European markets went higher after the US-Mexico trade deal

Daily Analysis - 28/08/2018

Trade deal between US and Mexico

The USD was close to a month low against the euro today as the yen gained after the US-Mexico deal. The core of this deal gives the ability to US business to operate in Mexico without any tariffs. That Boosted investors’ appetite for riskier assets. The deal created pressure on Canada to consider new terms in order to keep a three-nation pact. Going forward, Canada will become involved, so there are still parts that are hard to predict," and added, "Sino-U.S. trade problems haven't been solved yet and it remains unclear what Canada will do in relation to the agreement." Today around 04:30 GMT the euro held almost all the gains made over the past few days. It was trading at $1.16730. It went up to $1.16970 in early trading. The dollar index, that measures the USD performance versus six other currencies, was a little higher at 94.846, erasing the losses after reaching its lowest level since Aug. 2 in early trade. The Mexican peso was about 0.4 % lower at 18.853 per USD, erasing some gains from the previous day. Yesterday, the Mexican peso closed about 0.8% higher and rose about 1.2% on the news that the United States and Mexico had reached the agreement.

Gold inches down

Gold went down today from a two-week high. It went up from the previous session, as the dollar firmed against yuan. That makes the precious metal more expensive for buyers in the world's biggest consumer economy China. The China central bank raised its daily guidance rate for the yuan by the most in nearly 15 months today and that created a demand for US Dollars. The Spot gold fell about 0.2% to $1,209.00 an ounce at around 04:00 GMT. Also, U.S. gold futures were down 0.1 % at $1,215.40 an ounce. Gold is no more a safe-haven asset and the reason is that it fell over 7% so far this year. Many factors together created the uncertainty between the investors and some of the factors are the international trade disputes and the Turkish currency crisis. So now investors are increasingly turning to the U.S. dollar instead. After President Donald Trump criticized the U.S. Federal Reserve for raising interest rates Gold recovered after touching 1 and a half year lows on Aug. 16 at $1,159.60. Innes said "We need a complete flip around momentum in the U.S. dollar for gold to push above $1,230 and move to $1,260. Unless the Fed takes the December rate hike off the table, gold does not have a chance to get near any of those supportive levels”

Bitcoin pullback

Bitcoin went up about 2.9% on Monday, after Sunday’s 0.5% loss, and closed the day around at $6,942.5. Bitcoin manages to stop a sequence of 4 consecutive Monday losses. Early morning we witnessed a pullback to intraday low $6,652.7. It clearly touched the first major support level at $6,573.80 and supported a move back through to $6,700 levels. A quiet afternoon left the Bitcoin hovering inside a range. Later in the day, we saw a rally that affected almost all crypto market coins, and we saw Bitcoin breaking out from the 23.6% FIB Retracement Level of $6,750. Bitcoin broke through the first major resistance level at $6,805.80 and second major resistance level at $6,931.40 and went up to $6,942.2 before going back to $6,902 by the day’s end. What gave bitcoin momentum is Bitcoin futures numbers from the U.S CFTC for the week ending 21st August. The report showed that May short positions were on the decline, while long positions were on the rise. That gave the Bulls some much support.

EURUSD on the move

The EUR could continue the two-day positive sentiment. That will happen if the European equities pick up a strong momentum on reports that US President Trump & Merkel support EU-US trade talks. The flat Treasury yield curve may indicate a US recession that could strengthen a dovish turn in Fed expectations. The EURUSD pair opened the week with a positive sentiment. It held steady above 1.165 level on Monday and ended the day with about 0.30% increase in value. The fact that we had a weak sentiment surrounding USD in broad market helped also. The EURUSD continued to move up on Monday and hit a 27-day high of 1.1697 in Asian session. Now the pair is trading at 1.1667 down and it’s down about 0.09% on the day.