विदेशी मुद्रा समाचार समयरेखा
14:11 USD/CAD moves sideways near 1.31, waits for next catalyst
The USD/CAD pair closed the day virtually unchanged near the 1.31 handle on Wednesday as rising crude oil prices allowed the commodity-related Loonie
Crude oil consolidates Tuesday's rally, WTI trades near $54.US Dollar Index clings to modest daily gains above 97.50.Trading action is likely to remain subdued in the second half of the day.The USD/CAD pair closed the day virtually unchanged near the 1.31 handle on Wednesday as rising crude oil prices allowed the commodity-related Loonie to stay resilient against the USD. In the absence of significant macroeconomic drivers, the pair is fluctuating in a narrow band near 1.31.
Oil rises on hopes of deeper output cuts
On Tuesday, reports claiming that the Organization of the Petroleum Exporting Countries (OPEC) and its allies were planning to discuss deeper oil output cuts amid the dismal energy demand growth outlook provided a boost to crude oil prices. The barrel of West Texas Intermediate (WTI) added 1.6% on the day and closed at $54.30 to support the CAD. Ahead of the weekly crude oil stock report of the US Energy Information Administration (EIA), the WTI is posting modest daily losses near $54.
On the other hand, the heavy selling pressure surrounding the GBP on Brexit uncertainty allowed the Greenback to find demand. The US Dollar Index snapped its five-day losing streak on Tuesday and extended its gains on Wednesday. As of writing, the index is up 0.12% on the day at 97.62.
Wholesale sales from Canada and the US monthly budget statement will be featured in the economic docket but are unlikely to receive a meaningful market reaction.
Technical levels to watch for
14:09 CAD: Delayed political impact? – ING
Francesco Pesole, FX strategist at ING, suggests that they’re not excluding 'delayed' political impact on the loonie if there is some uncertainty in t
Francesco Pesole, FX strategist at ING, suggests that they’re not excluding 'delayed' political impact on the loonie if there is some uncertainty in the coming days or signs of negative spillover in the energy sector as a result of recent elections.
Key Quotes
“We expect any impact to be broadly limited in size given the market's focus on developments in UK parliament, upcoming Bank of Canada and Federal Reserve meetings and ongoing trade negotiations.”
“If optimism on a Brexit deal continues to fuel global appetite for risk assets, we don't see reasons to exclude an extension of the recent CAD outperformance. Indeed, the loonie is still the most attractive G10 activity currency thanks to its supportive rate outlook and stabilising commodity prices.”
“In addition, the long-awaited ratification of the USMCA by the US Congress seems very near after Democratic House speaker Nancy Pelosi's constructive comments and White House economic adviser Larry Kudlow suggestion the vote should occur by Thanksgiving.”
“We see it as a positive factor for CAD. In turn, we don't exclude a break below 1.30 in USD/CAD in the near future, although some tangible improvements on the US-China trade negotiations will be needed to maintain the pair below that level.”
14:00 United States MBA Mortgage Applications fell from previous 0.5% to -11.9% in October 18
United States MBA Mortgage Applications fell from previous 0.5% to -11.9% in October 18
13:50 EUR/GBP falters ahead of 0.8670, Brexit remains in centre stage
The better tone in the Greenback in combination with renewed Brexit jitters is putting EUR/GBP under pressure in the 0.8630 region on Wednesday. EUR/G
The rebound in EUR/GBP loses traction near 0.8670.EU-27 officials expected to debate on deadline extension today.Ireland supports a delay to end-January 2020. DUP favours an election.The better tone in the Greenback in combination with renewed Brexit jitters is putting EUR/GBP under pressure in the 0.8630 region on Wednesday.
EUR/GBP stays focused on Brexit, ECB data
The European cross is looking to add to recent gains although it struggles to abandon the area of 5-month lows in the lower-0.8600s. Earlier in the day, the upside momentum in the cross met a tough barrier in the vicinity of 0.8670, where coincide a Fibo retracement of the May-August rally.
Meanwhile in Brexit-land, UK PM B.Johnson is expected to push for general elections (likely before Christmas) if the EU finally grants a 3-month extension to the October deadline (to January 31 2020).
Regarding the latter, Ireland’s L.Varadkar said earlier in the day that he favours a delay to end of January, while DUP’s Wilson leans towards a call for snap elections.
Calendar-wise, the next significant event will be the ECB meeting on Thursday and the publication of advanced PMIs in core Euroland for the current month.
EUR/GBP key levels
The cross is losing 0.10% at 0.8633 and a drop below 0.8574 (monthly low Oct.17) would expose 0.8488 (monthly low May 6) and then 0.8474 (2019 low Mar.12). On the other hand, the next up barrier emerges at 0.8667 (78.6% Fibo of the May-August rally) followed by 0.8814 (200-day SMA) and finally 0.8906 (50% Fibo of the May-August rally).
