It seems there is no investor trust in the US dollar. One would think that the statistics released on retail sales should give momentum to an increase in the US dollar provided that the technical scenario is favourable, however FOMC minutes spoiled the overall picture, and the Dollar Index dropped considerably. Keep in mind that a report of that sort of substance was actually expected.
Today, the scenario has repeated itself. The US currency is again under pressure amid speculation that National Economic Council director Gary Cohn has resigned over President Trump's comments on events in Charlottesville. Last weekend, there were violent clashes of far-right activists with counterprotesters in Charlottesville.
In the meantime, amid recent events the Dow Jones Industrial Average posted its biggest decline in three months on Thursday, while the 'fear gauge', the Vix, climbed by more than 30%. In the light of this the yen has also been strengthening against the US dollar. The currency pair today has been testing the lower border of a converging diapason at 109.5. The decline may strengthen if the price will go beyond the previous low at 108.7.
Gold is on the rise again, which is natural amid new disruptions in Trump's administration. The target of $1,300-$1350 per troy ounce remains current.
EUR/USD regained its previous losses during the last trading session, however on the whole the technical scenario is turning out to be neutral. The currency pair is consolidating in a sloping descending sideways trend. In general, that can be explained by expectations of Mario Draghi's speech in Jackson Hole. However, there were reports coming in yesterday that the ECB's head was not going to make any serious comments on monetary policy at the Jackson Hole summit next week. If this is what really is going to happen, then the delay is likely to lead to a deeper short-term correction of the euro.
In the Russian currency market, there was a sale today. A decrease in the ruble was within an overall trend of risk-asset aversion and fixation of a part of positions ahead of the weekend. However, apart from these aspects, external factors, on the whole, favoured the ruble. Crude oil has been consolidating above the 50-day moving average. Demand in the debt market has also been supporting the national currency. The RGBI has approached the highs of 2017. It has been traded at 138.4. The major risks for the ruble are still associated with oil. While this week's data from the Ministry of Energy on crude oil reserves were not bad, gasoline reserves increased by 22,000 barrels, which seems rather negative, considering that the driving season in the US is about to end. In addition, there are rising risks of an increase in shale oil production in the US. Data from Baker Hughes started to demonstrate an increase last week.
From a technical perspective, it is not unlikely that next week the dollar/ruble currency pair will reach the 58-58.50 level; however, to achieve it, significant momentum is needed. There is no such momentum expected soon. A tax period is a weak driver to achieve a more serious growth. Speaking of the upper border, support is now in a range of 60-62.
Ivan Kapustyanskiy, equity analyst at Forex Optimum