Global macro overview for 13/02/2018

The stock market continues to dictate the conditions for other asset classes while maintaining volatility at an elevated level. Since Monday the risky currencies(EUR, AUD, NZD, SEK, NOK) are under pressure, and "safe havens" are doing better. Although on Monday, more characters said that the worst was over and we are returning to stability, today after the Asian session there is no continuation of peace. Nikkei gets into a row, and stock exchanges in China reduce growth after a solid start driven by a good session on Wall Street. The currency market is traditionally lowered by USD/JPY rate, which breaks 108 this morning. Optimism comes from commodity currencies and emerging markets currencies are saved only by the fact that the market has lost the eagerness to return to the USD. This is why the market participants are right to conclude, that the US Dollar will not gain on the basis of strengthening its own foundations, but as a result of closing the short positions accumulated in previous weeks. It is not a solid fuel. If the direct attitude of investors to USD is to change, it will sooner come from rising inflation expectations and implications for the Fed's monetary policy. From this point of view, tomorrow's CPI reading from the US remains the key. However, it is uncertain whether the data will be favorable, given the high consensus (0.4% m/m). Higher volatility can save USD against risky currencies, but it will not help in confronting JPY, CHF or EUR.

Let's now take a look at the USD/JPY technical picture at the H4 time frame. The price has broken below the technical support at the level of 108.12 and now is testing the nearest support at the level of 107.53. The downward momentum is still strong, despite the oversold market conditions. In a case of an extension, the next support is seen at the level of 107.32 (daily time frame support).

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