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Quotes from RBC Capital Markets:
-EUR: It is shaping up to be a week to forget for EUR as speculation of an ECB refi rate cut next week has mushroomed. We expect the ECB to leave all of its policy settings unchanged next week, but for the opening statement (and Q&A) to have a distinctly dovish tone given the combination of recent euro exchange rate strength and data weakness (inflation, credit, and labour market).
-For now, we think that the Governing Council will refrain from any immediate action, but we expect the downbeat tone of next week’s meeting to lay the groundwork for a policy response over the next few months, which, at the very least, will take the form of another (V) LTRO early in the new year.
Published: 2013-11-01 05:05:00 UTC+00
Talking Points:
Dollar Climbs 5 Straight Days Yet Lacking Drive
Look to where the money is. This past session, the FX market’s most liquid currency pair – EURUSD – posted a massive 1.1 percent. That is this pair’s biggest dollar-favorable move in over a year, yet it does not necessarily reflect a particularly robust dollar. Monitoring the other ‘majors’, we found the benchmark’s performance was far less consistent. Doubt following the FOMC rate decision Wednesday has yet to pervade speculators’ optimism that the dreaded Taper will come any sooner than the March 2014 policy meeting. And yet, the probabilities of a December or January reduction in the QE3 program were materially improved by the central bank’s decision not to heighten its dovish rhetoric. The USDollar is up five straight days (matching the longest run since May 2012. If the precarious S&P 500 leads a risk aversion move, the dollar’s drive will find reinforcement. Otherwise, we will look ahead to next week’s 3Q GDP and October NFPs to gauge Taper.
Euro Suffers Biggest Drop Since June 2012
The Euro was the biggest mover of the majors by a wide margin this past session. Across the majors, the shared currency suffered losses between 0.3 percent (EURCHF) and 1.6 percent (EURCAD). Of course, the most media-coverage was given to the EURUSD’s biggest drop in 16 months and EURJPY’s reversal from multi-year highs. These two pairs tap into a deeper fundamental appeal for the FX markets – risk appetite. Yet, the euro’s universal itself is quite exceptional. Not only does it alter a consistent bull trend that has developed over the past few months, its impetus suggests that we would be in for a bigger capital shift away from the region. From the docket, we would see September unemployment for the broader Eurozone hit a fresh record high of 12.2 percent while the October CPI reading sank to 0.7 percent – a four year low. Persistent economic pain and price pressures turning to disinflation raise the probability that policy officials will respond with more stimulus. That is auspicious timing as we have the ECB’s next policy meeting next week…
Japanese Yen Crosses Slip as BoJ Avoid the ‘S’ Word
Following the Federal Reserve’s decision to use a softer tone on monetary policy – and thereby reinforce global risk appetite – there was some expectation that the Bank of Japan (BoJ) would do something to offset the neutral shift. It is in the Japanese policy authority’s interest for speculative appetites to build…more so than many other countries. In Japan’s efforts to build an economic recovery while simultaneously correcting structural problems with items like debt, an assessment of success would theoretically lift the yen as capital flowed in and the central bank eventually abandoned a zero interest rate policy (ZIRP). Japan does not want the currency ‘benefit’ in its plans without first experiencing some of the growth benefits as trade would suffer. Feeding carry is an important component of their path, yet they have little control over that global drive. Introducing a second wave of stimulus is one of few options. Yet, the BoJ showed little ambition for this.
Australian Dollar Little Moved China Data, RBA Next Week
This morning’s data has offered distinct support for the Aussie dollar’s fundamental backdrop. However, if risk trends don’t hold up their end of the bargain, the interest in forecasts for tepid rate hikes will garner little market appetite. Looking at the data, both the AiG manufacturing survey and Rismark home price indicator for October offer room for optimism. The factory activity report extended its surge to its highest reading (53.2) since July 2010 – in part a sign of success for easy monetary policy. China – Australia’s largest trade partner – would also report its own manufacturing progress report. A 19-month high bolsters fears of a fading export industry, but confidence in this trend is still shaky. A balance of growth and inflation are important moving forward if the Aussie dollar is to regain some of its sheen as a growing carry candidate – especially as speculative appetites dry up. The RBA decision is due next week, and swaps show no chance of a 25bp hike within the coming year.