13:45 Brexit: Nothing was agreed at PM Johnson-Corbyn meeting - BBC
According to BBC political editor Laura Kuenssberg, nothing was agreed at the meeting between British Prime Minister Boris Johnson and opposition Labo
According to BBC political editor Laura Kuenssberg, nothing was agreed at the meeting between British Prime Minister Boris Johnson and opposition Labour Party leader Jeremy Corbyn.
"Labour wanted to discuss a different timetable for Brexit bill, govt wanted to know what Lab would do if the extension is vetoed - sounds like neither side came away with much," Kuenssberg tweeted out.
The British Pound largely ignored these comments. As of writing, the GBP/USD pair was virtually unchanged on the day at 1.2870.
13:32 James Smith, developed markets economist at ING
James Smith, developed markets economist at ING, suggests that things are moving fast for the UK economy, but conventional wisdom suggests the best el
James Smith, developed markets economist at ING, suggests that things are moving fast for the UK economy, but conventional wisdom suggests the best election strategy would be for the UK to have left the EU before voters head to the polls.
Key Quotes
“That favours the government reluctantly accepts the delay and presses ahead with the legislation - and this is currently what we narrowly think is more likely.”
“But then again, it's worth remembering that the Conservative's whole election campaign will rely on Brexit being front-and-centre in the electorate's minds when they cast their vote. Counterintuitively if a Brexit deal is ratified, but an election takes place with a lag (say in February or March next year), that might just give the opposition the space to reframe the debate away from Brexit, back to the domestic agenda (particularly economic issues) where the Conservatives are arguably more vulnerable.”
“The benefit of going to an election now is that is would be harder for the election narrative to be about much other than Brexit - even if the government has failed to meet its October 31 "do or die" deadline.”
“Whatever the government decides, these arguments will be front-and-centre as it tries to maximise its chances at the next election.”
13:23 USD/JPY technical analysis: Recovers early lost ground to over 1-week lows
The USD/JPY pair witnessed some follow-through selling on Wednesday – marking its fifth day of a negative move in the previous six – and dropped to ov
The intraday downtick showed some resilience below 50% Fibo. level.Move beyond 108.60 resistance might inspire intraday bullish traders.The USD/JPY pair witnessed some follow-through selling on Wednesday – marking its fifth day of a negative move in the previous six – and dropped to over one-week lows.
However, bulls continued showing some resilience below 50% Fibonacci level of the 112.40-104.45 downfall and assisted the pair to recover a major part of its early lost ground.
Meanwhile, technical indicators on the daily chart maintained their bullish bias and turned out to be one of the key factors that attracted some dip-buying interest at lower levels.
A subsequent strength beyond the 108.60 horizontal zone might prompt some technical buying and set the stage for a fresh attempt towards conquering the 109.00 round-figure mark.
The mentioned handle nears the very important 200-day SMA, which if cleared decisively might be seen as a key trigger for bullish traders and might pave the way for additional gains.
On the flip side, any further downside now seems to find decent support near a five-month-old descending trend-line resistance breakpoint – around the 108.00-107.90 region.
Below the mentioned resistance-turned-support, near the 108.00 handle, the pair might turn vulnerable to accelerate the pullback further towards the 107.55 confluence region.
The latter comprises of 100-day SMA and 38.2% Fibo. level, which if broken decisively might negate any near-term bullish bias and open the room for a further near-term depreciating move. USD/JPY daily chart
However, bulls continued showing some resilience below 50% Fibonacci level of the 112.40-104.45 downfall and assisted the pair to recover a major part of its early lost ground.
Meanwhile, technical indicators on the daily chart maintained their bullish bias and turned out to be one of the key factors that attracted some dip-buying interest at lower levels.
A subsequent strength beyond the 108.60 horizontal zone might prompt some technical buying and set the stage for a fresh attempt towards conquering the 109.00 round-figure mark.
The mentioned handle nears the very important 200-day SMA, which if cleared decisively might be seen as a key trigger for bullish traders and might pave the way for additional gains.
On the flip side, any further downside now seems to find decent support near a five-month-old descending trend-line resistance breakpoint – around the 108.00-107.90 region.
Below the mentioned resistance-turned-support, near the 108.00 handle, the pair might turn vulnerable to accelerate the pullback further towards the 107.55 confluence region.
The latter comprises of 100-day SMA and 38.2% Fibo. level, which if broken decisively might negate any near-term bullish bias and open the room for a further near-term depreciating move. USD/JPY daily chart
13:16 Markets: ECB and US Durable Goods eyed this week – TDS
According to analysts at TD Securities, in a quiet week for the data calendar, markets will be watching US durable goods alongside the ECB rate decisi
According to analysts at TD Securities, in a quiet week for the data calendar, markets will be watching US durable goods alongside the ECB rate decision.
Key Quotes
“Unfortunately, we don't expect many fireworks from the ECB at Draghi's final meeting, but it is still likely to be a dovish one with growth and inflation disappointing. A quiet data calendar may keep the focus on Brexit, as we edge closer to October 31st.”
