Growth
in the UK services is projected to remain unchanged at 54.00 in June. While a
figure that meets or exceeds market expectations may support the Pound in the
near term, gains remain threatened by Brexit-related uncertainty.
Appetite
towards the Pound is likely to diminish as anxiety heightens ahead of the
looming UK cabinet meeting on Friday. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
Theresa May is expected to present a “third way” post-Brexit custom proposal in
an effort to break the deadlock within her cabinet and the EU. Sterling could
witness heavy losses if Theresa May’s proposal is met with rejections.
Will
the Bank of England raise UK interest rates in August? This is a question that
remains on the mind of many investors. While last week’s upward revision to first-quarter
GDP growth and positive PMI figures for June may support expectations of a rate
hike, Brexit uncertainty and global trade tensions could force the BoE to delay
monetary policy normalization.
In
regards to the technical picture, the GBPUSD remains bearish on the daily
charts. There have been consistently lower lows and lower highs while the MACD
trades to the downside. Daily bears remain in firm control below the 1.3290
lower high. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
An intraday breakdown below 1.3186 could trigger a decline towards Tuesday’s
low at 1.3114. Alternatively, a bullish move above 1.3230 may signal an incline
towards 1.3290.
Will FOMC minutes refresh Dollar rally?
The
Dollar could continue weakening against a basket of major currencies as
investors profit-take ahead of Thursday’s FOMC meeting minutes.
Investors
are likely to closely scrutinize the FOMC meeting minutes for clues on rate
hike timings during the second half of 2018. With unemployment in the United
States falling to an 18-year low and inflation hitting the golden 2% target,
speculation remains elevated over the Fed raising rates at least two times this
year. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
However, an appreciating Dollar and global trade tensions could dampen
expectations over the Fed adopting a more aggressive approach towards monetary
policy normalization. The Dollar could receive a welcome boost if the FOMC
meeting minutes are more hawkish than expected.
Focusing
on the technical picture, the Dollar Index could be experiencing a technical
correction on the daily charts. A breakdown below the 94.30 level may trigger a
decline towards 94.00 and 93.85, respectively. If bulls are able to awake from
their temporary slumber, the Dollar Index has scope to venture towards 95.00
and 95.40.
Commodity spotlight – Gold
Gold
bulls have found support in the form of a weakening Dollar this morning with
prices rebounding towards a fresh weekly high at $1260. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
While the yellow metal has scope to appreciate further amid a softening Dollar,
the outlook remains bearish in the medium to longer term. This year, Gold is
still at risk to losing more value on the outlook that the Dollar could
strengthen further.
Much
attention will be directed towards the US jobs report on Friday which could
play a key role in where Gold concludes this week. A strong NFP figure coupled
with signs of accelerating wage growth may boost speculation of higher US
interest rates – ultimately punishing Gold.
In
regards to the technical picture, Gold remains bearish on the daily charts. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
A technical rebound is in the process with prices trading above the 23.6%
Fibonacci retracement level of $1254. An intraday breakout above $1260 could
encourage a further incline higher towards $1264.43. Alternatively, a failure
for bulls to keep above $1251 could open a path back towards $1245.
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