Canadian Dollar Rallies after Strong August GDP Reading
It isn’t the norm that a Canadian data release can generate significant volatility from the FX market. This is certainly true of the monthly GDP figures that the country releases. Yet, the August growth numbers printed Thursday leveraged more than its fair share of loonie gains. The 0.3 percent pickup for the second month of the 3Q was a significant moderation of the previous month’s near-three year high figure. However, averaged out, the quarterly figure is on a strong pace. This strength will likely increase the market’s sensitivity to Canadian data through the coming week – a good time for it. On the docket we have the Ivey business survey, housing starts and employment figures.
Swiss Franc: SNB Tallies Losses on Gold Holdings
Given the correlation between the Swiss franc and the Euro (the 20-day rolling link between EURUSD and USDCHF is -0.92), it comes as little surprise that the former was significantly lower through the past session. The fundamental link is one of economic connection – if the country’s largest trade partner is seeing economic or financial uncertainty, Switzerland itself will receive the same international treatment. Looking beyond the external influences, there were local news headlines. The Swiss National Bank reported its 3Q figures. According to their figures, the central bank suffered a 6.4 billion franc loss so far in the year on its holdings. Its FX holdings lost 1.76 billion francs through the three-month period through September but were still 4.0 billion francs up on the year. Meanwhile, their gold holdings are still floating the group a loss of 10.7 billion on the year. As long as the SNB maintains a hold-to-recovery policy, much of these losses will be overlooked.
Gold’s Third Daily Drop, Biggest in 4 Weeks
The tentative, bearish turn for gold was punched with a significant exclamation mark Thursday. The precious metal dropped 1.6 percent through the session for the biggest one-day loss in four weeks and a move that suggests the bulls have been quieted. Looking to the traditional, fundamental counterpart for the commodity; the dollar’s gains were certainly a factor to the move. However, the greenback’s ‘Taper hopes’ gains were relatively restrained. Furthermore, the European data suggested the world’s second largest reserve currency could be looking at another large-scale asset purchase program (LSAP). When we look at the metal in euro terms, the session was still a bearish one, though the progress was far more reserved. Even the Bank of Japan’s policy bearings should have some latent sway over gold. Though the central bank didn’t mention its appetite for a second round of support to preempt the negative implications of the upcoming tax hike, investors no doubt expect the move at this point. Notably, neither volume on gold ETFs nor futures was particularly hearty.
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ECONOMIC DATA
SUPPORT AND RESISTANCE LEVELS
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CLASSIC SUPPORT AND RESISTANCE
INTRA-DAY PROBABILITY BANDS 18:00 GMT
v
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Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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-NZDUSD has broken the line that extends off of the August and 10/10 lows. Like AUDUSD, the advance from the YTD low forms converging lines which is consistent with a bear market rally.
-Price traded to a new low for the month on Wednesday (by 1 pip) before making a key reversal.
-A flat correction may be complete from .8212 (10/30 low at midnight (NY)).
Trading Strategy: Order to short at .8285, stop .8315, target .8120. If stopped out, then will be looking to identify a top between .8380 and .8450
LEVELS: .8162 .8191 .8225 | .8285 .8330 .8356
Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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-AUDUSD 10/23 outside day reversal is consistent with the AUDUSD transitioning from an uptrend to something else (sideways or downtrend). The rally from the August low consists of 2 converging lines and price is below the support line.
-Bigger picture, the advance reversed in the vicinity of the June high (.9791), 2008 high (.9849) and at the channel that originates from the October 2012 low. This is a good place for a top.
Trading Strategy: Look lower as long as price is below .9525 (Thursday high) towards cited supports. Exceeding Thursday’s high would open up towards .9580-.9620 (where I’ll be looking to go short).
LEVELS: .9332 .9390 .9428 | .9485 .9525 .9570
The Japanese yen jumped today after the central bank maintained its extremely accommodative monetary policy, but boosted growth forecasts and signaled that inflation may reach the target next year.
The Bank of Japan kept interest rates near zero and the size of annual asset purchases at ¥60–70 trillion. The central bank increased expected growth of gross domestic product in 2014 to 1.5 percent up from the previous prediction of 1.3 percent. The projection for inflation stayed at 3.3 percent, far above the bank’s target of 2 percent.
The BoJ outlook was not without its negative sides. The central bank mentioned that “considerable uncertainty surrounds developments in medium- to long-term inflation expectations” and said that “there is no sign at this point of excessively bullish expectations in asset markets or in the activities of financial institutions”.
