The foreign exchange market is actually frozen on a wave of contradictory factors that do not allow investors to unequivocally interpret the likelihood of events. This behavior can be explained by the fact that, on the one hand, investors are frightened by the high likelihood of continued slowing down of the global economy, which, following classical examples, should stimulate interest in buying defensive assets, including the Japanese yen, the Swiss franc and the US dollar. But, on the other hand, hopes remain that the expected trade agreement between the States and Beijing will suspend this process and reverse it.
The result of this meeting is "waited" primarily by the commodity group currencies since many countries depend on China's ability to actively buy industrial metals and oil. This is most clearly reflected in the trade relationship "celestial" with Australia and New Zealand. The currencies of these countries are very sensitive to the news and economic statistics from China because they are economically very closely associated with it. That is why we are witnessing recently the ambiguous dynamics of these currencies in pairs with the US dollar.
The dynamics of the Canadian dollar is also fully modeled by the behavior of crude oil prices, in addition to, of course, the state of the Canadian economy. The quotes of "black gold" throughout the last week are in a rather narrow range, supported by hopes for a trade agreement between Washington and Beijing, as well as expectations that the renewal of the OPEC + pact aimed at stabilizing and resuming the growth of oil prices, on the one hand, weakening of the US dollar, on the other hand, will contribute to their increase.
The eurocurrency and the British pound remain hostage to the consequences of a British exit from the EU. In addition to this, the euro is under strong pressure from the fact that economic growth has slowed down in the euro area, as reported by ECB President M. Draghi this week. Sterling remains fully dependent on how the Brexit problem is resolved. While hopes remain that T. May, the Prime Minister of Great Britain, will succeed in "settling" this situation, the sterling will receive support. This is not because the markets are confident of a positive resolution of the situation, but because they follow simple logic, if you cannot put pressure on the sterling, then it is easier to buy it after reaching local minima. And this behavior will persist until the first positive or negative news.
Evaluating the market picture, we note that the period of high volatility produced by uncertainty will last at least until the end of this month.
Forecast of the day:
The currency pair GBP / USD remains in a short-term uptrend. If the pair holds above the level of 1.2950, we should expect the continuation of local growth to 1.3045, but if it falls below 1.2950, there is a probability of its falling to 1.2860.
A similar picture is observed in the currency pair USD / JPY, which can also pull up to 110.20 if it holds above 109.00. but a decline below this mark will lead to its fall to 108.50.
