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Sterling at Four-Month Lows

Asian markets finished mixed today amid global politics and geopolitical uncertainty. The Nikkei225 finished 0.05 percent lower to 21,283, the Hang Seng benchmark in Hong Kong finished 0.04 percent lower at 27,647. The Shanghai Composite finished 0.87 percent lower to 2,880, while in Singapore, the FTSE Straits Times index finished flat at 3,184.

Australian stocks clawed back earlier losses to finish in positive territory for a sixth straight trading session. The market was lifted by gains from the Consumer Discretionary, Materials, Energy and Industrials sectors, which outweighed weakness in the Consumer Staples, Financials and Telco sectors. The ASX200 ended the session 10 points higher or 0.2% to 6,510. ASX200 is now up 15.3% year-to-date.

European session started mixed today amid geopolitical concerns and the upcoming election in EU. The DAX30 is 0.07 percent lower to 12,133 and CAC40 is 0.06 percent lower at 5,383 while the FTSE MIB in Milan is trading 0.27 percent lower at 20,643. The London Stock Exchange is adding 0.48 percent to 7,364 as May proposed giving MPs a vote on putting her Brexit deal to a referendum in an attempt to win over Parliament over to her side and get her proposals through.

In commodities markets, crude oil trades lower today at 62.48 after American Petroleum Institute data showed that U.S. crude stockpiles rose unexpectedly the previous week. Brent oil also trades lower at $71,73 per barrel. Major oil producers have yet to agree on adjustments on output. Gold consolidates around 1273 zone at the two weeks low. The precious metal breached the 100-day moving average, and that gave the control back to bears. XAUUSD technical picture is bearish now after yesterdays sell-off. Gold will find support at 1272, the April low, while more bids will emerge at the 200-day moving average at 1255. On the upside, resistance stands at 1296, the 100-day moving average.   

In cryptocurrencies market, bitcoin (BTCUSD) consolidates near recent highs just below the 8,000 mark. The daily low for BTC was at 7,839 and the daily high at 8,101. BTCUSD breached the 50 and 100-hour moving average during the weekend and bulls took control for the short term. Immediate support for BTC stands at $7,644, the 50-hour SMA round figure and then at the 200-hour moving average at 7,147, and on the upside, strong resistance stands at 8,300, the high from the Asian session. Ethereum (ETHUSD) continues higher to 256. On the upside, the immediate resistance stands at 263, the high during the Asian session, while the support stands at 236 and the 100 hour SMA, Litecoin (LTCUSD) digests the high at 91.51. The crypto market cap holds above $174.0B.

On the Lookout: U.S. Commerce Department on Monday granted Huawei Technologies Co Ltd a license to buy U.S. goods until Aug. 19th The Australian construction data report delivers a contraction of 1.9% in the first three months of 2019 against economist’s expectations for a no change.

In the Central Banks calendar, the European Central Bank President Mario Draghi is due to speak in Frankfurt today. Also, we’ll get the FOMC minutes from the meeting earlier this month.

In the America economic calendar, we await the weekly data on the mortgage.

Trading Perspective: In forex markets, the US dollar trades higher at 97,92 as traders digest the developments in US-Sino trade war. The Aussie dollar started the week strong after Prime Minister Scott Morrison registered surprise victory in the general election, but today during the Asian session, it got a hit down to 0.6879 as RBA Governor Philip Lowe said the board “will consider the case” for an interest rate cut on June 4. Kiwi also trades lower breaking below the critical 0.65 mark. As of writing, the pair is trading at 0.6497.

GBPUSD Hourly (H1) Chart
GBPUSD Hourly (H1) Chart

GBPUSD failed to materialize the jump during the PM May speech which lifted the pair above 1.28, but traders very fast dumped the Pound as T. May failed to deliver a solid solution in the dust of Brexit uncertainty. The pair hit the daily low at 1.2671 a fresh four-month low and the daily high at 1.2718. Bears are in full control now and a test of 1.2670 the January 15th bottom looks possible. On the upside, immediate resistance now stands at 1.27 and then at the 50-hour moving average around 1.2720.

In Sterling futures, the open interest increased for the seventh session in a row on Tuesday, this time by around 4.7K contracts. The volume posted the largest single day build since March 29.

EURUSD trades at three-week lows at 1.1150 as any attempt to the upside meets strong bids. The pair made the Asian high at 1.1165 and the low at 1.1150. The pair breached all major moving averages last Friday and now is looking for support at the yearly low down to 1.1115. On the upside, the immediate resistance stands at 1.1180 the high from yesterday, while more offers will emerge at 1.1245, the 50-day moving average.

In euro futures, the open interest rose by 714 contracts on Tuesday, reaching the fourth consecutive build in a row. Volume, also rose by around 64.7K contracts, extending the choppy activity for one more session.

USDJPY trades at 110.40 amid general USD strength across the board. Today the pair hit the low at 110.36 and the high at 110.62. The pair will find support at 109.54 Friday low. On the upside, immediate resistance for the pair stands at 110.51, the 100-day moving and then at 111.01 the 50-day moving average.

In Yen futures, the open interest shrunk by 4.5K contracts on Tuesday vs. an increase of almost 26.5K contracts in volume.

USDCAD is trading lower for the third day at 1.3405. The pair will find immediate support at the 50-day moving average around 1.3392 while extra support stands at the 1.3300 round figure. On the upside, immediate resistance stands at 1.3435, the 100-hour moving average, while a break above can escalate the rebound towards the 1.35 zone.

USDCAD Hourly (H1) Chart
USDCAD Hourly (H1) Chart