On Wednesday, the US dollar was unexpectedly under the strong local pressure despite amid news from Bloomberg news agency, that China could refuse to buy government bonds of the US Treasury. And although there was a refutation this morning, some sludge remained. While in another situation of confrontation between the states and the PRC, the problem will emerge again and may strike a new blow towards the dollar.

This news showed that the US economy and government bonds market became so dependent on China. It is widely known that Beijing is the largest buyer of US Treasury bonds, hence, the US depends very much on whether China will finally decide to challenge America and strike at its financial market. On the other hand, the evaluation for the news yesterday can be viewed as a kind of "canard", and also called "first attempt to do something". This further about probing how the real situation in the US financial market can react in the event of Beijing's real decision and not only to refuse from state bond purchases and start selling them within the declared concept framework of Russia and China on the reduction of commodity circulation in the American currency.

Another important development of the environment was the continuation of the Japanese yen rally, which is still supported by the decision of the local regulator to reduce the purchases of 10 and 25-year government bonds by 5%. This makes one think about the potential start of changes in the Central Bank's monetary policy. In fact, if this issue continued, the study voiced at the end of the year shows that the world's largest CBOs may begin to reconsider their views on monetary policies at the beginning of the coming year 2018 can be proved correct. In this case, the US dollar will face strong resistance, which will restrain its potential growth in relation to the currencies of the UK, the eurozone, and Japan. But again, it should noted that this can be talked about when the actions of the Central Bank of Japan and other major world securities continues.

Forecast of the day:

The GBP/USD pair is trading below 1.3500. Brexit's theme continues to have a negative impact on the British currency. From a technical point of view, there is a possibility of a local decrease to 1.3440 if the pair does not recover above this mark.

After a strong fall below 112.00, the USD/JPY pair may now recover. But failure to overcome may lead to a probable decrease to 110.90.

* The presented market analysis is informative and does not constitute a guide to the transaction.