08.10.201808:59 Forex Analysis & Reviews: Uncertainty still dominates markets

Uncertainty still dominates markets

The main drivers last week for the world markets in general and the currency market in particular continued to be the situation around the escalation of trade tension between the United States and China, the exacerbation of the debt crisis in Greece, the hope of resolving the Brexit problem and publishing data from the US labor market.

The fact that the problem of the trade war between Washington and Beijing is worsening, despite the "determination" of the first to continue negotiations, became clear after America accused China of interfering in the presidential elections and the purchase of an anti-aircraft missile system in Russia. Rising tensions have shown investors that there is no need to wait for an agreement in the near future. On this wave, the demand for risky assets fell, and the US dollar received significant support.

Also last week, the problem of the Greek debt crisis, "healed" at the beginning of this decade, surfaced, which, coupled with the debt problem of Italy, reminded a sharp decline in the single currency. And although the market expects a gradual change in the monetary paradigm of the ECB, which supports the euro, the long-standing problems in Europe do not allow it to grow confidently in the first place against the dollar.

The British pound remains hostage to the uncertainty of how Brexit will end. As a scapegoat, it continues to respond to both positive and negative news, which, in the short term, will be forced to pair with the US dollar to move further in the "sideways".

Published on Friday, employment data in the US were significantly worse than forecasts and showed an increase in the number of new jobs 134,000 against the forecast of 185,000 and the upward revised value of 270,000. But the unemployment rate fell to 3.7% against 3.9%. In the foreign exchange market, the reaction was ambiguous, which can be explained not by the data itself, but by the fact that investors simply ignored them, realizing that the Federal Reserve will still raise interest rates by 0.25% before the end of this year, which plays in favor of the dollar.

In general, assessing the overall picture in the market, it can be described as cautious. In this situation, we continue to expect a decline in commodity currencies. But European ones are likely to remain in the "sideways" against the dollar.

The forecast for today.:

The EUR/USD pair is trading below the level of 1.1530. It is under pressure from the general decline in risk appetite in the markets, economic problems in Greece and Italy. If the pair fails to rise above 1.1530, there is a probability that it will fall to 1.1445.

The AUD/USD pair is trading below 0.7085. It is pressured by the escalation of tensions between the US and China. The pair may locally recover to 0.7085, but we consider it possible to sell it on growth with a target level of 0.7000.