WE SEE AN INCREASED INTEREST IN USD
The trading week started on a positive note with traders in a good mood thanks to the absence of any new missile launches or nuclear tests in North Korea. However, it comes as no surprise as North Korea celebrated their 69th year of founding. As a result we saw a fall in demand for defensive assets like gold, the Japanese yen and Swiss franc. The greenback also benefited from Chinese banks easing their restrictions on US dollar purchases.
The central event for the US currency during this week will be the data release on the consumer price index on Thursday. Considering the recent depreciation of dollar, the cost of imports increased which will support inflation growth and that in turn may result in more hawkish rhetoric by Fed officials concerning the possibility of another rate hike before the end of the year.
The USD/JPY grew today due to stronger demand for risky assets like the US dollar and this offset positive statistics from Japan on machine tools orders that according to preliminary data increased in August by 36.6% compared to the same period of the previous year.
The news from Canada on the growth in the number of housing starts to 223,000 in August that is 9,000 more than expected was not able to compensate the pressure from US dollar appreciation and the fall of crude oil prices that traditionally have a significant impact on the price of USD/CAD.
The EUR/USD, after some consolidation above the important 1.2000 mark, resumed negative dynamics and may soon reach the inclined support line. If it breaks through, we may see a change to the local rising trend to negative. In this case the next targets will be at 1.1825 and 1.1750. Upside potential is limited by the nearest high around 1.2100.
The USD/JPY could not fix below 108.05 and is showing confident rising dynamics. Recently quotes have overcome the upper limit of the local descending channel and reached the 108.85 line, gaining a foothold above this line may become a trigger for massive purchases with the nearest targets at 109.60 and 110.30. The closest support range in case of the fall resuming will be at 108.00-108.05.
The USD/CAD did not reach the psychologically important 1.2000 mark and is now correcting upwards within the descending channel. In case of price fixing above 1.2200 we may see further growth up to 1.2365 and 1.2550. Recent crossing of the zero point by the MACD signal line is in favour of this positive scenario. The strong support line is still located at 1.2000.