USD/JPY dropped from 98.48 to 98.32 as of 20:19 GMT today, while its daily low was at 98.08. EUR/JPY sank from 135.29 to 133.54. GBP/JPY was at 157.67 after dropping from 157.96 to 157.26 intraday.
If you have any questions, comments or opinions regarding the Japanese Yen,
feel free to post them using the commentary form below.
View Live Chart for the EUR/USD
After non-dovish FED, a batch on negative European data finally took its’ toll on the EUR/USD sending the pair down to a daily low of 1.3583, where it stands. The strong drop in EU inflation was probably the main cause of this slide ahead on next week ECB meeting and the possibility of a more accommodative ECB stance then. The hourly chart shows no technical signs the pair is willing to correct higher, as indicators hold in oversold readings and price below 1.3600. In the 4 hours chart the bearish momentum also prevails, with a break below mentioned low, exposing 1.3540 in the short term.
Support levels: 1.3540 1.3500 1.3460
Resistance levels: 1.3610 1.3650 1.3710
View Live Chart for the EUR/JPY
The EUR/JPY lost nearly 200 pips still holding the negative bias according to the hourly chart, as indicators head lower in oversold territory, with short term sellers now surging around 133.70. In the 4 hours chart technical readings present a clear bearish tone, suggesting more slides ahead towards 132.80, next short term support.
Support levels: 133.30 132.80 132.40
Resistance levels: 133.90 134.50 134.90
View Live Chart for the GBP/USD
The GBP/USD traded in a tight range this Thursday, holding at least above the 1.6000 psychological figure, albeit unable to regain 1.6060 price zone. The hourly chart shows price right in the middle, hovering around its 20 SMA as indicators head slightly higher above their midlines. Despite positive, again the pair lacks clear upward strength. In the 4 hours chart price retraces from a strongly bearish 20 SMA while indicators stand in negative territory, which maintains the upside limited as long as below mentioned 20 SMA.
Support levels: 1.6010 1.5970 1.5920
Resistance levels: 1.6060 1.6115 1.6150
View Live Chart for the USD/JPY
The USD/JPY lost some ground this Thursday, although held above the 98.00 mark. The hourly chart shows price holding above moving averages that continue heading north , while indicators hover around their midlines, showing little selling interest around. In bigger time frames, technical readings are still strongly neutral, giving no clear clues on upcoming movements.
Support levels: 97.90 97.50 97.00
Resistance levels: 98.40 98.80 99.30
View Live Chart for the AUD/USD
The AUD/USD early advance was unable to establish above 0.9510 Fibonacci resistance, and after reaching a daily high of 0.9524 the pair turned back south, entering Asian session at its lowest level of the day. The hourly chart maintains a negative tone, with indicators heading south below their midlines, while the 4 hours chart also supports a downward continuation, eyeing 0.9380 for the upcoming hours.
Support levels: 0.9450 0.9420 0.9380
Resistance levels: 0.9510 0.9540 0.9590
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Receive the Weekly Speculative Sentiment Index report via PDF via David’s e-mail distribution list.
EURUSD – Retail traders had recently become their most short Euro on record, and we have consistently remained in favor of further rallies. Yet a significant shift warns that the EURUSD continues lower.
Trade Implications – EURUSD: Retail short interest in the Euro has fallen a significant 25 percent since last week, while long interest is up 30 percent. Timing major market reversals is very difficult, but the sharp shift has led our sentiment-based Momentum2 to sell the Euro from $1.3737.
It’s important to note that the vast majority of traders remain short—usually enough to keep us bullish. Yet our Senior Market Strategist notes that an aggressive EURUSD decline below $1.3655 may warn of a bigger correction.
— Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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The Great Britain pound dropped versus the Japanese yen today with the decline of consumer confidence, but erased losses versus the US dollar after the positive report about house prices.
Nationwide House Price Index rose 1.0 percent in October, exceeding the forecast of 0.7 percent. At the same time, the GfK Consumer Confidence Index declined from -10 in September to -11 in October. The mixed data resulted in the mixed performance of the sterling.
GBP/USD was at 1.6028 as of 12:41 GMT today after falling from 1.6036 to 1.6005. GBP/JPY dropped from 157.96 to 157.61.
If you have any questions, comments or opinions regarding the Great Britain Pound,
feel free to post them using the commentary form below.
Strong bullish sentiment was found at the support zone around 1.4830, which pushed the pair to the upside reaching 1.5400, then 1.5700, where two prominent tops were established.
