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07.03.2018 12:20 AM
News on North Korea supported the euro

Risky assets rose sharply against the US dollar in the morning trading on Tuesday, March 6, after the results of negotiations between North and South Korea were made known.

It should be noted that a high-ranking delegation from South Korea arrived in Pyongyang, and during the talks North Korea demonstrated a clear intention to implement denuclearization. This suggests that the North Korean authorities can go on reducing the arsenals of nuclear weapons, its carriers and delivery vehicles, or at least begin negotiations about it. As the South Korean authorities say, North Korea wants to conduct honest negotiations with the US on nuclear weapons issues, as well as normalization of relations. The good news is that North Korea will suspend all tests of weapons for the duration of the talks.

Against the backdrop of these news investors sent their view towards risky assets, especially the euro and the British pound. The Australian dollar also benefited from good support, which ignored the Reserve Bank of Australia's decision on interest rates.

As it became known today, the RBA left the key interest rate unchanged at 1.50 percent, saying that interest rates correspond to inflation and GDP targets. The RBA expects that the Australian economy will grow faster in 2018 than in 2017, as significant progress has been made in reducing unemployment.

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The regulator also expressed concern about the high rate of the Australian dollar, which will lead to a slowdown in economic activity, as household consumption prospects remain uncertain for the short term.

The absence of important fundamental statistics also allowed the return of demand for risky assets, and the breakthrough of technically important resistance in the EURUSD pair led to the removal of a number of stop orders of sellers of the euro. Euro buyers have reached certain levels of resistance, which it is recommended to pay attention to in the morning review. Breakthrough 1.2410 will lead to further strengthening of positions in risky assets with renewal of resistances 1.2460 and 1.2510.

CNBC's interview with Robert Kaplan, a representative of the Federal Reserve, did not give serious support to the US dollar, even though Kaplan said about the expected three interest rate increases this year. However, the interview itself was concerned about a probable trade war between the US and the European Union. Robert Kaplan also did not make changes to his economic forecast for 2018.

Jakub Novak,
Analytical expert of InstaForex
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