Tariffs and another firing by Trump drove headlines last week.
Trump wasn’t willing to let go his trade war rhetoric one bit as he mentioned trade surplus with Canada and was also rumored to be weighing out imposing tariffs on certain goods imported from China. Trump has earlier fired his secretary of state Rex Tillerson and now has replaced him by former CIA director Mike Pompeo, a renowned Iran hawk. The vacant CIA director’s post was filled in by Gina Haspel who will be agencies first female head.
Gold was pressured by worried about trade war and an imminent rate hike in the coming FOMC meeting hitting a low of 1309 before settling at 1313.50
EURUSD too was weak following the wait and watch approach advocated by Draghi. Inability of EURUSD to capture the 1.25 level too accelerated selling with EURUSD ending the week at 1.2290.
GBPUSD was flat last week with no fresh Brexit news as traders looked to Dollar and financial markets for direction. GBPUSD closed last week at 1.3942.
USDJPY was sharply lower last week with it testing support at 105.50 yet again. Political uncertainties helped Yen gain against Dollar.
USDCAD rallied yet again after finding support close to 1.28, BoC highlighting worries about NAFTA helped CAD weakened and USDCAD closed last week at 1.3096.
FOMC should steal the limelight next week with a rate hike an almost certainty. Markets will however look to the language used in the monetary statement to get an idea of the future hike plans. At the moment fed rate hikes of more than 3 this year looks an outside possibility with the establishment filled with doves and President Trump himself the biggest of them.
Gold looks set to test the 1305 support yet again in the coming week, with the major support lying further down at 1280. As in the cases before this could be another classic case of doing one on the rumor and exactly opposite after the news. If the monetary statement sticks to 3 hikes only this year Gold should find support and look to test 1341 yet again.
EURUSD was weak last week but the bullish picture is still intact with strong support existing at around 1.22.
GBPUSD looks set to have completed the correction after it had rallied above 1.43 in January 2018. GBPUSD found support just above the 50% retracement of the Nov ’17 – Jan ’18 rally that existed at 1.3685 and now has broken out of the triangle formation to the upside. Immediate support exists at 1.3900 and 1.3800. Host of economic data from UK is set to be released this week with Inflation data on Tuesday followed by average earnings data on Wednesday.
USDJPY has found support at 105.00-105.50 repeatedly and that level should hold unless geopolitical situations worsen further. Resistance exists at 106.40.
Persistent worries about NAFTA has undermined CAD. UDCAD is now in new territory not seen till last July. USDCAD is now well placed in a steep uptrend with next level of resistance at 1.3130 and 1.3200. Support lies at 1.3000 and 1.2920.