The dramatic events surrounding President Donald Trump and the scandal of leaking some very confidential information to the Russian prime minister dominated this week's atmosphere. All this smacked down the dollar and drove investors away in search of safe havens such as gold and the Japanese yen, and some investors headed to the digital currency (Bitcoin) to record historic highs of 1940$.
On the economic front, unemployment benefits fell to a 29-year low of 232,000 last week. This data helped the US dollar erase some of its losses by the end of the week but could not sustain the gains. Sending the dollar index, “which measures strength USD against a basket of currencies” to a six-month low of 97.
In light of the weakness of the US dollar, the British pound was supported by very positive data managed to reach its highest level since last October at 1.3047 versus US Dollar . Where inflation figures rose to their highest level since September 2013 at 2.7%, and as inflation continues to rise, it will put more pressure on BOE to raise interest rates with expectations of inflation rising to 3% before the end of the year.
As well as, UK labor market continued to improve since the vote for Brexit. Unemployment has been at its lowest level in 42 years at 4.6%. Only the concern remains that wage rates will slow, especially as it will play a major role in expectations of inflation and interest rates.
The Japanese economy achieved the best pace of growth in a decade when the economy grew by 0.5% in the first quarter, reinforcing the mandate of Japanese Prime Minister Shinzo Abe. The Japanese economy is growing for the fifth straight quarter, this is the longest streak of uninterrupted growth since 2006.
Turning to the Australian economy, the minutes of the RBA’s Monetary Policy Committee meeting showed concern over the continued rise in house prices pointing to the measures taken by the government that would take some time to curb the sharp rise. While the Australian labor market continued to improve on a large scale and remains concerned only that the number of part-time jobs outperforms full-time jobs, with partial jobs increased by 67% compared to 27% for full-time jobs over the last 17 years.
As for the Chinese giant, the slowdown in industrial production data over the past month has caused market fears and may be it would be a substandard beginning for the second quarter of this year. For the past year and a half, the last quarter was one of the best performing periods for the Chinese economy, supported by industrial production and consumption, These data indicate that spending will continue to be the main factor for local growth. The data came at the time of Beijing Summit in honor of the Chinese President, during which he launched the belt and the road, which require the rejection of trade protectionism and avoid the fragmentation.
The yellow metal benefited from the weakness of the US dollar and investors rushed to it as a safe haven, rising from the lowest levels of the week at 1227 dollars an ounce, reaching its highest level since the beginning of this month at 1265$.
Crude oil, with markets optimistic about OPEC's meeting this month, and expectations of an extension of the cut-off agreement may be extended until the first quarter of next year, pushed prices back to 50$ a barrel, higher than their weekly lows of $ 47.72 a barrel.
On the technical view, we will highlight the most important market movements as following :
The pair has climbed since the beginning of this week from 1.0920, breaking the resistance barrier of the ascending channel and the previous high at 1.1020, faced by another resistance at 1.1160 sent prices slightly down but it rebounded quickly during Friday trading reaching near to levels of 1.12. exceeding this level would send prices much higher to 1.13 then 1.1435. current support levels will be at 1.1075 then 1.1020.
Oil has risen since the beginning of this week from levels of 47.70$ breaking through resistance at 48.70$ (Fibonacci retracement 50%) and represents a resistance of the broken uptrend. Succeeded in overcoming these levels and stabilizing higher would send prices much higher to 50.40$,then we expect further rising to levels of 51.50$ and 52.70$ during next week trading. Current support levels will be at 49.90$ and 49$.