Daily Commentary
 | 15/08/2018

Canada to introduce safeguard action against US tariffs

On Tuesday, Canada said it is considering of introducing a safeguard action on seven steel products. This action is said to be taken to shield domestic producers Interests. According to Finance Minister Bill Morneau, they will look into the matter in depth and identify any threats or potential threats and these safeguards will be applied .It must be noted, the European Union announced its own safeguards in July. The Canadian dollar was the top performer on Tuesday as risk sentiment improves.

The Canadian dollar was the top performer yesterday as risk sentiment improved. USD/CAD war dropping during the European session and followed up with the same trend during the US session. The financial data to be released today in the US session could apply more downward pressure for the pair. In any case should the pair come under selling interest we could see it move lower to the 1.3059 (S1) support level and break it aiming for the 1.3034 (S2) support barrier. On the hand, should the pair come under buying interest we could see it move towards the 1.3091 (R1) and even breach it.

Dollar strengthens further to reach 13-month high

The USD continued its rally and yesterday reached an impressive high exemplifying its dominance compared to other currencies around the world. U.S. stock indexes broadly gained and an index that tracks the dollar against the euro, yen, sterling and three other currencies touched 96.794, the highest since June 2017. At the same time, Oil prices were supported over decreased production from top producer Saudi Arabia but corrected lower later on.

Gold prices continued to plunge on Tuesday as gold fell lower to a 1.5 year low, pressured by rising geopolitical uncertainty and a stronger greenback. Traders kept on short selling the precious metal while at the same time the strengthening of the USD helped boost Golds selling appetite. If the selling interest persists then the precious metal may break the 1186.47 (S1) support barrier and aim lower for the (S2) 1180.00 support hurdle. On the other hand, if the shiny metal is undertaken by a bullish sentiment we could see gold aiming for the 1192.31 (R1) resistance level and even break it aiming for the 1198.42 (R2) resistance barrier.

Economic Highlights:

In the European morning we get the UKs inflation data for July with the YoY rate forecasted to increase. At the same time from the UK we get PPI figures. In the American session we get the US core retail sales and retail sales for July both expected to drop while the US industrial production for July is also expected to drop. Later in the American session we get the EIA weekly Crude Oil Inventories with a -2.5M drawdown expected.

XAU/USD

• Support: 1186.47 (S1), 1180.00 (S2), 1173.75 (S3)

• Resistance: 1192.31 (R1), 1198.42 (R2), 1204.35 (R3)

USD/CAD

• Support: 1.30591 (S1), 1.30345 (S2), 1.30005 (S3)

• Resistance: 1.30906 (R1), 1.31176 (R2), 1.31425 (R3)