The uptrend line around 1.5430-1.5400 applied bullish pressure on the pair which managed to break through 1.5720, thus matching the August highest level and the recently established top.
The market expressed obvious closure above 1.5575 which opened the way towards 1.6000, 1.6170, then 1.6260.
It is important to note that the market expressed bearish rejection off 1.6150-1.6200 which resulted in an inverted hammer weekly candlestick. That is why a bearish movement was expected to take place during the last week provided that the bears continue defending the weekly high at 1.6150. However, the lack of bearish momentum enhanced by the weakness of USD allowed the bulls to step above 1.6200 (127.2% Fibo Expansion) for a short time until bearish domination came back into the market.
On October 25, there was confirmation of the bearish momentum located around 1.6200 resulting in a shooting star daily candlestick pushing more bearish steam into the market.
The pair probably established a Head-and-Shoulders reversal pattern, where the right shoulder is located around 1.6180-1.6200 which provided a valid sell entry on retesting or after the breakdown of 1.6100 (neck-line) with SL located above 1.6250.
The pair needs to breakdown the next support level located around 1.6040 (100% Fibo Expansion) in order to resume the ongoing movement heading for lower targets.
On the other hand, daily fixation above 1.6040 will enable the pair to express bullish movement towards 1.6100-1.6150 initially.
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View Live Chart for the EUR/USD
The EUR/USD trades at its lowest level in two weeks, finally breaking below 1.3700 following news the EU unemployment rate stands at 12.2% multi years high. The hourly chart maintains a strong bearish tone, as indicators barely corrected extreme oversold readings and head back south, as price consolidates right below 1.3650 immediate resistance. In the 4 hours chart technical readings maintain a strong bearish momentum, suggesting a continuation down to 1.3580 next strong support.
Support levels: 1.3625 1.3580 1.3540
Resistance levels: 1.3650 1.3710 1.3750
View Live Chart for the GBP/USD
The GBP/USD holds above 1.6000, but with no upward momentum as price is unable to recover beyond 1.6060 immediate resistance level. The hourly chart however, presents a slightly bullish tone, with price above its 20 SMA and indicators heading higher above their midlines, reflecting some buying strength. In the 4 hours chart indicators hold in negative territory, while price rebounds from its 200 EMA: a recovery above mentioned resistance is needed to confirm another advance in the pair, towards the 1.6115 price zone.
Support levels: 1.6010 1.5970 1.5920
Resistance levels: 1.6060 1.6115 1.6150
View Live Chart for the USD/JPY
The USD/JPY resumed the downside, quickly approaching the 98.00 figure and with the hourly chart showing an increasing bearish potential, as indicators head lower below their midlines. 100 SMA in the mentioned time frame will offer some short term support around 97.90. Bigger time frames however, maintain the neutral stance seen on previous updates, and only below 97.00, a daily ascendant trend line, a stronger slide should be expected.
Support levels: 97.90 97.50 97.00
Resistance levels: 98.40 98.80 99.30
View Live Chart for the AUD/USD
Australian dollar recovered some ground against the greenback, stalling around a key Fibonacci level, 0.9510 the 38.2% retracement of its latest bearish run. The hourly chart shows price pressuring higher above a flat 20 SMA while indicators hold in positive territory, showing no actual strength. In the 4 hours chart price is also being capped by a bearish 20 SMA around current levels, while indicators aim higher still below their midlines. An upward acceleration here may see the pair extending its advance over the upcoming hours, although further technical confirmation is required.
Support levels: 0.9450 0.9420 0.9380
Resistance levels: 0.9510 0.9540 0.9590
EURUSD dropped yesterday and closed at 1.3736. The United States dollar strengthened after the latest FOMC statement about the monetary policy. The United States Federal Reserve maintained the size of its asset purchase program at 85 billion dollars per month. The FOMC Statement excluded any reference to the recent government shutdown and omitted previous remarks suggesting that tightening financial conditions could slow the pace of improvement in the economy and labor market. A report today showed that the Unemployment Claims in the United States came out close to the market expectation at a reading of 340K during the last week. Support for the EURUSD is seen at 1.3635 and resistance is seen at 1.3737. The HotForex Traders Board shows that 56 percent of the traders are short on the EURUSD.