“For precious metals, a quiet week could argue for some downside in gold as the breadth of technical indicators pointing long edges off the highs and as momentum signals wane.”
“For base metal and energy markets, the Markit manufacturing data in Europe and the US will likely be the main economic drivers. Indeed, given the global manufacturing is in recession, along with the recent contraction in the US ISM data, further weakness in manufacturing data will likely keep markets on the defensive as weak data continues to hold a firm grip on demand expectations in the mind of commodity investors. But, aside from the data, any additional updates on the "Phase One" trade deal could still have an impact on the margin.”
13:00 Germany 10-y Bond Auction climbed from previous -0.61% to -0.41%
Germany 10-y Bond Auction climbed from previous -0.61% to -0.41%
12:58 Irish PM Varadkar said to support Brexit extension to 31 January 2020
According to the latest headlines flashing on the wires, Irish Prime Minister Leo Varadkar was said to support a Brexit extension to January 31, 2020,
According to the latest headlines flashing on the wires, Irish Prime Minister Leo Varadkar was said to support a Brexit extension to January 31, 2020, following a phone call with the European Council President Donald Tusk.
They were further quoted saying that “it would still be possible for the UK to leave before January 31, 2020, if the Withdrawal Agreement has been ratified in advance of that date.”
EU27 ambassadors will discuss the issue at 1730 CET in Brussels and might produce some short-term trading opportunities around the GBP crosses.
They were further quoted saying that “it would still be possible for the UK to leave before January 31, 2020, if the Withdrawal Agreement has been ratified in advance of that date.”
EU27 ambassadors will discuss the issue at 1730 CET in Brussels and might produce some short-term trading opportunities around the GBP crosses.
12:53 EUR/USD Technical Analysis: The leg lower could extend to the 1.1100 region… and below
EUR/USD Overview Today last price 1.1114 Today Daily Change 19 Today Daily Change % -0.09 Today daily open 1.1124 Trends Daily SMA20 1.1011 Daily SMA
EUR/USD is prolonging the rejection from fresh tops in the 1.1180 region recorded on Monday.The renewed and quite moderate selling pressure is putting the constructive outlook to the test so far, as the pair approaches the key support in the 1.11 neighbourhood.If the selling impetus gathers further traction, then the critical 55-day SMA in the mid-1.10s would become the next target of relevance.EUR/USD daily chart
12:47 DUP's Wilson: Would welcome a general election
The Northern Ireland's Democratic Unionist Party (DUP) Brexit spokesman Sammy Wilson was out on the wires in the last hour saying that they need funda
The Northern Ireland's Democratic Unionist Party (DUP) Brexit spokesman Sammy Wilson was out on the wires in the last hour saying that they need fundamental changes to the Brexit deal for DUP to support it and would welcome a general election.
Meanwhile, the GBP/USD pair held on to its weaker tone and was last seen flirting with daily lows, around mid-1.2800s.
Meanwhile, the GBP/USD pair held on to its weaker tone and was last seen flirting with daily lows, around mid-1.2800s.
12:43 US Dollar Index Technical Analysis: Regains some poise above the 200-day SMA
Dollar Index Spot Overview Today last price 97.56 Today Daily Change 12 Today Daily Change % 0.03 Today daily open 97.53 Trends Daily SMA20 98.57 Dai
DXY continues to recover ground lost in the last couple of weeks, managing to retake the key area above the 200-day SMA and print 3-day high in the 97.60 region.Above this key level, the upside bias should be restored, allowing for further gains to, initially, the 55-day SMA near 98.30.In case sellers regain the upper hand, a potential test of 97.00 the figure (and probably) below should not be ruled out.DXY daily chart
12:34 Canada: Three-year low for Business hiring intentions – NBF
Krishen Rangasamy, analyst at National Bank Financial, explains that business sentiment is improving in Canada as depicted from the Autumn edition of
Krishen Rangasamy, analyst at National Bank Financial, explains that business sentiment is improving in Canada as depicted from the Autumn edition of the Bank of Canada Business Outlook Survey (conducted between August 20 and September 13) whose main index moved back into positive territory for the first time this year.
Key Quotes
“While sentiment about future sales was unchanged from last summer, intentions to invest in machinery and equipment climbed to a 4-quarter high, consistent with rising capacity pressures ─ 50% of respondents, the highest share this year, stated either some or significant difficulty in meeting an unexpected increase in demand.”
“Firms reported labour shortages (particularly in the services sector), but their intentions to increase employment dropped to the lowest since 2016Q3 as many respondents aimed for increased efficiency via automation. While positive for productivity that does not bode well for 2020 job growth.”
