FX.co ★ Neutral speech of Draghi will crash the euro

EUR / USD, GBP / USD

In response to the political events in the United States such as the inability of Donald Trump to produce a workable team, the squandering of federal funds to support the president's family (12 times more than Obama's), the failure of politics in Afghanistan (although the campaign was launched by G. Bush) caused the euro to gained additional 55 points yesterday. Trump stated that he would strengthen the military presence in Afghanistan in order to conduct a military campaign against terrorism to a victorious end. With this, he repeated that the policy of B.Obama, who also initially wanted to withdraw troops from Afghanistan, eventually tightened the smoldering conflict.

The speeches of J.Yellen and M.Draghi brought conflicting information to the Jackson Hole. At the moment, Yellen will report about the Fed's balance sheet winding down from September, while Draghi will be neutral and will not indicate new terms or rates of ECB policy tightening. In fact, in this case, nothing new will be announced by the head of the Central Bank, but a shift in investor sentiment regarding the euro which will occur more strongly.

Recently, we noted that the current tension between the US and North Korea will be insignificant due to the absence of the main indicator of the development of US military conflict and provocation against any country. But the situation turned out to be more serious and yesterday, the UN issued a report indicating some secret supplies of chemical weapons to Syria from North Korea. Even the Reuters news agency was surprised about the lacking details of these supplies written in a 37-page document.

In the United Kingdom, losses from leaving the EU are still being discussed. Yesterday, the government assured that a new trade agreement would be concluded without specifying even any general prospects, as usual. Today, the data on public sector borrowings for July will be published. It is expected that it will be 0.0 billion, which shows lack of budget deficit. But in July, traditionally, there is a budget surplus which is very small and the projected figure is unlikely to have a significant impact on the market. The balance of production orders in the UK from the CBI for August is expected to decrease to 8 against 10 in July.

The sentiment index of business circles in the euro zone ZEW for the current month is projected to decrease from 54.2 to 35.6. According to Germany, this index is expected to decrease from 17.5 to 14.8.

In the United States, house price index for June is projected to grow by 0.5% after 0.4% in May. The business activity index in the manufacturing sector of Richmond for the month of August is expected to decrease from 14 to 11.

The current situation and mood of the market are uncertain. As we can see speculative accumulation of large volumes in buying the euro, the maximum over the past 4 years (Bank of America with reference to the CFTC), and the desire of the Wells Fargo to resume the trend but has even greater desire to fix profits. We look forward to continuing trading in the range of 1.1780-1.1875. As the main scenario, we expect a decline in the euro to 1.1560. Apparently, the British pound can not reach resistance 1.2950, we expect a decrease to 1.2755.

AUD / USD

In Australia, as usual, it is relatively calm, while investors continue to observe the events in the US and Europe. The Australian dollar, not currently having its own catalysts for growth or decline, follows the general trend of the US dollar. Yesterday, it eased slightly, and the "Australian" acquired 8 points, which was supported since Friday by a slight increase in the price of iron ore at 75.36 dollars. The stock market in Australia is optimistic as the S&P / ASX 200 came in at + 0.35% versus yesterday's S&P 500 growth of 0.12% based on the good economic performance of large companies. Copper and nickel are kept at annual highs. Agricultural crops are experiencing strong price pressure, wheat at a minimum level since April this year. The yield on Australian government bonds is growing for the third day. In the current picture, we see the result of the overbought euro. Both in the foreign exchange and commodity markets, there is a natural desire to fix profits, especially before the closing of current futures contracts which is on August 28 for the copper, August 29 on palladium, and August 30 for oil (Brent).

We are expecting that the Australian dollar will decline in the range of 0.7710 / 30.