Friday, December 13, 2019
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The US dollar remains firm after strong employment report and fears for new escalation of trade war

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The USD remained firm against a number of its counterparts on Friday, after a strong US employment report and as US President Trump warned that he would be ready to impose tariffs on additional 267B USD worth of Chinese imports. Such tariffs would cover effectively the total amount of Chinese imports in the US. Analysts point out, that the markets may not have fully priced in the impact of U.S. tariffs on all Chinese imports. For the time being, additional tariffs on 200B USD of Chinese imports are still looming and should there be further escalation we could see the USD strengthening.

AUD/USD dropped on Friday, breaking consecutively the 0.7160(R2) and the 0.7115(R1) support levels now turned to resistance. The pair could continue to trade in a bearish market as trade tensions could continue to escalate, however, technically it should be noted that the RSI indicator in the 4-hour chart is below the reading of 30, implying a rather overcrowded short position. Should the bears continue to reign over the pair’s direction we could see the pair breaking the 0.7060 (S1) support line and aim for the 0.7000 (S2) support level. Should, on the other hand, the bulls take over, we could see the pair breaking the 0.7115 (R1) resistance line and aim for the 0.7160 (R2) resistance hurdle.

Boris Johnson attacks May over Brexit

According to media, as the deadline for Brexit looms, former UK foreign secretary Boris Johnson attacked UK’s PM Theresa May over Brexit as he stated that May has “wrapped a suicide vest around the British constitution”. UK’s home secretary, Sajid Javid, answered that “there are better ways to articulate your differences”. On the other side, UK Labour unions seem open to backing a new referendum regarding Brexit. As the Brexit negotiations are set to continue, any headlines could increase volatility for the GBP.

GBP/USD continued to trade in a sideways manner on Friday, testing the 1.2960 (R1) resistance line. We could see the pair continue to trade in a sideways manner, however with some bearish tendencies today, as the GBP side might be weakened by today’s financial releases and the USD strengthened by today’s fundamentals. Should the market favour the pair’s long positions, we could see the pair breaking the 1.2960 (R1) resistance line and aim for the 1.3020 (R2) resistance hurdle. Should, on the other hand, the pair come under selling interest, we could see it breaking the 1.2895 (S1) support line and aim for the 1.2835 (S2) support barrier.

In today’s economic highlights:

During the European session, we get from the UK the manufacturing production growth rate and the trade balance figure for July. As for speakers, please note that Atlanta Fed president Raphael Bostic speaks. Gold moved in a bear’s market on Friday and should you be interested in the precious metal’s fundamental news and technical outlook don’t miss our Gold Weekly outlook later today.

Week Ahead

As for the week ahead on Tuesday, we get the UK employment data for July and Germany’s ZEW Economic Sentiment for September. On Wednesday no major financial releases are expected, while on Thursday we get Australia’s employment data for August, Bank of England’s interest decision, Central Bank of Turkey’s interest rate decision, ECB’s interest rate decision and the US CPI rates for August. On Friday the US retail sales growth rates for August is due out.

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Disclaimer:
This information is not considered as investment advice or investment recommendation but instead a marketing communication. This material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.


source: FXGiants

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