12:31 GBP/USD remains depressed near mid-1.2800s
The GBP/USD pair held on to its softer tone through the early European session on Wednesday and is currently placed at the lower end of its daily trad
The British Pound remained on the defensive amid fresh Brexit uncertainty.Softer risk mood benefitted the USD and added to the pair’s weaker tone.The GBP/USD pair held on to its softer tone through the early European session on Wednesday and is currently placed at the lower end of its daily trading range, around the 1.2850-40 region.
The British Pound remained on the defensive in wake of the latest Brexit development, wherein the UK lawmakers on Tuesday rejected the UK Prime Minister Boris Johnson's three-day timetable for passing Brexit legislation. The government later announced to pause the Brexit legislation and the lack of clarity about the next step weighed on the Sterling. Weighed down by Brexit confusion Meanwhile, a source in Johnson’s office said that a new election would be the only way to break the Brexit impasse if the EU agrees to a delay until January, which added to the uncertainty. Adding to this, a slight deterioration in the global risk sentiment was seen benefitting the US Dollar's relative safe-haven status against its British counterpart and further collaborated to the weaker tone.
Given that thins on the trade war front are quiet, Brexit was driving a general risk-off mood on Wednesday. However, firming market expectations that the Fed will cut interest rates further at its upcoming monetary policy meeting on October 29-30 might keep a lid on any strong USD gains and extended some support to the major.
This coupled with the fact that the risk of a no-deal scenario has been largely been neutralized in the recent past, any subsequent dips might still be seen as an opportunity to initiate some fresh bullish positions. Hence, it will be prudent to wait for a strong follow-through selling before confirming that the pair might have actually topped out in the near-term and positioning for any further near-term corrective slide. Technical levels to watch
The British Pound remained on the defensive in wake of the latest Brexit development, wherein the UK lawmakers on Tuesday rejected the UK Prime Minister Boris Johnson's three-day timetable for passing Brexit legislation. The government later announced to pause the Brexit legislation and the lack of clarity about the next step weighed on the Sterling. Weighed down by Brexit confusion Meanwhile, a source in Johnson’s office said that a new election would be the only way to break the Brexit impasse if the EU agrees to a delay until January, which added to the uncertainty. Adding to this, a slight deterioration in the global risk sentiment was seen benefitting the US Dollar's relative safe-haven status against its British counterpart and further collaborated to the weaker tone.
Given that thins on the trade war front are quiet, Brexit was driving a general risk-off mood on Wednesday. However, firming market expectations that the Fed will cut interest rates further at its upcoming monetary policy meeting on October 29-30 might keep a lid on any strong USD gains and extended some support to the major.
This coupled with the fact that the risk of a no-deal scenario has been largely been neutralized in the recent past, any subsequent dips might still be seen as an opportunity to initiate some fresh bullish positions. Hence, it will be prudent to wait for a strong follow-through selling before confirming that the pair might have actually topped out in the near-term and positioning for any further near-term corrective slide. Technical levels to watch
12:30 Canada: Business Confidence holding up – RBC
Nathan Janzen, senior economist at the Royal Bank of Canada, notes that Canadian business sentiment somewhat unexpectedly improved in the Bank of Cana
Nathan Janzen, senior economist at the Royal Bank of Canada, notes that Canadian business sentiment somewhat unexpectedly improved in the Bank of Canada’s autumn (Q3) Business Outlook Survey.
Key Quotes
“Businesses did cite, as expected, concerns about the US industrial sector amid escalating US-China trade tensions. Indeed, some firms now reportedly expect a “small US recession” over the next year. But foreign demand appears to be holding up, to date.”
“There are still clearly legitimate risks to the go-forward outlook for the Canadian economy. But, for now, these survey results – although from a limited sample of about 100 firms – will probably only reinforce the Bank of Canada’s view that rate cuts are not immediately needed.”
12:28 EUR/JPY Technical Analysis: Downside expected to re-test the 100-day SMA near 119.80
EUR/JPY Overview Today last price 120.5 Today Daily Change 40 Today Daily Change % -0.12 Today daily open 120.64 Trends Daily SMA20 118.82 Daily SMA5
The rally in EUR/JPY appears to have met important resistance in the 121.50 region, coincident with late July peaks. The ongoing correction lower comes along renewed softness in EUR, some pick up in the demand for safe havens and a move away from overbought levels, as measured by the RSI.Further selling impulso should meet the next relevant support at the 100-day SMA in the 119.80 region ahead of the 55-day SMA, today at 118.45.The resumption of the up move is expected to target the key 200-day SMA at 122.21.EUR/JPY daily chart
12:08 UK: An Article 50 extension is coming – ING
James Smith, developed markets economist at ING, suggests that with the October 31 deadline no longer likely to be met, the EU will now almost certain
James Smith, developed markets economist at ING, suggests that with the October 31 deadline no longer likely to be met, the EU will now almost certainly go ahead and authorise an extension to the Article 50 period.
Key Quotes
“While France has previously voiced doubts over granting more time, most believe that President Macron is unlikely to ultimately block another extension.”
