Daily Market Review — 20/08/2015
Bank of Japan Decision on Interest Rate Is the Main Event of the Day
Yesterday’s dynamics of the pair were caused by the expectation of an important report on inflation in the US, as well as the publication of the minutes of the last Fed meeting. According to the data, the US consumer price index showed an increase by 0.1% last month against analysts’ expectations of 0.2%. On an annual basis, consumer prices rose by 0.2%, which fully meets the expectations of the market. As to more important indicator, namely the basic consumer prices index prices rose by 0.1% m/m against analysts’ expectations of 0.2%, and by 1.8 % y/y. After the publication of the Fed meeting minutes of the Japanese currency has strengthened against the US dollar, since there was no hint of imminent rate hikes. Also worth noting that most Fed officials said that while a rate hike is ‘approaching’, it is not the time for increase yet. Market participants expect a press conference the BOJ regarding its decision on interest rates, scheduled for 06:30 (GMT).
Resistance: 124.06, 124.46, 124.58
Support: 123.68, 123.51, 123.32
Yesterday the pair showed mixed trends, which was caused by the expectation of important economic statistics from the United States. There were no economic news in the UK yesterday. Inflation report showed that US consumer prices continued to rise, though at a slower pace than expected by most analysts. It is worth noting that after the Fed meeting minutes were published, the markets are less likely to expect a rate hike at the meeting in September. Today market participants should pay attention to the publication of economic data on retail sales in the UK at 08:30 (GMT). There are also important stat reports in the US. For example, data on the initial jobless claims will be published at 12:30 (GMT), while at 14:00 (GMT) markets will monitor the release of the data on existing homes sales, Philadelphia Fed Manufacturing Survey, and the index of leading indicators.
Resistance: 1.5700, 1.5716, 1.5789
Support: 1.5633, 1.5562, 1.5533
Yesterday’s trading on the European major stock exchanges was negative. The reason for this lies in fears of economic slowdown in China and the weakening of the currencies. Also worth noting that investors are worried that the recent weakening of the RMB may weaken demand for commodities, as well as lead to decrease in demand for some services. This will make European exporters suffer, especially those from Germany. Also investors were focused yesterday on the publication of the Fed meeting minutes, which didn’t make it easier to predict the timing of the first rate hike. Today some impact on the stock markets will have a publication of the UK index of retail sales, scheduled for 08:30 (GMT).
Resistance: 6437.08, 6486.64, 6533.24
Support: 6375.29, 6350.00, 6330.00
Gold prices rose significantly yesterday, due to concerns about China’s economic development, as well as the expectations of the Fed meeting minutes. Investors prefer to buy gold as a safe-haven asset amid financial, economic and political crises. Upon the publication of the minutes gold price received another impetus to growth. The minutes’ main idea was that the first rate hike is approaching, but it’s not the time yet. It was also noted that the economic slowdown in China as well as the Greek crisis will have negative consequences for the US economy. This fact raises doubts among investors that the Fed will raise interest rates at its meeting in September. Therefore, there is a room for rise of gold prices.
Resistance: 1142.06, 1146.64, 1150.81
Support: 1119.09, 1109.41, 1101.60