• MTS Economic News_20181019

    19 Oct 2018 | Economic News

·       The euro hovered near a one-week low against the dollar on Friday as the European Commission’s criticism of Italy’s populist budget sparked fresh concerns about political tensions in the common currency zone.

The dollar index, a gauge of its value against major peers, was 0.05 percent higher at 95.96 on Friday, having closed on Thursday at its highest level since Aug. 21. That rise was driven by a steep fall in the euro on Thursday, which constitutes around 57 percent of the index.

The euro was relatively flat at $1.1454 on Friday, steadying slightly after losing 0.4 percent overnight. The single currency hit its lowest intra-day level of1.1447 since Oct. 9 on Thursday after the European Commission said Italy’s 2019 budget draft is in serious breach of European Union budget rules.

“The euro decline reflects the build up of political tension in the eurozone,” said Sim Moh Siong, currency strategist at Bank of Singapore.

“The next support for the euro is at 1.1430, a break of which can take us down to 1.13.

The British pound hit a fresh 11-day low on Friday, but rebounded slightly to quote at $1.3020 versus the dollar.

·       The Japanese yen weakened 0.17 percent versus the dollar on Friday, to trade at 112.31.

The greenback lost 0.4 percent of its value to the yen on Thursday, reflecting the global risk-off mood due to rising geopolitical tensions between the U.S. and Saudi Arabia, Italy’s budget woes and U.S-Sino trade war tensions.

China’s economic growth in the third quarter slowed to 6.5 percent, its weakest pace since 2009 and below expectations, as a campaign to tackle debt risks and the trade war with the United States weighed on the economy.

The yuan changed hands at 6.9339 on Friday, trading flat versus the dollar, after recovering from its intra-day low of 6.9416.

·       The pair's weekly high coincides with the 50% retracement of the previous weekly decline and has now stabilized below the 38.2% retracement of the same decline, which keeps indicating that the upward potential is well limited. In the weekly chart, the pair is resting around a bullish 100 SMA, while the recovery stalled below a still bearish 20 SMA. Technical indicators in the mentioned chart remain within negative levels but lack clear directional strength. All in one, more slides could be expected.

In the daily chart, the 20 and 100 DMA converge with the mentioned Fibonacci resistance that contained the weekly advance, while the 200 DMA maintains its bearish slope some 300 pips above the current level. Technical indicators in the same chart have resumed their declines within negative readings and after correcting oversold conditions, also indicating that the risk is skewed to the downside. 1.1460 is a strong static support area, and if pierced ahead, the pair can retest 1.1400, while below this last, 1.1320/40 is the next probable bearish target. An immediate resistance comes in the 1.1620 area, but the pair needs to firm up beyond 1.1660 to actually have chances to extend d its recovery toward the 1.173

·       A convincing break below the 1.3080-75 region is likely to accelerate the fall towards the key 1.30 psychological mark with some intermediate support near the 1.3035 level. On the flip side, the 1.3130-35 region now seems to have emerged as an immediate resistance, above which the pair is likely to aim towards reclaiming the 1.3200 round figure mark.


·       Bank of Japan Governor Haruhiko Kuroda on Friday warned of the need to be mindful of risks to the country’s moderate economic expansion, such as the rising tide of protectionism and volatile financial markets.

·       China’s economic growth cooled to its weakest pace since the global financial crisis in the third quarter, with regulators pledging further policy support as a years-long campaign to tackle debt risks and the trade war with the United States began to bite.

The economy grew 6.5 percent in the third quarter from a year earlier, slower than 6.7 percent in the second quarter, the National Bureau of Statistics said on Friday. Analysts polled by Reuters had expected the economy to expand 6.6 percent in the July-September quarter.

The GDP reading was the weakest year-on-year quarterly growth since the first quarter of 2009 at the height of the global financial crisis.

·        Italy’s Deputy Prime Minister Matteo Salvini said there was no government crisis after a row broke out in the ruling coalition over a tax amnesty draft bill, Il Messaggero said on Friday citing Salvini.

On Friday, the head of Italy’s anti-establishment 5-Star Movement, Luigi Di Maio, said a dispute with coalition partner the League over a tax amnesty needed to be sorted.

Di Maio, also deputy prime minister, said on Wednesday the text of the amnesty had been “manipulated” after his party had signed off on the measure in cabinet, raising doubts about the stability of the coalition government.

·       European Union negotiator Michel Barnier said on Friday a Brexit deal with the United Kingdom was 90 percent done, although there was still a chance no accord would be reached due to ongoing stumbling blocks over the Irish border.

·       German Chancellor Angela Merkel said on Friday that an Asia-Europe summit in Brussels showed that some two-thirds of the world was committed to multilateralism and recognized the benefits of free trade.

·       Oil prices rose on Friday on signs of surging demand in China, the world’s second-biggest oil consumer, although the market was heading for a second week of losses on concern that trade wars were curbing economic activity and rising U.S. inventories.

Benchmark Brent crude oil LCOc1 was up 20 cents a barrel at $79.49 by 0740 GMT. U.S. light crude CLc1 was 15 cents higher at $68.80.

For the week, Brent crude was percent lower while U.S. crude was down 3.5 percent, both on track for a second consecutive weekly decline.

·       CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices are testing support guiding the uptrend since early February, now in the 66.66-68.53 area. A daily close below that paves the way to challenge the support shelf in the 64.26-45 zone. Alternatively, a move back above the 70.05-26 region clears the way for a retest of trend line support-turned-resistance at 71.51.The longer-term chart setup suggests a longer-term top may be forming.


Reference: Reuters, CNBC, FXStreet

Related
MTS Gold Co., Ltd.
40,42,44, Sapsin Road, Wang Burapha Phirom Sub-district, Pranakorn District, Bangkok, 10200
Tel. 0 2770 7777 Fax. 0 2623 9366 E-mail: support@mtsgoldgroup.com