Morning Market Review

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08/10/2018

EUR/USD

At the Asian session, the pair EUR/USD technically corrected upwards to 1.1535 after a significant decline on Thursday. During the day, investors expect the publication of data on the consumer price index for July in the US. According to forecasts, the consumer price index will reach the level of 3.0%, and the core consumer price index in July will remain at the level of 2.3%, being above the target level of 2.0% for the fifth consecutive month. In general, a steady increase in inflation and a decrease in the unemployment rate in the US keep investors' confidence that the Fed will increase the rate two more times. One of the rate hikes may happen as early as this September.

As for the news of the trade war, China refused to introduce promised increased duties on the supply of American crude oil. Probably, the PRC cannot compensate it yet. However, the increase in tariffs will affect diesel fuel, gasoline and propane imported from the US.

GBP/USD

The pair GBP/USD in the morning rose to 1.2835, but is tending to decline. Nevertheless, during the day, the strengthening of the pound may resume in case of the release of positive data on GDP and industrial production. It is expected that UK GDP in Q2 2018 could grow from 1.2% to 1.3% YoY and from 0.2% to 0.4% QoQ. The industrial production in June is projected to grow by 0.4% MoM, and by 0.7% YoY. The implementation of these forecasts can support the British currency.

AUD/USD

The AUD/USD pair continued declining during the Asian session having reached 0.7350. The RBA comments on monetary policy published today did not give investors anything new. The regulator's statement confirms that the Australian economy remains stable, the unemployment rate will decline, and inflation will eventually grow. The GDP forecast remained unchanged: in 2019 and 2020, the growth should exceed 3%, and the unemployment rate will decrease to 5%. The inflation rate should amount to 2.25% during the same period. In general, the RBA believes that maintaining the rate at 1.5% will contribute to economic growth, and there are no arguments for changing it.

USD/JPY

Quotations of the pair USD/JPY during the Asian session dropped to the level of 110.65. JPY was supported by strong preliminary data on Japan's GDP for Q2 2018. The indicator rose from –0.2% to 0.5% QoQ and from –0.6% to 1.9% YoY, which is the most significant increase since Q3 2017.

Gold

Gold quotes continued downward movement and reached the level of 1209.30. If the positive data on inflation in the US are published, the decline in the instrument may continue.

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