Talking Points
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The Japanese Yen outperformed in overnight trade, rising as much as 0.4 percent on average against its top counterparts, as risk appetite soured and drove demand for the safe-haven currency. Asian stocks followed Wall Street lower after the Federal Reserve disappointed the markets’ hopes for a meaningful dovish shift in official rhetoric, as expected. The New Zealand Dollar underperformed after the RBNZ hinted that the elevated exchange rate may limit scope for interest rate hikes planned for next year.
The preliminary set of October’s Eurozone CPI figures headlines the economic calendar in European trading hours. Expectations call for the headline year-on-year inflation rate to remain at 1.1 percent, unchanged from the prior month. A disappointing result on the analogous report from Germany yesterday opens the door for a downside surprise, which may put the Euro under pressure as traders consider the implications of shrinking price growth on ECB policy expectations.
Later in the day, the spotlight turns back to the US as markets digest yesterday’s FOMC outcome. The weekly Jobless Claims data set is expected to show initial applications for jobless benefits fell to the lowest in a month. The status-quo tone of the Fed policy statement suggests traders probably overestimated the extent to which policymakers would delay stimulus reduction in the wake of October’s US government shutdown. The emergence of firm US news-flow stands to reinforce this idea and may help drive the US Dollar higher while weighing on sentiment-linked currencies. Indeed, S&P 500 futures are pointing sharply lower in late overnight trade, hinting the path of least resistance favors risk aversion in the hours ahead.
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Asia Session:
Euro Session:
Critical Levels:
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
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The Australian dollar rose against its US counterpart today, supported by very good housing data. The Aussie was flat against the Japanese yen.
Australian building approvals surged 14.4 percent in September after falling 1.6 percent in the preceding month. The actual reading was high above the forecast of 2.9 percent. Such data suggests that an interest rate cut from the Reserve Bank of Australia is not required for aiding economic growth.
AUD/USD rose from 0.9481 to 0.9505 as of 11:57 GMT today. AUD/JPY was flat at 93.39.
If you have any questions, comments or opinions regarding the Australian Dollar,
feel free to post them using the commentary form below.
After the two-day Fed’s meeting it was decided to leave QE3 unchanged ($85 billion a month). The Committee noted that there is improvement on the labour market, which investors regarded as the beginning of trimming from December, not from March, though the labour situation improved according to the whole level of unemployment, not the data on Nonfarm Payrolls. Consequently, the euro dropped 14 points, the pound sterling lost 7 points, S&P 500 dropped 0.51%, Dow Jones fell 0.39%.
On the whole, the markets reacted on the Fed’s decision moderately and now the major indicator of the investors’ activity will be the stock indices, which will show whether major investors will re-distribute assets to the Treasurys.
Meanwhile, we can rely on the macroeconomic data. At 11:00 UTC+4 data on Retail Sales in Germany in September is published, forecast 0.4%-0.5% vs. -0.2% in August. At 14:00 UTC+4 data on Unemployment Rate in the Eurozone will be issued; the previous reading was 12.0%. At 16:30 UTC+4 US Initial Jobless Claims will be revealed, forecast 341K vs. 350K in the previous week.
We expect that in the near future the mood will be bearish and we expect to see the price in the area 1.3670/80 for the euro and 1.5955/65 for the pound sterling.
USD/JPY.
Yesterday the Japanese yen was more consistent, amid the Fed’s announcement it grew 33 points. Of course it was helped by the background provided by the Bank of Japan, which promised to continue stimulating the economy.
Today at 10:00 UTC+4 the Bank of Japan report on economic outlook and inflation is scheduled. Approximately that time the bank will announce the monetary rate decision.
Taking into account unequal data for the last half of the year, it is difficult to depict the possible market mood, though there will be some difficulties induced by data on Industrial production and consumption will be observed. The Japanese investors have not started to buy massively the US bon ds, the purchase volumes of the foreign securities for the previous week was 1.03 trillion yen vs. 1.41 trillion in the previous week. Today correlation of the yen is possible (98.00).
In the near term when the US Treasury announces new placements of the Treasurys, we expect the growth will resume.
| ||
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Talking Points
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Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
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TODAY’s TECHNICAL LEVELS:
Resistance. 3 : 98.91.
Resistance. 2 : 98.72.
Resistance. 1 : 98.52.
Support. 1 : 98.29.
Support. 2 : 98.10.
Support. 3 : 97.90.
