1 August 2019 Morning Session Analysis
Dollar surge despite rate cut.
Dollar index measuring its value against a basket of six major currency pairs surged to its 2-years high despite Fed’s rate cut decision. Greenback received bullish momentum after Fed’s decision to cut its rate by 25-basis point, the first cut in a decade since the financial crisis. As the rate cut was widely expected, overall sentiment from FOMC was rather mixed whereby Fed’s Chairman Jerome Powell stated that the cut was not a beginning of a long series of rate cuts, however he also emphasized that it would not be just one rate cut. According to the FOMC statement, the Fed left their door open to future cuts, stating that they will act appropriately to sustain expansion of economic activity and will further evaluate future economic data to keep their labor market strong and inflation level near their symmetric 2 percent objective. As investors were expecting a dovish stance from the FOMC with higher hopes on an aggressive cut, the statement had lowered investors expectations while causing them to largely buy the dollar and sell safe-haven assets. However, the Fed had also ended its balance sheet reduction two months earlier than planned, loosening their monetary policy early than expected. Investors will now focus on upcoming data from the US to further gauge Fed’s future monetary policy stance. As of writing, dollar index was up by 0.37% to 98.55 while pair of USD/JPY was up by 0.43% to 109.20.
As for commodities, crude oil price fell 0.40% to $57.65 per barrel despite a major downfall in crude oil inventories. According to the Energy Information Administration (EIA), US crude inventories fell by 8.496M, exceeding economists’ forecast to fall only 2.588M. However, the major fall in stockpiles failed to provide support for oil prices as the Fed signals rate cut may be limited. Besides that, recent Sino-US trade talks which ended without any significant progress further worsen the sentiment for oil market. On the other hand, gold price plunged by 0.22% to $1409.50 a troy ounce following investors risk appetite towards the dollar after the FOMC statement, causing investors to sell their safe-haven assets and enter into stronger dollar.
Today’s Holiday Market Close
Time Market Event
N/A
Today’s Highlight Events
Time Market Event
19:00 GBP BoE Inflation Report
Tentative GBP BoE MPC Meeting Minutes
19:30 GBP BoE Gov Carney Speaks
Today’s Highlight Economic Data
| Time | Nation & Data | Previous | Forecast | Actual |
| 15.55 | EUR – German Manufacturing PMI (Jul) | 43.1 | 43.1 | – |
| 16:00 | EUR – Manufacturing PMI (Jul) | 46.4 | 46.4 | – |
| 16:30 | GBP – Manufacturing PMI (Jul) | 48.0 | 47.7 | – |
| 19:00 | GBP – BoE Interest Rate Decision (Aug) | 0.75% | 0.75% | – |
| 20:30 | USD – Initial Jobless Claims | 206K | 212K | – |
| 22:00 | USD – ISM Manufacturing PMI (Jul) | 51.7 | 52.0 | – |
Technical Analysis
DOLLAR_INDX, H4: Dollar index was traded higher while currently testing the resistance level 98.50. MACD which illustrate bullish bias signal suggest the dollar to extend its gains after it breaks and close above the resistance level.
Resistance level: 98.50, 99.85
Support level: 97.90, 97.10
GBPUSD, Daily: GBPUSD was traded lower following prior breakout below the previous support level 1.2245. MACD which illustrate persistent bearish momentum signal suggest the pair to extend its losses towards the support level 1.1955.
Resistance level: 1.2245, 1.2400
Support level: 1.1955, 1.1775
EURUSD, H4: EURUSD was traded lower following prior breakout below the previous support level 1.1100. MACD which illustrate bearish momentum signal suggest the pair to extend its losses towards the support level 1.1015.
Resistance level: 1.1100, 1.1170
Support level: 1.1015, 1.0950
USDJPY, H4: USDJPY was traded higher following prior breakout above the previous resistance level 109.00. MACD which illustrate bullish momentum signal with the formation of golden cross suggest the pair to extend its gains towards the resistance level 109.75.
Resistance level: 109.75, 110.30
Support level: 109.00, 108.50
AUDUSD, H4: AUDUSD was traded lower while currently testing near the support level 0.6825. MACD which display bearish bias signal suggest the pair to extend its losses after it breaks below the support level.
Resistance level: 0.6865, 0.6905
Support level: 0.6825, 0.6760
NZDUSD, H4: NZDUSD was traded lower following prior breakout below the support level 0.6550. MACD which illustrate bearish momentum signal with the death cross formation suggest the pair to extend its losses towards the support level 0.6490.
Resistance level: 0.6550, 0.6600
Support level: 0.6490, 0.6420
USDCAD, H4: USDCAD was traded higher while currently testing near the resistance level 1.3230. MACD which display bullish momentum signal with the formation of golden cross suggest the pair to extend its gains after it breaks above the resistance level.
Resistance level: 1.3230, 1.3290
Support level: 1.3145, 1.3095
USDCHF, H4: USDCHF was traded higher following prior breakout above the previous resistance level 0.9935. MACD which illustrate bullish bias signal with the formation of golden cross suggest the pair suggest the pair to extend its gains towards the resistance level 1.0005.
Resistance level: 1.0005, 1.0095
Support level: 0.9935, 0.9895
CrudeOIL, H4: Crude oil price traded lower following prior breakout below the previous support level 57.85. MACD which illustrate diminishing bullish momentum with the starting formation of death cross suggest the commodity to extend its losses towards the support level 56.00.
Resistance level: 57.85, 59.25
Support level: 56.00, 54.50
GOLD_, H4: Gold price was traded lower following prior breakout below the previous support level 1421.40. MACD which illustrate bearish momentum signal with the formation of death cross suggest the commodity to extend its losses towards the support level 1403.15.
Resistance level: 1421.40, 1437.95
Support level: 1403.15, 1386.35