“Exactly what form this will take is still uncertain, but most believe Brussels could go for another so-called 'flextension'. The latest reports suggest this could set a new Brexit date in January or February 2020, but crucially allow that deadline to be brought forward if a deal is ratified by the UK Parliament.”
“While PM Johnson has indicated he wouldn't accept a 3 or 4-month extension, the terms of the 'Benn Bill' mean he has little choice but to accept unless Parliament says otherwise.”
11:47 Gold climbs to the top end of over 1-week old trading range, around $1495 area
Gold edged higher through the early European session on Wednesday and is currently placed near the top end of a broader trading range held over the pa
Softer risk sentiment underpinned traditional safe-haven assets.Sliding US bond yields/subdued USD demand remain supportive.Bulls await a sustained breakthrough over a one-week-old range.Gold edged higher through the early European session on Wednesday and is currently placed near the top end of a broader trading range held over the past two weeks.
The precious metal gained some follow-through traction on Wednesday and added to the previous session's modest uptick amid reviving safe-haven demand. The global risk sentiment deteriorated a bit on Tuesday after the UK lawmakers rejected the government's proposed timetable for passing legislation to ratify its Brexit deal. Reviving safe-haven demand supportive The global flight to safety was further reinforced by a fresh leg of a downfall in the US Treasury bond yields and further benefitted the non-yielding yellow metal. Adding to this, a subdued US Dollar demand remained supportive of the prevalent bid tone surrounding the dollar-denominated commodity - Gold.
Meanwhile, optimism over some progress reported in the US-China trade talks might offset the positive factors and keep a lid on any runaway rally for the commodity. Hence, it will be prudent to wait for a sustained breakthrough the recent trading range before positioning for any further near-term appreciating move.
In absence of any major market-moving economic releases, the broader market risk sentiment and the USD price dynamics might continue to act as key determinants of the commodity's momentum and produce some short-term trading opportunities on Wednesday. Technical levels to watch
The precious metal gained some follow-through traction on Wednesday and added to the previous session's modest uptick amid reviving safe-haven demand. The global risk sentiment deteriorated a bit on Tuesday after the UK lawmakers rejected the government's proposed timetable for passing legislation to ratify its Brexit deal. Reviving safe-haven demand supportive The global flight to safety was further reinforced by a fresh leg of a downfall in the US Treasury bond yields and further benefitted the non-yielding yellow metal. Adding to this, a subdued US Dollar demand remained supportive of the prevalent bid tone surrounding the dollar-denominated commodity - Gold.
Meanwhile, optimism over some progress reported in the US-China trade talks might offset the positive factors and keep a lid on any runaway rally for the commodity. Hence, it will be prudent to wait for a sustained breakthrough the recent trading range before positioning for any further near-term appreciating move.
In absence of any major market-moving economic releases, the broader market risk sentiment and the USD price dynamics might continue to act as key determinants of the commodity's momentum and produce some short-term trading opportunities on Wednesday. Technical levels to watch
11:43 Russian Energy Min Novak: No official proposal on changed OPEC+ deal
Russia's Energy Minister Alexander Novak crossed the wires in the last hour, via Reuters, saying that there has been no official proposal to change OP
Russia's Energy Minister Alexander Novak crossed the wires in the last hour, via Reuters, saying that there has been no official proposal to change OPEC+ deal yet neither any information about possible discussions of deeper Oil production cuts at December meeting. It is always possible to tweak OPEC+ agreement, Novak added further.
The comments failed to inspire bullish traders, with WTI Crude Oil prices holding weaker by around 0.50% for the day, just above the $54.00/barrel mark.
The comments failed to inspire bullish traders, with WTI Crude Oil prices holding weaker by around 0.50% for the day, just above the $54.00/barrel mark.
11:23 Turkey: Limited room for further CBRT easing – Standard Chartered
Carla Slim, economist at Standard Chartered, expects the Central Bank of the Republic of Turkey (CBRT) to cut the repo rate by 100bps on 24 October, f
Carla Slim, economist at Standard Chartered, expects the Central Bank of the Republic of Turkey (CBRT) to cut the repo rate by 100bps on 24 October, following cumulative easing of 750bps at its last two Monetary Policy Committee (MPC) meetings.
Key Quotes
“We do not rule out a deeper cut of up to 200bps, in which case the MPC would emphasise downside risks to year-end inflation. The October CBRT expectations survey shows year-end inflation expectations fell to 12.7% from 14% a month earlier. Having fallen to single digits (9.3% y/y) in September, we think inflation will likely drop further in October before rising to double digits again in November. We see year-end inflation at c.13% and real interest rates at 2.5%.”
“Given conducive domestic conditions, as well as another expected Fed cut in 2019, we think the CBRT will likely see through the resurgence of the political risk premium related to Turkey’s military incursion in Syria.”
