During the weekend, it was published through various important financial sites that the US president is expected to announce additional tariffs of $200B worth of Chinese imports, today Monday the 17th. However, a small change of detail was made with the tariff level likely being 10%, which is below the 25% that the administration initially considered. Tariffs level could be lowered due to importers and other business owners who complained of the possible impact the duties may have, as well a possible increase in prices on American consumers, especially as the holiday season approaches. However, sources also stated that the tariff level might be raised to 25% if China refuses to change their economic policies. The Chinese government replied by stating it may refuse to take part in planned trade talks with the United States later this month.
EUR/USD dropped during Friday’s European afternoon and remained lower until the closing, breaking consecutively the 1.1675 (S1) support line, now turned to resistance. The pair remained lower during the today’s Asian session trading between the 1.1675 (R1) resistance level and the 1.1623 (S1) support level, moving in a sideways manner. Volatility could rise during today’s European session with financial data to be released or in the American session on further headlines regarding the US-SINO issue. Should the pair come under selling interest, we could see it breaking the 1.1623 (S1) support line and aim lower for the 1.1576 (S2) support barrier. On the other hand, should the market favour the pair’s long positions, we could see the pair breaking the 1.1675 (R1) resistance line and aim for the 1.1745 (R2) resistance hurdle.
- Support: 1.1623 (S1), 1.1576 (S2), 1.1537 (S3)
- Resistance: 1.1675 (R1), 1.1745 (R2), 1.1820 (R3)
Brexit: Uncertainty remains but actions are taken to safeguard Interests
Deutsche Bank is considering to move large volumes of assets from London to Frankfurt after the UK’s planned exit. According to FT, Deutsche Bank could transfer approximately 450B euros in capital back from London to its headquarters. This could be a move to protect its interests from any potential Brexit setbacks, but the fact that a significant amount could remain in London may indicate a form of investment for the future. On the same subject, but a different front, in a meeting between Austrian Chancellor Sebastian Kurz and German Chancellor Angela Merkel it was agreed that actions should be taken in order to land a trade deal between Britain and the European Union, after Brexit, signifying they would like to keep business with Britain in the future.
GBP/USD also traded lower heading towards the closing on Friday the 14th. Even though in the last session of the previous week it traded above the 1.3080 (R1) Resistance level it landed lower in the final hours of Friday’s trading and today Monday the 17th remained very close to that price. GBP/USD could be heading for a very bumpy ride this week with financial releases from the UK having the potential of creating huge volatility. Also, a looming meeting in Austria on Wednesday the 19th with the intent to speed up Brexit negotiations could create further volatility. If Cable is undertaken by a bearish movement supported by financial releases we could see the pair moving down to the 1.3020 (S1) Support level and even breaching it moving to the 1.2960 (S2) support area. On the other side, any positive developments on Brexit could create a positive momentum for the pair, causing it to rise above the 1.3080 (R1) resistance level and aim for the 1.3160 (R2) resistance barrier.
- Support: 1.3020 (S1), 1.2960 (S2), 1.2895 (S3)
- Resistance: 1.3080 (R1), 1.3160 (R2), 1.3215 (R3)
In today’s economic highlights:
In a rather slow Monday, in the European session, we get the industrial production growth rate of Turkey for July while from Sweden Riksbank’s meeting minutes will be released. Furthermore, in the European session, we get the Eurozone HICP for August. As for speakers, ECB’s Benoit Coeure speaks & Riksbank Governor Speaks.
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