Trading plan for 09/08/2017:
On the FX market, we can witness an escape from risk after yesterdays US-North Korea confrontation. The defensive currencies are CHF (+0.6%) and JPY (+0.3%), while the risky currencies are AUD (-0.4%), NOK (-0.25%) or CAD (-0.18%). The Asian stock market is shining all in red, Crude Oil is losing gains, and precious metals like Gold and Silver are rallying.
On Wednesday 9th of August, the event calendar is quite busy with important economic releases, but only during the US session, when the Housing Starts and Building Permits data from Canada will be released. Then the US economy will release Prelim Unit Labor Costs data, Prelim Nonfarm Productivity data and Crude Oil Inventories. During the very early Asian session, the Reserve Bank of New Zealand will decide on interest rates.
EUR/USD analysis for 09/08/2017:
The Unit Labour Costs data is scheduled for release at 12:30 pm GMT and market participants expect a drop in the second quarter from 2.2% to 1.2%. The labour costs are a key input for inflation, so if forecast sees wage inflation slipping to a 1.2% annual rate, the recent comments from FOMC member Bullard might be adequate. He said on Monday that the recent inflation data has surprised to the downside and call into question the idea that the US inflation is reliably returning toward the target.The current level of the policy rate is likely to remain appropriate over the near term, he added. Not every Fed official agrees with Bullard's point of view, but if today's data meets the expectations, then his point of view might not be easily dismissed. The further confirmation will come with the Friday's July report on consumer and producer inflation in the US.
Let's now take a look at the EUR/USD technical picture on the H4 timeframe. The market has tested the recent technical support at the level of 1.1728, but none of the candles closed below this level so far. The momentum indicator is moving lower into the negative territory and market conditions are starting to look oversold a little. Nevertheless, there is still a room for a further move down to the level of 1.1612 if the data disappoints market participants.
Market Snapshot: Gold breaks out above the trend line
The price of gold has broken above the golden trend line resistance around the level of 1,265 and the stochastic indicator is bouncing from the oversold levels. If the momentum will prevail, then the next target for bulls would be at the level of 1,275, where the recent 78%Fibo retracement of the previous swing down is. A breakout higher opens the road towards the swing highs at the level of 1,296.
Market Snapshot: SPY retreats from highs
After making new all-time high at the level of 248.87, the SPY (S&P500 ETF) reversed to the downside and violated the technical support at the level of 247.98. This nervous reaction was likely caused by US-North Korea confrontation and in a case this conflict escalates further, more of sudden and deep sell-off might be expected. The next technical support is seen at the level of 245.72.