DESCRIPTION:
Please, pay attention to the levels of support 3 (97.90) and resistance 3 (98.91). Normally, when a level is touched, USD/JPY will rebound from the previous minimum by 10 to 20 pips, but if the levels are broken through by over 50 pips, then it will be a sign that these currencies have found trends today.
Best regards,
Official Analyst of InstaForex Group
InstaForex Group
http://instaforex.com
Email : Arief.jakarta@indo.instaforex.com
blog.mt5.com/arief
http://www.mt5.com/forex_analysis_award/profile/index/arief
Disclaimer:
Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
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Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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-USDCAD formed an outside week last week. In fact, last week’s price range engulfs the prior 3 week’s price range and takes out the prior 6 week’s highs. The market has responded well to long term trendline support.
-The current rally has reached channel resistance (upward) along with the key reversal close from 8/23 (1.0495).
Trading Strategy: Wanted 1.0420 order triggered before the run above 1.0470. Sitting tight for now.
LEVELS: 1.0390 1.0418 1.0440 | 1.0495 1.0547 1.0608
The US dollar was firm after the meeting of the Federal Open Market Committee as the resulting statement was less dovish than market participants have expected. The greenback retained strength despite poor employment data.
The FOMC statement was rather optimistic:
The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished, on net, since last fall.
Nevertheless, the Committee considered that it is too early to think about reduction of stimulus:
The Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program as consistent with growing underlying strength in the broader economy. However, the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases.
The employment report from Automatic Data Processing showed growth by just 130,000 jobs in October that trailed the forecast of 151,000. Such data indeed does not give incentive for the US central bank to change policy, yet the dollar was not bothered by it.
EUR/USD fell from 1.3734 to 1.3726 as of 00:00 GMT today. GBP/USD went down from 1.6036 to 1.6028, while USD/JPY was flat at 98.48 following yesterday’s advance.
If you have any questions, comments or opinions regarding the US Dollar,
feel free to post them using the commentary form below.
The Bank of Japan will on Thursday conclude its monetary policy meeting and then announce its decision on interest rates, highlighting a busy day for Asia-Pacific economic activity. The BoJ is widely expected to keep rates on hold at 0.10 percent.
The BoJ also will release its monetary base target for 2014, with forecasts suggest no change at 270 trillion yen.
Japan also will see September numbers for housing starts, construction starts and labor cash earnings, as well as the October reading for the Nomura/JMMA Manufacturing PMI.
Housing starts are expected to rise 12.5 percent on year to 983,000 after adding an annual 8.8 percent to 960,000 in August. Construction orders jumped 21.4 percent in August. Labor cash earnings are expected to ease 0.4 percent on year after dipping 0.6 percent a month earlier.
Australia will see September numbers for private sector credit and building approvals, as well as Q3 figures for import and export prices.
Private sector credit is expected to add 0.4 percent on month and 3.4 percent on year after rising 0.3 percent on month and 3.4 percent on year in August.
Building approvals are tipped to gain 2.8 percent on month and 1.2 percent on year after shedding 4.7 percent on month and spiking 7.7 percent on year in the previous month. Import and export prices are both called higher by 3.5 percent on quarter after both eased 0.3 percent in the previous three months.
New Zealand will see October scores for both the NBNZ business confidence survey and the ANZ activity outlook; in September, they came in at 54.1 and 45.3, respectively.
Singapore will provide unemployment figures for the third quarter of 2013, with analysts expecting the rate to hold steady at 2.1 percent.
Thailand will announce trade data for September; in August, imports were worth $17.78 billion and exports were at $19.99 billion for a surplus of $2.21 billion.
Malaysia will release producer price data for September; in August, PPI was up 0.4 percent on month and down 2.6 percent on year.
Hong Kong will see September numbers for retail sales; in August, sales were up 7.2 percent on year.
Published: 2013-10-30 23:01:00 UTC+00
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Exclusive newsline by InstaForex is your reliable assistant in the Forex world.
Top Forex analysts with immense experience in Forex trading, dozens of comprehensive analytical reviews daily, various subjects and types of analysis. Moreover, economic calendar by InstaForex Company can help you be in the middle of informational flow.
Exclusive newsline by InstaForex is your reliable assistant in the Forex world.
Top Forex analysts with immense experience in Forex trading, dozens of comprehensive analytical reviews daily, various subjects and types of analysis. Moreover, economic calendar by InstaForex Company can help you be in the middle of informational flow.
Talking Points:
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The US Dollar rallied on Wednesday, as the FOMC’s monthly rate statement was perceived as less dovish than expected.
