According to media as the Trump-Kim meeting is ongoing, the first positive signs start to come out. When asked how the meeting is progressing, president Trump said “Very good. Very, very good” while Chairman Kim stated that “we overcame all kinds of skepticism… and it’s good for peace”. Should the meeting have a positive outcome, we could see the start of a process for further stabilisation of the Korean peninsula. It might also be the case that the two leaders could surprise the markets by agreeing more than expected or today’s meeting having more concrete results. The markets reacted calmly at the start of the meeting, while should there be further positive headlines we could see the USD strengthening and safe havens weaken.
USD/JPY rose yesterday breaking the 109.75 (S1) resistance line (now turned to support and tested the 110.45 (R1) resistance line. We see the case for the pair to continue to have bullish tendencies as the outcome of the Trump-Kim meeting and the US financial releases later today could support the USD side. Should the bulls continue to be in charge, we could see the pair breaking the 110.45 (R1) resistance line and aim for the 111.00 (R2) resistance hurdle. Should the bears take over, we could see the pair breaking the 109.75 (S1) support line.
- Support: 109.75(S1), 108.95(S2), 108.50(S3)
- Resistance: 110.45(R1), 111.00(R2), 111.65(R3)
Brexit test for Theresa May
On other headlines, UK government’s key Brexit legislation returns to parliament for a vote. UK PM Theresa may have to pacify both pro Brexiteers as well as pro-EU rebels in order to pass the legislation. The two key amendments which the UK government will have to overcome relate to the UK remaining in the EU customs union and the second about parliament gave the power to veto a possible deal with the EU. The markets seem to be in a “wait and see” position, watching out for signs of the Brexit prospects as well as the PM’s future and should there be positive headlines, we could see the pound getting some support.
Cable dropped yesterday after the disappointing results of the UK financial releases, aiming of the 1.3330 (S1) support line. We could see the pair, dropping further as the financial releases today could weaken the pound and at the other hand strengthen the USD. Should the pair continue to be underselling interest we could see the pair breaking the 1.3330 (S1) support line and aim for the 1.3215 (S2) support barrier. Should it find fresh buying orders along its path we could see it aiming or even breaching the 1.3425 (R1) resistance level.
- Support: 1.3330(S1), 1.3215(S2), 1.3125(S3)
- Resistance: 1.3425(R1), 1.3500(R2), 1.3600(R3)
In today’s other economic highlights:
In the European session, we get UK’s employment data for April and Germany’s ZEW economic sentiment and current conditions indicators for June. In the American session, we get the US inflation data for May and the API weekly crude oil inventories figure. Also please be advised that the monthly OPEC report is due out today and could provide volatility in oil prices.
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