THE QUEEN’S SPEECH IN THE UK SUPPORTED THE POUND
Traders’ attention today turned to the UK, where Queen Elizabeth II delivered a speech where she noted that the main goal of the government has to be reaching better terms on the Brexit deal with the European Union. The pound found further support from the report on British public sector net borrowings that reached the lowest since 2007. The figure in May was just 6.0 billion pounds, which is 1.3 billion better than expected. The volatility of GBP/USD price is likely to remain elevated during the next weeks, due to Brexit negotiations.
The amplitude of EUR/USD price fluctuations reduced due to the lack of important data releases in the US and Eurozone. Investors are trying to figure out the next steps of the Fed, and speculations about one more rate hike during the year in America are putting pressure on the pair.
Fears about the possible start of correction on the US stock market eased which allowed the USD/JPY to regain some previously lost positions. Traders took the publication of the monetary policy meeting minutes of the Bank of Japan this morning in their stride amid the absence of new hints about a possible change in the plans of Japanese central bank.
The NZD/USD price keeps consolidating today ahead of the RBNZ statement on monetary policy and the release of a decision on its interest rates at 21:00 GMT. The majority of experts do not expect the increase in interest rates from the current level of 1.75% due to the acceptable level of inflation, that allows holding the monetary policy settings on the current level.
EUR/USD price was unable to continue the upward correction within the descending channel and overcome the resistance line at 1.1160 that has led to the resumption of decline. Statements from Fed officials point to the possible tightening of the monetary policy this year helping the bears to pull the prices down further. The closest targets in case of a continued decline will be 1.1100 and 1.1020. Potential of growth is limited by the upper boundary of the descending channel and the strong resistance at 1.1200.
The British pound has shown a sharp increase after the speech by Queen Elizabeth II in Parliament. The effect of this optimism-driven impulse was short lived, and after hitting the RSI oversold zone on the 15-minute chart the negative dynamics resumed. Growth potential today is likely to be restrained by the sloping resistance and the next targets in case of a fall will be 1.2635 and 1.2600.
The sharp increase in the USD/JPY price today was explained by the rising appetite for risky assets, which in turn, reduces the demand for defensive assets like the Japanese yen. As a result, quotes tested the resistance at 111.70 and overcoming the level of 112.00 may become a stimulus for continued growth with the targets at 113.00, 114.00 and 114.70. On the other hand, we may see the trend reversal with the acceleration of decline after breaking through the closest minimum around 111.00. In this case, the next targets will be 110.30 and 109.60.
Bulls returned to the American stock market and as a result, we saw the increase of the S&P-mini, that reflects the movement of the wider American index S&P500. In the case of overcoming the level of 2440, the price is likely to move further upward to all-time highs near 2450. We do not exclude the downward correction to the closest support at 2416 or to the lower limit of the local ascending channel. Today the volatility level probably will be low.
The NZD/USD price has left the boundaries of the upward channel and is currently consolidating within the triangle. The decline in the amplitude of price fluctuations usually points to the possibility of a strong price movement after the exit from the triangle. In the case of growth, the first targets will be at 0.7300 and 0.7375. On the other hand, breaking through the support at 0.7220 may become the trigger for a continued price drop with potential targets at 0.7110 and 0.7050. The reason for the sharp move may come from the RBNZ statement on monetary policy at 21:00 GMT.
The price of the American crude oil benchmark extended daily gains after the release of the report on US crude oil inventories. Production reduced by 2.5 million barrels last week against the forecasted decline of only 1.2 million barrels. This fact may support the growth of WTI quotes today, but probably won’t be strong enough to lead to a trend change. In the case of breaking through the resistance at 44.25, we may see continued increase to 45.20 and 46.00. On the other hand, the nearest support in case of a price drop is at 43.00. Volatility is likely to be elevated today.