Bullish Asian Markets as Trump Signals a Restart to Trade Talks

Daily Analysis - 13/09/2018

ECB probably will stick to its policy

The (ECB) will probably stick to its policy today while inflation doesn’t have the momentum to grow and growth remains stable. Dirk Schumacher, ECB watcher at Natixis in Frankfurt stated to clients

"It is clear that the most recent inflation figures do not suggest in any way that the ECB will need to deviate from its 'prudence, patience and persistence' mantra," and he added "The one development, however, which continues to point to a renewed pick-up in core inflation is wage growth, which has accelerated clearly since the beginning of the year,". The European Central Bank wants to keep its flexible policy and that’s why it has been stressing the data dependency for all its next decisions since they announced the exit strategy in Riga. As for now the data looks pretty good and there is no need to change their strategy.

Bitcoin’s on the move in the early hours

Bitcoin was up about 0.64% today, recovering yesterday’s nearly 0.30% fall, to close the day at about $6,333.3.

A sideway and choppy morning found the popular coin (Bitcoin) retracing back from the start of a day’s high of $6,280 to late morning intraday low of $6,202.7.Then it found support and the price moved through the first part of the day didn’t give the chance for the major support and resistance levels to retest.

Continuing through the late morning, Bitcoin recovered the morning losses, and going through to a late afternoon intraday high of $6,354. Following recent trends late in the day, the popular coin managed to hold on to about $6,300 levels all day, with no important fundamental news and that did not cause investors to jump ahead of today’s EU Finance Ministers meeting. The meeting agenda has cryptocurrencies high on the list of the important topics to be discussed.

EUR/USD Forecast

The USD fell across the market today and the fall gained momentum after a downbeat US PPI data report. The wholesale cost of US goods and services went down by about 0.1% last month versus a 0.2% rise that was expected. That made the first decline since February last year. The data showed that the recent rise in inflation has slowed down, at least temporarily. The crimped market expectations for a more fast Fed monetary policy tightening cycle.

The EUR/USD pair retraced from its early loss and recovered from an intraday low level of 1.1560. A report that the US is proposing a new round of trade talks with China strengthens further the greenback's safe-haven status and provides additional momentum. The pair rose back to the top end of an almost near 14 days old trading range resistance, around 1.1572, albeit failed to confirm a fresh bullish break-out.

GBP/USD: Sterling trades little changed

GBP did not change and trades on the downside at around 1.3000 while waiting for the BOE expecting to leave the Bank rate on hold at 0.75%. The Brexit is currently in focus again and is probably the main driver that moves the market with the EU positively willing to make changes to the current protocol on the Irish border. That will help the cable to stabilize above the level of 1.3000.

The Bank of England decision is due for 11:00 GMT and there is no press conference of the Bank officials to follow. Now on a more technical view, the pair today managed to retrace from a key support that includes a 100-hour SMA and a short-term bullish trend-line. The support is currently near the very important 1.30 psychological level and that might continue to support the short term downside. If that breaks it might give some bearish sentiment and drag the pair back towards the 1.2900 handle.