/JPY trading near multi-year lows on the Daily Chart, Created by FxGlobe MT4

EUR/JPY trading near multi-year lows on the Daily Chart, Created by FxGlobe MT4

Gold (current price: $1349.50) and Silver (current price: $20.01)

Precious metals experienced quiet trading during the last week, with no major movements in either direction, although the overall picture was slightly negative. Yesterday’s session was bullish again as both metals rebounded to close around major support/resistance levels at 1350 for gold and at $20 in the case of silver. The long-term trend remains positive for the metals and gold is still just 2% below its high near the 1375 zone, while silver is in a slightly weaker technical position.

Our assessment: Gold lost some of its upside momentum recently, but the safe haven commodity might be ready for another move higher, especially if global stocks finally start a correction.

Gold still stuck at 1350 on the Daily Chart, Created by FxGlobe MT4

Gold still stuck at 1350 on the Daily Chart, Created by FxGlobe MT4

Economic Releases

Forex markets might have a busier day ahead of them, as traders will have to focus on several important releases in the morning and during the afternoon session as well. The British CPI and the German Economic Sentiment numbers will highlight the morning session, while U.S. Building Permits and the local CPI Index will come out from the U.S. later on. Industrial Production will also be released in the afternoon, while the New Zealand Employment Report will be published in the evening.

Original Source: Daily FXGlobe

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