POUND FALLS AFTER AN EXPLOSIVE TRUMP INTERVIEW AS STOCKS SURGE
The pound fell against the US dollar today after a Donald Trump interview with Rupert Murdoch’s The Sun was published. In the interview, the US president talked about Brexit and his disappointment with the approach followed by Theresa May. Theresa May’s proposal for Brexit will leave the UK in the same customs union with the EU, which has disappointed most people who supported Brexit. The US president watered down her deal and removed the probability of the US doing a free trade deal with the UK. In the past, the US president has expressed his frustrations working with the EU. He believes the EU – which has been a close ally to the US – was created to take advantage of the US.
The dollar rose after an interview with Jerome Powell was published yesterday by Marketplace. In the interview, the Fed chair talked about his optimism for the American economy and pressed the chances that the Fed would continue the gradual tightening pace initiated by his predecessor, Janet Yellen. However, he cautioned against the ongoing trade war, which he predicted would have negative effects on the American economy. As the US tariffs on the Chinese economy went on, Chinese exports to the US rose by a higher number than expected.
Global stocks rose today after investors shrugged off the ongoing tensions on trade. The Japanese Nikkei, Hong Kong’s Hang Seng, and Germany’s DAX were higher by 1.85%, 0.20%, and 0.40%. The US futures pointed to a slightly higher opening as investors cheered the earnings from banks. JP Morgan and Citi beat on all the metrics investors focus on including revenues, EPS, and trading income. On the other hand, Wells Fargo’s stock fell after the company’s revenues missed estimates.
The EUR/USD pair fell to its lowest level since Monday last week after hawkish statements from the Fed chair. It is now trading at 1.1637, which is slightly above the lower band of the Bollinger Bands. It is also below the 25 and 50-day moving averages. The pair is forming an inverted cup and handle pattern, which means that the downward momentum could continue. If it does, traders should expect the price to test the important support of 1.1590.
The GBP/USD pair continued declining today after statements made by the US President. It is now trading at 1.3157, which is slightly higher than the intraday low of 1.3100. The price is in line with the 25-day moving average and slightly lower than the 50-day average. It is also lower from the important resistance level of 1.3260. The pair could continue the downward movement and test the important support of 1.3050 as shown below.
The USD/JPY pair moved higher today and is currently trading at 112.53, which is the highest level since January this year. The upward movement came as trade tensions eased and as the Fed reiterated its hawkish view of the economy. The price is above the 50-day moving average and is slightly above the upper band of the Bollinger Bands. The RSI is above 73, which is an indication of being overbought. There is a likelihood that the pair will move slightly lower in days to come though the upward momentum could return.