Following a two-day meeting, the Federal Reserve left the asset purchase rate at 85 billion dollars a month and the interest rate target at 0.25%, as expected. Regarding the start of a taper, the FOMC said that the committee will await more evidence that progress will be sustained before adjusting the pace of quantitative easing.
Leading into the release, the median expectation among Bloomberg surveyed analysts was for the Fed to begin its taper in March of 2014. The Fed said in today’s release that economic activity has continued to expand at a moderate pace. However, following the recent government shutdown and debt ceiling crisis, the Fed said that fiscal policy is restraining economic activity.
Last June, Federal Reserve Chairman Bernanke said that the Fed will probably taper its bond purchases later in 2013 and halt QE in mid-2014. However, the Fed surprised markets by not tapering in September, and the recent government problems mentioned above seemed to have delayed the taper timeline even further. Fed determines it’s monetary policy based on unemployment and inflation rate targets, and the FOMC statement mentioned today that 0.25% target interest rate remains appropriate as long as unemployment remains above 6.5%.
The comments were apparently not as dovish as expected, and the US Dollar rose against major pairs in Forex markets. USD/JPY continues to rise to new weekly highs at the time of this writing, and a monthly high may provide resistance at 99.00. The 100-day moving average may provide support at 98.39.
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USD/JPY 1-Minute: October 30, 2013
Chart created by Benjamin Spier using Marketscope 2.0
– Written by Benjamin Spier, DailyFX Research. Feedback can be sent to bbspier@fxcm.com .
The Mexican peso gained today ahead of the Federal Reserve policy meeting on speculations that the Fed will maintain pace of its asset purchases, weakening the dollar and supporting risk-sensitive currencies.
The Federal Open Market Committee will announce its decision today and it is widely believed that quantitative easing will remain in place. The disappointing employment report certainly did not give an incentive for the FOMC to trim stimulus. Therefore it is likely that Fed’s QE will continue to support risky currencies.
USD/MXN fell from 12.9188 to 12.8481 as of 17:12 GMT today after rising to 12.9370 intraday.
If you have any questions, comments or opinions regarding the Mexican Peso,
feel free to post them using the commentary form below.
Daily closure above 1.5720 (the highest level in August) enhanced further bullish pressure to be applied, so that the bulls could step above 1.5760 (the highest level in June).
The previous bullish swing targeted 100% Fibonacci Expansion level. However, the current bullish swing was strong enough to bypass this level, when the pair stepped above 1.6035 recording a daily high at 1.6262, which is 70 pips higher than 127.2% Fibonacci Expansion level. However, most of the daily gains were lost resulting in an Inverted Hammer daily candlestick during the 1st week in October.
A wider-than-expected trade deficit along with dismal UK industrial and manufacturing production data enhanced bearish pressure on the pair last week to reach a weekly low around 1.5895.
Price fixing above 1.5950 enabled the bulls to reach 1.6035, the nearest supply level followed by the retesting of 127.2% Fibonacci Expansion around 1.6220 (the right shoulder zone).
Last week, on Thursday, the GBP/USD pair broke initially the 1.6200 handle touching the area as of 1.6250. However, signs of bullish failure are obvious on the chart.
The cable is probably establishing a bearish Head-and-Shoulders pattern with right shoulder located around 1.6200. That is why, a valid sell entry was suggested at 1.6200 or after breakdown of the neck-line around 1.6000 – 1.5950 (for conservative traders) to have an estimated target around 1.5720 with SL as daily closure above 1.6250.
The current bearish momentum needs to break down demand zone around 1.6040-1.6020 in order to pursue further bearish targets around 1.5720.
Fundamentally, Sterling Pound traded near its lowest level in two months against the euro in trading on Wednesday; reflecting concerns about growth and maintaining strong British economy during the past few months.
Failure to breakdown 1.6040-1.6000 zone was observed. Instead, bullish rejection will lead to another bullish swing towards 1.6200 again.
A breakthrough above 1.6220, which is not expected, will lead to another bullish swing towards 1.6285 again (141.4% Fibo Expansion), where intraday resistance should be applied.
