03.09.201808:07 Forex Analysis & Reviews: Global macro overview for 03/09/2018

This week there will be key data in the discussion surrounding the future of trade wars. The new round of tariffs imposed by the US on Chinese goods may worsen sentiment in the markets. In addition, PMI / ISM indicators will be used to assess the condition of the global economy. Traditionally, at the beginning of the month, we have a report on the US labor market. Meetings will be held by central banks in Australia, Poland, Canada and Sweden.

The US is starting a week with a delay due to Labor Day on Monday. In the foreground, there may be a discussion about the chances of implementing new import duties for goods from China. We believe that the list of goods will serve as a card at the negotiating table rather quickly, although the risk of its implementation may be a factor spoiling the market sentiment pushing capital towards USD and other safe havens (JPY, CHF). From the data side we have ISM (Tues, Thurs) and NFP (Fri). ISM indicators may indicate deterioration in relation to the previous month, but readings at 56-57 still inform about the strong condition of the economy. The labor market should again show strong values with high employment growth (180 thousand thresholds) and a decline in the unemployment rate to 3.8 percent. The wage increase close to the trend is 0.2-0.3%. will seal the Fed's interest rate hike in September.

In the Eurozone, the revision of PMI (Mon, Wed) will rather go unnoticed, confirming that the period of a slowdown has already passed, but there are no strong signs of rebound. As business activity research translates into hard data, you can say more in German industrial production (Fri). Good data seems to be a prerequisite for breaking EUR higher, otherwise we will continue to observe boring consolidation.

In the United Kingdom, only the PMI indices are worth noting (Mon-Wed). July data indicated a deterioration of the economic situation, although readings of nearly 54 are not bad. The preliminary indications from Euroland published already do not give grounds for optimism for the industry index, but the service sector can already count on growth. Since the latter is more important for the UK, the data can ultimately support GBP. This will be possible, however, if the information envelope surrounding Brexit negotiations remains positive. Any mention raising the risk of disagreement with the EU will eliminate attempts to recover the last weakness.

In Australia, the focus will be on the RBA meeting (Tue) and GDP data. Over the past month, Australia has faced political turmoil (change of the prime minister) and increased concerns about the condition of the real estate sector and private debt in the era of credit cost increases. As a result, the RBA message will be analyzed for the increased dovishness that may hit AUD. After the GDP reading for the second quarter, values close to 3% are expected, but the terrible data on CAPEX this week raise the risk of a lower result. With anxious worries about commercial wars, AUD can be an easy boy to beat.

The Canadian Bank (Wednesday) will probably keep the overnight interest rate unchanged. The GDP reading for the second quarter in the past week was weaker than expected, which cuts the speculations about the hike and the market will continue to wait for October. As the chances are high (75%), even confirmation of hawkish expectations by the bank will not be a big surprise. On Friday, the publication of the labor market report is planned, where the risks are symmetrical, and until then the future of CAD will depend on how (and if) the NAFTA negotiations will end today.

Let's now take a look at the USD/CAD technical picture at the H4 time frame. The market has broken above the level of 61% Fibo and above the blue trend line resistance and made a local high at the level of 1.3088. Currently, the price is in a corrective cycle, but still stays above the trend line. The nearest support is seen at the level of 1.3000 and the nearest resistnace is seen at the level of 1.3113. The larger time frmae trend remains down.