Daily Commentary
 | 10/08/2018

Russia gets heated over US sanctions

Yesterday, Russia threatened to strike back for a new round of sanctions announced by the U.S. Washington, explained the fresh sanctions were decide due to the way Moscow treated former Russian agent and his daughter in Britain. The opening round of these sanctions are aimed to reduce exports to Russia of U.S. sensitive goods and technologies , although officials said Russia may respond equally by not increasing Oil production as promised previously. The Russian Ruble slid in overnight trading to its lowest level since November 2016 against the USD, after a second day of declines.

USD/RUB was seen picking up on strong volatility in the previous days as the pair’s sensitivity to the pre mentioned news was evident with the pair trading on an upswing. Technically, the RSI indicator in the 1 hour chart is above the reading of 70, implying a rather overbought market. If the pair is overtaken by a bullish sentiment we could see it move higher and break the 66.46 (R1) resistance level. On the other hand, Should traders favor USD/RUB short positions, we could see the pair moving lower to the 64.76 (S1) support level and aim for the 63.74 (S2) support barrier.

NAFTA developments looking better

On Thursday, Mexico’s economy minister stated that they were progressing with various issues towards a deal with the United States on new rules for the auto industry. The United States recommended tougher rules on vehicle’s construction in order for the NAFTA region to avoid tariffs. The news seems to pave the way for Canada to join the new discussions and could be very promising for their future cooperation.

EUR/USD dropped yesterday as the Dollar rallied against its counterparts. Analyst stated the greenback is superior over emerging market currencies even as the trade wars carry on. The common currency dropped and stabilized between our 1.1580 (R1) resistance level and the 1.1510 (S1) support level. Should the bears continue to dictate the pairs’ direction we could see it moving downwards to the 1.1510 (S1) support line and even breaking it moving lower towards the 1.1445 (S2) Support barrier. On the other hand if a bullish movement overtakes the pair we could see it break the 1.1580 (R1) resistance line and aim higher for the 1.1640 (R2) resistance barrier.

In today’s other economic highlights:

Starting with the European Morning we get Turkeys Current Account Balance for June with the deficit expected to shrink. A note must be made here as the Turkish lira fell heavily to yet another record low against the USD in its previous sessions and today. The Turkish Lira weakening was enacted when the US stated it would follow up with sanctions against Turkey and news today indicated ECB was worried on exposure of EU banks in Turkey. If the news forecast is realized we could see the Turkish Lira getting some support.

We continue with the UK GDP preliminaries Figures for Quarter two (Q2) forecasted to advance and could create support for the GBP along with the Manufacturing Production for June. In the American session we get the US inflation data for July with the Core CPI forecasted to remain on hold and the CPI expected with a minor increase .At the same time we get Canadas Employment Data for July with mixed data expected. Later on we close with the weekly Baker Hughes Oil Rig Count from the US.

EUR/USD

• Support: 1.1510 (S1), 1.1445 (S2), 1.1375 (S3)

• Resistance: 1.1580 (R1), 1.1640 (R2), 1.1730 (R3)

USD/RUB

• Support: 64.76 (S1), 63.74 (S2), 62.50 (S3)

• Resistance: 66.46 (R1), 67.51 (R2), 68.65 (R3)