“The sanctions imposed on Turkey by the US recently should not lead to another FX crisis, in our view, barring additional escalation and measures by the US. This time is different – external vulnerabilities are much less significant. However, given the cyclical nature of Turkey’s stabilisation post-FX crisis, the improvement on the external front could prove temporary. As domestic demand recovers, import growth will likely return, tipping the current account back into a deficit.”
11:16 Italy: Fiscal headaches – ABN AMRO
Aline Schuiling, senior economist at ABN AMRO, notes that Italy’s debt ratio is higher than thought before according to the latest data. Key Quotes “T
Aline Schuiling, senior economist at ABN AMRO, notes that Italy’s debt ratio is higher than thought before according to the latest data.
Key Quotes
“The new estimates show that Italy’s debt ratio was significantly above the levels that were originally estimated during the years 2015-2018, with the 2018 ratio revised higher to 134.8%, up from the earlier estimated 132.2%. Meanwhile, Italy’s new centre-left coalition government still is discussing the 2020 budget, which should be approved by Italy’s parliament before the end of the year and also needs to be approved by the European Commission.”
“Getting the budget approved by Italy’s parliament has become more complicated as Prime Minister Conte needs the support from the left-wing populist Five Star Movement (M5S), the centre-left Democratic Party (PD) as well as the liberal Italia Viva (IV), which recently split from the PD. IV holds 27 of the 630 seats in the lower house and its support for the plans of the coalition government of M5S and PD (which hold 216 and 89 seats, respectively) is needed to pass the budget.”
“Getting the budget approved by the EC will also be complicated. Italy’s debt ratio (the second highest within the eurozone following Greece) is more than double the EU-ceiling of 60%. The European fiscal rules state that it needs to be reduced at a ‘significant’ pace towards the 60%-level.”
“In its latest agreement with the EC from December 2018, the previous government had agreed that the debt ratio would gradually decline during the period 2019-2021, to reach 128.2% GDP by 2021. Considering that Italy’s growth outlook has deteriorated significantly since then (we estimate Italy’s GDP to show roughly zero growth this year and in 2020), it is very likely that the government debt ratio will actually increase in the next few years and that the country will move back into the EC’s Excessive Deficit Procedure.”
11:06 EUR/USD alternates gains with losses near 1.1120, looks to Brexit
The shared currency has managed to rebound from earlier lows vs. the buck and is now taking EUR/USD back to the 1.1120 region. EUR/USD focused on Brex
EUR/USD navigates the area of weekly lows around 1.1120.The Greenback stays sidelined in the upper end of the range.Investors’ attention remains on developments from Brexit.The shared currency has managed to rebound from earlier lows vs. the buck and is now taking EUR/USD back to the 1.1120 region.
EUR/USD focused on Brexit, UK politics
The weekly correction in the pair seems to have met some decent contention in the 1.1120/15 band so far amidst increasing concerns on the Brexit front as well as uncertainty in the UK political arena and the renewed buying interest in the Greenback.
In fact, and in the wake of the recent events on the Brexit front, all the attention has now shifted to the EU officials and their view on the potential extension of the October 31st deadline. In addition, speculations on a probable call for snap elections and the resurgence of ‘no deal’ jitters keep weighing on sentiment.
Still an empty docket in both the Euroland and the US today ahead of Thursday’s ECB event and the release of flash PMIs for the current month.
What to look for around EUR
The upside momentum in the pair has extended to the 1.1180 region earlier this week, where it met some strong resistance and sparked a correction lower to the area below the key 100-day SMA. In the meantime, the Brexit process and developments from the US-China trade front remain the exclusive drivers of the mood surrounding spot. It is worth recalling, however, that the recent positive 3-week streak in spot has been exclusively sponsored by the renewed offered bias in the Dollar and that the outlook in Euroland continues to deteriorate and does nothing but justify the ‘looser for longer’ monetary stance by the ECB and the bearish view on the single currency in the longer run. In addition, the possibility that the German economy could slip into recession in Q3 remains a palpable risk for the outlook and is expected to weigh on EUR in the short/medium term horizon.
EUR/USD levels to watch
At the moment, the pair is losing 0.01% at 1.1124 and a break below 1.1047 (55-day SMA) would target 1.1013 (21-day SMA) en route to 1.0925 (low Sep.3). On the upside, the next hurdle is located at 1.1171 (monthly high Oct.18) seconded by 1.1186 (61.8% Fibo of the 2017-2018 rally) and finally 1.1204 (200-day SMA).
11:00 South Africa Consumer Price Index (MoM) below forecasts (0.4%) in September: Actual (0.3%)
South Africa Consumer Price Index (MoM) below forecasts (0.4%) in September: Actual (0.3%)
11:00 South Africa Consumer Price Index (YoY) below forecasts (4.2%) in September: Actual (4.1%)
South Africa Consumer Price Index (YoY) below forecasts (4.2%) in September: Actual (4.1%)
10:57 AUD/USD keeps the red near weekly lows, below mid-0.6800s
The AUD/USD pair maintained its offered tone through the early European session on Wednesday and is currently placed at the lower end of its daily tra
Renewed US-China trade uncertainty exerted some follow-through pressure.Reviving safe-haven demand underpinned the USD and added to the selling bias.Fed rate cut expectations might cap strong USD move up and limit the downside.The AUD/USD pair maintained its offered tone through the early European session on Wednesday and is currently placed at the lower end of its daily trading range, around the 0.6840 region.
