Fears of trade wars are back, this time on the in form of uncertainty regarding the duties on cars and motor vehicles. This puts pressure on the Japanese stock market. Combined with the drop in US profitability, the 10-year-old clearly strengthens the yen. South Korea has confirmed that the fate of the Kim-Trump meeting in June is hanging by a thread. EUR/USD revolves around 1.17. GBP/USD is in the rebound to 1.34 after yesterday's fall to 1.33. AUD/USD is halfway between Tuesday's peak and yesterday's minimum, at 0.7560. USD/JPY after yesterday's breakdown and the unsuccessful return of over 110.30 returns to inheritance and violates yesterday's lows, thus falling at 109.50.
Yesterday's session at Wal Street ended with modest increases, but during the overnight Asian session, the contract for SP500 is down 0.3% and under 2725 points. Shanghai Composite and Hang Seng ended the day in the red as well. Due to Trump's reservations regarding the import of cars, the Tokyo Stock Exchange is under pressure as Nikkei 225 drops almost 1.5%.
On Thursday 24th of May, the event of the day is ECB Monetary Policy Meeting Accounts release, but the economic calendar is full of important data releases. Germany will print GDP and GfK Consumer Climate data, ECB will issue Financial Stability Report, the Uk will post Retail Sales With Auto Fuel data and the US will present Existing Home Sales data and Unemployment Claims data. There are scheduled speeches from BoE Governor Mark Carney (twice), FOMC Member William Dudley, FOMC Member Raphael W. Bostic and FOMC Member Patrick T. Harker later in the day.
GBP/USD analysis for 24/05/2018:
The Cable in the morning almost violated 1.3300. After a slightly lower than expected inflation data, the British currency deepens the weakness and the rate drops towards 1.3308. The core inflation and CPI (respectively 2.1% and 2.4% year-on-year with a consensus of 2.2 and 2.5% year-on-year) both disappointed the global investors. After the dovish withdrawal by the Bank of England from the hike in May, August is also threatened (at the moment the nearest real date of tightening policy parameters). The MPC move is so much included in prices that with weaker data and political chaos and Theresa May's weakening position, the pound should remain weak against other major currencies.
Please notice there are two scheduled speeches from Bank of England Governor Mark Carney today: 08:00 am GMT and 05.00 pm GMT and both are worth watching.
Let's now take a look at the GBP/USD technical picture at the H4 time frame. The recent low at the level of 1.3308 might be challenged soon again as the level of 1.3300 is an important technical support form the daily time frame (made on 2017.12.15). There should be some upward price reaction at the level, especially as the market conditions are now oversold and there is a growing bullish divergence present. The nearest technical resistance is seen at the level of 1.3391, but the key level for further growth is seen at the level of 1.3483.
