The Dollar Suffered A Double Whammy: Trump Chaos, Fed Minutes
AvaTrade | Aug 17, 2017 06:54AM ET
Summary:
- The dollar pounded against six major currencies by the end of manufacturing council announced by Trump and dovish FOMC July minutes.
- Gold benefited from the dive in the dollar and regained most of the lost ground on the week, potentially targeting last week’s high of 1292.
- K. July retail sales and EU July CPI due to release today are in focus.
The buck suffered a double whammy Wednesday. First, Trump ended manufacturing council after CEOs disbanded strategic and policy forum and which triggered fears over increasing displeasure at Trump and doubts about Washington’s future policies. Second, FOMC July minutes released Wednesday showed policy makers were more cautious in response to recent sluggish inflation, with some members voted for a pause in rates hike until it was proved to be temporary. The greenback accelerated its decline after the release of the dovish minutes. The data to watch today are U.K. July retail sales and EU July CPI.
Technical
The dollar index (DXY) completed its corrective movement on the daily chart, with clear and significant resistances and bearish divergence in MACD indicator on 1 hour chart. Its short term moving averages descended rapidly below its long term moving averages, reinforced short-term declines of the price action. Watch the index and see if it continues to lose ground or not on the day.
As to non-U.S. currencies, the euro rallied after finding support at daily EMA30, eyeing on EU inflation figure on the day. The sterling bounced back after consolidation. The British currency hit H1-EMA60, looking for a potential decisively breakout on the day. The Australian dollar rallied further on Wednesday, reclaiming 50% level of the decline from late July to the month of August. Wait and see if the commodity currency could sustain its bullish momentum or not today.
Let’s take a look at precious metals now. Gold tested twice the level at 61.8% Fibonacci of up move last week and confirmed its role of a support. The metal thus rallied rapidly in New York session, regaining most of lost ground on the week, with potential to test 1292 high again today. The gold’s rise gained momentum mainly thanks to the weakness in the dollar. The gold resumed its negative correlation of the dollar after the risk-aversion sentiment eased.
Get The News You Want
Disclaimer: The views and opinions expressed in this article are those of the authors and for the purpose of reference only, and shall not be relied upon by investors in making any trading decisions.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.