The pair witnessed some follow-through selling on Wednesday and retreated farther from over one-month tops set in the previous session amid renewed uncertainty about US-China trade talks. In the latest development, comments from the White House Economic Adviser suggested that unresolved trade issues during the initial talks could spill over into phase two. Weighed down by renewed trade uncertainties/USD uptick Adding to the pessimism was the news that the US Department of Commerce (DOC) has proposed antidumping duty (AD) and countervailing duty (CVD) investigations of imports of aluminium wire and cable from China. This coupled with a slight deterioration in the global risk sentiment exerted some additional downward pressure on the China-proxy Australian Dollar.
Meanwhile, the US Dollar benefitted from reviving demand for traditional safe-haven demand. However, expectations that the Fed will cut interest rates again at its upcoming meeting on October 29-30 should cap any strong USD gains and helped limit deeper losses, at least for the time being.
There isn't any major market-moving US economic data due for releases on Wednesday. Hence, the broader market risk sentiment and the USD price dynamics might continue to act as key determinants of the pair's momentum, or contribute towards producing some short-term trading opportunities. Technical levels to watch
The pair witnessed some follow-through selling on Wednesday and retreated farther from over one-month tops set in the previous session amid renewed uncertainty about US-China trade talks. In the latest development, comments from the White House Economic Adviser suggested that unresolved trade issues during the initial talks could spill over into phase two. Weighed down by renewed trade uncertainties/USD uptick Adding to the pessimism was the news that the US Department of Commerce (DOC) has proposed antidumping duty (AD) and countervailing duty (CVD) investigations of imports of aluminium wire and cable from China. This coupled with a slight deterioration in the global risk sentiment exerted some additional downward pressure on the China-proxy Australian Dollar.
Meanwhile, the US Dollar benefitted from reviving demand for traditional safe-haven demand. However, expectations that the Fed will cut interest rates again at its upcoming meeting on October 29-30 should cap any strong USD gains and helped limit deeper losses, at least for the time being.
There isn't any major market-moving US economic data due for releases on Wednesday. Hence, the broader market risk sentiment and the USD price dynamics might continue to act as key determinants of the pair's momentum, or contribute towards producing some short-term trading opportunities. Technical levels to watch
10:49 Oil: Larger supply cuts for 2020 from OPEC? – Danske Bank
Danske Bank analysts note that late yesterday, Reuters quoted OPEC sources for saying that they would consider larger supply cuts for 2020 than previo
Danske Bank analysts note that late yesterday, Reuters quoted OPEC sources for saying that they would consider larger supply cuts for 2020 than previously planned to be discussed at the December meeting.
Key Quotes
“The message immediately made oil prices jump around 50 cents to USD 60/bbl, but they came quickly back down afterwards. Oil prices are down USD 15/bbl from the highs in April following the weaker economic outlook, and, according to the International Energy Agency, supply growth next year from non-OPEC producing countries such as Brazil and the US will likewise weigh on prices.”
10:45 BoJ said to be considering to lower price, growth forecasts – BBG Report
According to a Bloomberg report, citing people familiar with the matter, the Bank of Japan (BoJ) is considering to lower its forecasts for inflation a
According to a Bloomberg report, citing people familiar with the matter, the Bank of Japan (BoJ) is considering to lower its forecasts for inflation and economic growth this year in their quarterly outlook report – due to be released at the end of the latest monetary policy meeting on October 31.
The latest headlines, however, did little to lend any support to the USD/JPY pair, which is currently struggling near one-week lows amid reviving safe-haven demand.
The latest headlines, however, did little to lend any support to the USD/JPY pair, which is currently struggling near one-week lows amid reviving safe-haven demand.
10:12 USD/JPY struggles below mid-108.00s, over one-week lows
The Greenback held weaker against its Japanese counterpart, with the USD/JPY pair struggling below mid-108.00s, or over one-week lows set earlier this
Softer risk mood helped revive safe-haven demand and exerted some pressure.Fed rate cut expectations kept the USD bulls on the defensive and weighed further.The Greenback held weaker against its Japanese counterpart, with the USD/JPY pair struggling below mid-108.00s, or over one-week lows set earlier this Wednesday.
The pair added to the overnight modest losses and witnessed some follow-through selling for the second consecutive session on Wednesday – also marking its fifth day of a negative move in the previous six – amid reviving safe-haven demand. Weighed down by reviving safe-haven demand The latest Brexit development, wherein the UK lawmakers rejected the government's proposed timetable for passing legislation to ratify its Brexit deal, weighed on investors' sentiment and underpinned the Japanese Yen's perceived safe-haven demand.