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Performed by Michael Becker, Analytical expert InstaForex Group © 2007-2013 |
View Live Chart for the EUR/USD
The EUR/USD fell to a daily low of 1.3695 after FED’s decision to leave economic policy unchanged, and maintains a strong bearish tone according to the hourly chart, as price struggles around 1.3710 area. There has been no much changes in FOMC statement, as the Central Bank decided to maintain the $85B pace of QE. Two lines, one new, one missing, stand out however: the FED added that “the recovery in the housing sector slowed somewhat in recent months” and removed comments on “tightening financial conditions” much less dovish than expected, and leaving doors open for QE tapering any time. The dollar gathered momentum across the board, although struggles now to continue around key levels. As for the EUR/USD, failure to quickly regain the 1.3750 area will likely keep the pressure to the downside, with next big hurdle of buyers waiting around 1.3640
Support levels: 1.3690 1.3640 1.3600
Resistance levels: 1.3750 1.3780 1.3810
View Live Chart for the EUR/JPY
The EUR/JPY trades near its highest level in over two years, set at 135.49 past week, and maintaining a strong bearish tone according to the hourly chart, as indicators head north above their midlines while moving averages gain bullish slope below current price. Yen weakness continues to excel across the board, although with stocks sliding, risk of yen gains after Nikkei opening increase. Nevertheless, the pair may extend up to 136.00 in the short term, and pullbacks will likely remain shallow and above 134.50 support zone.
Support levels: 135.00 134.50 133.90
Resistance levels: 135.50 136.00 136.45
View Live Chart for the GBP/USD
Pound recovers ground after dipping own to 1.5997, struggling now around previous lows around current level. The technical picture is still bearish in the pair both in 1 and 4 hours chart, although the 200 EMA remains intact in the 4 hours chart, and a candle opening below 1.60 is required to confirm another leg down. A recovery above 1.6060 on the other hand will likely signal the downside correction is over, and open doors for a stronger recovery towards the 1.6200 area.
Support levels: 1.6010 1.5970 1.5920
Resistance levels: 1.6060 1.6115 1.6150
View Live Chart for the USD/JPY
USD/JPY took one more step higher, breaking above its 100 DMA and holding above it as the dust begins to settle. The hourly chart shows 100 SMA quickly approaching 200 one, both below current price as indicators head north above their midlines, all of which supports further advances. In the 4 hours chart, the pair also presents a positive tone, although in the daily chart maintains a quite neutral stance. A long term descendant trend line coming from this year high, stands around 99.20, offering strong resistance in case of more gains.
Support levels: 97.90 97.50 97.00
Resistance levels: 98.40 98.80 99.30
View Live Chart for the AUD/USD
The AUD/USD failed to regain the 0.9515 Fibonacci and sunk to a fresh low of 0.9440 with the news, although bounced back up. However, the hourly chart maintains a bearish tone, with price below its 20 SMA and indicators heading south below their midlines, keeping the pair quite vulnerable to another leg down. In the 4 hours chart technical readings also present a strong bearish tone, supporting a continuation towards 0.9380 over the upcoming session.
Support levels: 0.9450 0.9420 0.9380
Resistance levels: 0.9510 0.9540 0.9590
Talking Points
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Focus Chart of the Day: USD/CAD
The move higher in USD/CAD over the past week or so has been impressive as the exchange rate has overcome several key technical levels with relative ease. During this push higher, sentiment towards the Canadian Dollar has collapsed. The Daily Sentiment Index (DSI) for instance, is now at around just 10% bulls. Such lopsided sentiment is usually reserved for rates near yearly extremes. USD/CAD is still well below its year-to-date high and the extreme in sentiment being exhibited is no doubt unusual. However, it is still a warning sign that needs to be respected especially as Funds closes in on a medium-term cycle turn window in the next few days. Ideally sentiment will drop a bit further to setup the ‘perfect reversal’. More on this as it develops.
Foreign Exchange Price & Time at a Glance:
Price & Time Analysis: EUR/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
EUR/USD Strategy: Like holding only a reduced long position while above 1.3655.
Price & Time Analysis: NZD/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
NZD/USD Strategy: Like the short side while below .8370.
Price & Time Analysis: GOLD
Charts Created using Marketscope – Prepared by Kristian Kerr
XAU/USD Strategy: Like the long side while over 1270.
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
This publication attempts to further explore the concept that mass movements of human psychology, as represented by the financial markets, are subject to the mathematical laws of nature and through the use of various geometric, arithmetic, statistical and cyclical techniques a better understanding of markets and their corresponding movements can be achieved
Looking for a way to pinpoint sentiment extremes in real time? Try the Speculative Sentiment Index.
To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX
