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July 4, 2017

Euphoria over euro fades, Dollar renews gains

Euphoria over euro fades, Dollar renews gains

US dollar expands rally against the euro in today’s Asian trading on upbeat economic data, which shore up investor optimism about the prospects for the US economy in the second half of 2017.

The yen is strengthening against buck and euro due to the growing demand for have assets after the information about the next launch of the ballistic missile by North Korea. Media of the country reported that an important statement on the last launch of the ballistic missile will be distributed on Tuesday.

Strong data on manufacturing activity in the United States for June improved investor sentiment towards the US economy. The dollar index fell 6% in the first half, which was the most significant decline since 2011, on fears of a slowdown in inflation and economic recovery in the US.
The index of business activity in the manufacturing sector of the US (ISM Manufacturing) in June 2017 rose to 57.8 points from 54.9 points a month earlier, the Institute for Supply Management (ISM) said on Monday. The indicator has become the highest since August 2014.

The attention of traders this week is directed to the minutes of the June meeting of the Federal Open Market Committee (FOMC), during which it was decided to raise the rate for federal funds by 25 basis points – to 1-1.25% per annum .
In addition, the market expects data on unemployment in the US for June, the publication of which is scheduled for July 7.

The Reserve Bank of Australia left the key rate unchanged at 1.5 percent following the meeting on Tuesday, as expected, given that regulator officials had previously signaled a stable outlook for most of the year. 49 from 50 Reuters economists expected RBA wills stand pat with its monetary policy.

Market reaction suggests traders were disappointed from dovish stance of the bank amid bullish mood of global central bankers seeing global upturn which need to be supported with higher rates.Though strong AU economy will take its effect after all so its recommended to try longs on the pair.

Oil prices fell slightly in the morning on Tuesday, interrupting the eight-day rally, due to fears about the increase of US inventories
According to the forecasts of BMI Research analysts, the average price for the North Sea grade will be at the level of $54 per barrel in the second half of this year, and in 2018 will rise to $55 per barrel. The prices for the American benchmark will average $51 per barrel in the second half of 2017 and $52 per barrel in 2018, they added.
The growth of oil production in countries that have not signed OPEC agreement, including the United States heats up the “bearish” sentiment in the market. The OPEC Oil cartel and several countries outside the organization agreed at the end of May to extend the production cutback by nine months until March 2018 to restore the balance of global supply and demand.

In overall oil prices still lack solid catalysts for growth, so its advised to hold up with purchases.

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