Asian Stocks Hit by US-China Tensions, ECB Enters the Limelight

Risk Appetite Eases in Asia, BoC Keeps Policy Unchanged

The US dollar traded mixed against the other G10 currencies on Wednesday and during the Asian morning Thursday. It lost the most ground versus CAD, NOK, and JPY in that order, while it underperformed against CHF and GBP. The greenback was found virtually unchanged against EUR, AUD and SEK.

CAD/CHF — Technical Outlook

CAD/CHF had a strong push to the upside yesterday, breaking its short-term downside resistance line drawn from the high of June 16 th. The pair continued to rally, but found resistance near the psychological 0.7000 mark, which continues to hold the rate this morning as well. Although there is a good possibility we may get more upside movement in the near term, we would still prefer to wait for a break above the 0.7001 barrier, marked by yesterday’s high, before getting comfortable with larger advances.

ECB Takes the Central Bank Torch

As for today, the central bank torch will be passed to the ECB. At its latest meeting, this Bank decided to increase its pandemic emergency purchase program (PEPP) by EUR 600bn to a total of EUR 1350bn, extending the horizon of the purchases to “at least the end of June 2021.” Officials also repeated that they remain ready to adjust all of their instruments as appropriate, to ensure that inflation moves towards their aim in a sustained manner.

EUR/USD — Technical Outlook

After a successful run to the upside in the first half of this week, EUR/USD eventually found resistance near the 1.1452 barrier and is now seen correcting lower. However, the pair remains above a short-term upside support line taken from the low of July 10 th. If that line continues to provide support for the rate, the bulls might take charge and drive EUR/USD up again, hence why we will stay somewhat bullish.

As for the Rest of Today’s Events

During the early European morning, we already got the UK employment report for May. The unemployment rate stayed unchanged at 3.9% instead of rising to 4.2% as the forecast suggested, while the employment change showed that the economy lost less than anticipated jobs. As for wages, both the including and excluding bonuses rates declined by less than expected.

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