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Markets Ignore China Action06 August 2018 by Dave Evans

Morning Report: 07.00 London

This morning, markets have so far ignored the PBoC’s activity to strengthen the Renminbi over the weekend. The dollar index is on the rise again after being hit by Friday’s poor payrolls and manufacturing PMI data.

The AUD/USD made hay on Friday, making gains back up to the 0.7400 level, but is on the back foot again this morning.

The EUR/USD and GBP/USD continue to weaken though after Friday’s poor services PMI data. The EUR/USD is testing the 1.1550 support level, while the GBP/USD is currently at its lowest closing levels for the year. The EUR/GBP gapped slightly lower, but remains rangebound.

The dollar is making further gains against the Swiss franc, with the USD/CHF rising to 0.9950. The Canadian dollar is showing out-performance though, with the USD/CAD challenging the 1.3000 level despite and opening gap higher.

Yen pairs have a negative bias, with the GBP/JPY poised to resume its reversal from Wednesday. The EUR/JPY is following suit, while the AUD/JPY is unchanged.

Coming up today

We have a light day on the economic data front with no mid or top tier economic items.

It is a bank holiday in Canada.

Trade Idea

The GBP/JPY is being weighed down by the strong yen and hard Brexit fears. There could be further downside from here though.

August 6th, 2018: Markets Ignore China Action

A good way to play this is a LOWER trade predicting that the GBP/JPY will close below 144.00 in 14 days for a potential return of 152%.

August 6th, 2018: Markets Ignore China Action