The sentiment in the financial markets has turned positive recently and today the situation is pretty much the same. Stocks continue to climb up although they took a hit in the early hours of the European session. They recuperated from that small bump and are moving up now, with CAC leading the way. Crude Oil and Gold continue to make gains and it seems like Gold might have changed the trend now from bearish to bullish, although it is still a bit early to tell whether this is a proper shift in the trend or if it is a major retrace before the downtrend resumes again.

Risk currencies are also up. EUR/USD has broken above 1.17 today but it is having second thoughts now, so I think that the pullback from the bigger downtrend which started in April might be coming to an end. Commodity Dollars are also up and the Canadian Dollar is leading the way. Emerging market currencies such as the Chinese Yuan, the Mexican Peso or the Russian Rubble are also benefiting from the improved sentiment and everything is falling on the USD’s shoulders. I bet Donald Trump is very happy with it, although he is not happy with Google. Anyway, let’s have a look at what has been happening today.

The European Session

Germany’s Foreign Minister on tariffs and Brexit – The German Foreign Minister Heiko Maas said that he expects the US to back down from tariff threats to the European car industry and added that the Chinese state capitalism is jeopardising fair global trade. It seems that the EU is lining up with Trump on this one. He also commented on Brexit saying that a hard Brexit option is very much alive.

Eurozone M3 Money Supply – The M3 money supply which accounts for the cash that is in circulation as well as bank deposits was expected to have increased by 4.3% on a yearly basis, down from 4.4% previously. But, it increased by 4.0% instead. Although, lending to households increased from 2.9% to 3% which is the second time it reaches the 3% level this year.

Is North Korea Deal Falling Apart – Months ago, Donald Trump and Kim Jong Un made a deal to denuclearize North Korea, but the Secretary of State Mike Pompeo received a letter form North Korea and it seems like the deal might be falling apart. Pompeo had a meeting planned for next week, but Trump has canceled it so even the North Korean situation which looked promising a while ago doesn’t seem so good now.

UK Made A Fair Offer to the EU – That’s what the UK Trade Secretary Liam Fox said earlier on and added that the UK doesn’t want a no-deal Brexit. But, the offer hasn’t been fair or reasonable and it seems like we might be heading for a hard Brexit.

Trump Turns on Google after Amazon – Donald Trump tweeted a while ago that search results about Trump on Google come from left wing media and they make him look good. He said that “Google and others” are suppressing voices from conservatives and that they are hiding the good news. Seems a bit off the edge, but he is right on this occasion. It seems like Google, YouTube, PayPal and other major online companies are turning into fascists now. They are deciding arbitrarily who and what can say things or can do business with them.

Patience and Prudence for the ECB Says Praet – ECB’s Praet said that the ECB monetary policy should remain patient, prudent and persistent. This should have been sort of bearish for the Euro but it is still climbing higher.

The US Session

Not the Time to Negotiate with China – US Commerce Secretary Wilbur Ross said that now is not the best time to negotiate with China. China has been dying to negotiate with the US as many Chinese officials have announced lately, but it might not happen at all.

Is NAFTA Coming Back to Life? – Yesterday Mexican officials said that the NAFTA deal between the US and Mexico will be announced soon and today Mnuchin added that he doesn’t expect many problems with Canada. So, it seems we might have a new NAFTA agreement soon.

US Goods Trade Balance – The US goods trade balance increased to $-72.2 billion from $-67.9 billion this month. The trend has been decreasing since April, but last month the deficit increased and this month we see that an increasing trend in the deficit is forming. Trump should hate this.

US Wholesale Inventories – US wholesale inventories increased by 0.7% this month which is the biggest increase in the last five months. This is not good news for the economy since businesses will order less in the coming months, but it increases the GDP which will be welcomed by Trump before the mid-term elections.

US Consumer Confidence – The US consumer sentiment came at 127.4 points last month but it is expected to fall to 126.6 points. This is still a good level of confidence though, but let’s see the numbers first.

Trades in Sight

Bullish USD/JPY

• The bigger trend is bullish
• The retrace is complete on the H1 chart
• The 100 SMA is providing support on the H4 chart
• The previous candlestick points to a bullish reversal

The 100 SMA is holding on pretty well

Yesterday we opened a buy forex signal around these levels in USD/JPY. That trade went pretty well and we booked profit in the afternoon as this pair moved higher, but this morning we saw another good opportunity to buy. USD/JPY has been retracing lower during the European session and the H1 chart is oversold now. The price is finding support at the 100 SMA (red) on the H4 chart and the previous candlestick closed as a doji which is a bullish reversing signal after the bearish retrace. We bought USD/JPY again since the retrace seems complete now, hoping to book some more pips from this pair.

In Conclusion

The USD continues to be on the backfoot now so I won’t try to catch the falling knife, apart from USD/JPY, which seems to have stopped sliding lower. The economic calendar is very light in the US session so the sentiment will do all the work once again today and the sentiment is going against the USD.