Daily Market Update: Trump Comments on Rate Hikes, Japan & Canada CPI

 

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News Commentary

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The dollar reversed against the currency basket on Thursday after U.S. President Trump said he was “not happy” about the Federal Reserve rate hikes but the downside was limited amid optimism over the U.S. economy.

“I’m not happy about it,” President Donald Trump said about interest-rate increases during an interview with CNBC Thursday, claiming that “higher rates put the United States at a disadvantage.” Trump insisted, but, he also sees that “Fed do what they feel is best.”

However, Powell earlier this week said gradual interest rate hikes would be “the best way forward” for the economy, citing stronger labour markets, and inflation that had met the Fed’s 2% objective.

 

The US and China are continuing a full-blown trade war. The People’s Bank of China (PBOC) is increasingly favouring a weaker Yuan after setting the Yuan reference rate at 6.7671 versus previous day’s fix of 6.7066.

 

The Japanese Yen started Friday’s trading session slightly affected by the release of local inflation data. June’s national CPI was 0.7%, lower than forecasts of 0.8% and in line with May’s result. However, the Yen may rise as trade war tensions may increase risk aversion.

 

All eyes will be on Canadian CPI at 12:30 GMT with a forecast of 0.1% such as with June’s reading. Traders will follow the result to get any conclusion about soon rates hike.

 

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 Chart Analysis

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US INDEX

On the daily chart, the price has bounced from the red resistance zone for the third time to shape the reversal triple top.

The price has recently formed another reversal pattern to assure the bearish bias with the wedge.

Followed by a break beneath an ascending trend on RSI, the index is supposed to move its way back to the support zone of 93.2-92.6.

 

AUD/USD

On the daily chart, the pair went back to the green support zone again to shape a double top pattern.

Followed by divergence in RSI, our bullish view is still the same: if the price manages to still be above the support area, it will be heading towards the combination of levels of the descending trend, ascending channel and resistance zone at 0.7655-0.774.

 

NZD/USD

On the daily chart, the price retested the green support zone 0.675-0.6695, followed by divergence in RSI.

An AB=CD harmonic pattern has been shaped to reinforce the bounce.

The price is supposed to head back to the top of the descending channel with the resistance zone at 0.697-0.703, but only if it manages to hold above the green zone.

 

AUD/JPY

On the daily chart, as we expected, the price has bounced from the red resistance zone at 83.9-85.95 with engulfing bar.

The price is expected to continue its reverse to keep going in its sideways movement to the support zone 81.2-80.5.

 

CHF/JPY

On the daily chart, it’s obvious to recognise by the key levels that the price has recently reached the resistance zone at 112.85-113.05, reversal wedge, moving average 200 and 50% Fibonacci.

Followed by AB=CD harmonic pattern, the price is expected to go down to 111.9 then 110.3