A slight deterioration in the global risk sentiment was evident from a softer mood around equity markets and reinforced by a subdued action surrounding the US Treasury bond yields, which further inspired bearish traders and collaborated to the pair's weaker tone.
Meanwhile, the US Dollar remained on the defensive on the back of firming market expectations that the Fed will cut interest rates further at its upcoming meeting on October 29-30 and did little to lend any support or provide any meaningful impetus.
In absence of any major market-moving economic releases on Wednesday, it will now be interesting to see if the pair is able to find any buying interest at lower levels or continues with its recent corrective slide from the vicinity of 109.00 handle touched on October 15. Technical levels to watch
The pair added to the overnight modest losses and witnessed some follow-through selling for the second consecutive session on Wednesday – also marking its fifth day of a negative move in the previous six – amid reviving safe-haven demand. Weighed down by reviving safe-haven demand The latest Brexit development, wherein the UK lawmakers rejected the government's proposed timetable for passing legislation to ratify its Brexit deal, weighed on investors' sentiment and underpinned the Japanese Yen's perceived safe-haven demand.
A slight deterioration in the global risk sentiment was evident from a softer mood around equity markets and reinforced by a subdued action surrounding the US Treasury bond yields, which further inspired bearish traders and collaborated to the pair's weaker tone.
Meanwhile, the US Dollar remained on the defensive on the back of firming market expectations that the Fed will cut interest rates further at its upcoming meeting on October 29-30 and did little to lend any support or provide any meaningful impetus.
In absence of any major market-moving economic releases on Wednesday, it will now be interesting to see if the pair is able to find any buying interest at lower levels or continues with its recent corrective slide from the vicinity of 109.00 handle touched on October 15. Technical levels to watch
10:00 Turkey Consumer Confidence up to 57 in October from previous 55.8
Turkey Consumer Confidence up to 57 in October from previous 55.8
09:58 US: Impeachment proceedings still in focus – Deutsche Bank
Deutsche Bank analysts note that for the US economy, impeachment proceedings still remain in focus. Key Quotes “In terms of impeachment proceedings at
Deutsche Bank analysts note that for the US economy, impeachment proceedings still remain in focus.
Key Quotes
“In terms of impeachment proceedings at the US Congress, Bloomberg reported overnight that William Taylor, a career bureaucrat who took charge of the US embassy in Ukraine in June, provided House investigators yesterday a meticulously detailed 15-page statement, chronicling an “irregular policy channel” with Kyiv, in which Trump associates circumvented traditional diplomatic paths to pressure the country’s new president to investigate White House political rivals.”
“The report further added that the US envoy testified that a senior diplomat told him in early September that President Donald Trump made U.S. security aid to Ukraine entirely dependent on a public promise to investigate former Vice President Joe Biden and the 2016 election.”
09:58 German foreign minister: Pushing back Brexit date by two or three weeks is not a problem
Germany's foreign minister, Heiko Maas was out with some Brexit-related comments in the last hour, via Reuters, saying that pushing back the day by tw
Germany's foreign minister, Heiko Maas was out with some Brexit-related comments in the last hour, via Reuters, saying that pushing back the day by two or three weeks to allow ratification will not be a problem. But we must know what would be the reason for a potential extension, Maas added further.
Meanwhile, the GBP/USD pair continued with its subdued trading range and was seen consolidating the latest sharp pullback of over 150 pips from the overnight swing highs.
Meanwhile, the GBP/USD pair continued with its subdued trading range and was seen consolidating the latest sharp pullback of over 150 pips from the overnight swing highs.
09:55 Brexit amongst market movers today – Danske Bank
According to Danske Bank analysts, focus today is still on Brexit after yesterday UK’s PM Boris Johnson paused the implementation of the Brexit deal i
According to Danske Bank analysts, focus today is still on Brexit after yesterday UK’s PM Boris Johnson paused the implementation of the Brexit deal into British law, as he lost the vote on the timetable, despite winning support for the principle of the deal.
Key Quotes
“A majority may have supported the deal eventually but the MPs did not want to rush it through in just three days. Many questions arise on the back of yesterday's vote. How long extension will the EU grant (Donald Tusk suggests to end-January as laid out in the UK extension proposal but sources hint France's President Macron wants a shorter one)? Will there finally be support for a general election or will PM Johnson move forward with the legislative work anyway?”
“We have a very thin calendar again today ahead of the very important central bank day tomorrow. Most interesting today is the release of the preliminary consumer confidence indicator for the euro area in October due out at 16:00 CEST.”
“The Swedish debt office releases its new borrowing forecast today.”
09:52 Labour MP Burgon: Party will back a general election if EU agrees to extension
Labour MP Richard Burgon was out with some comments in the last hour and said that party will back a general election if EU agrees to an extension of
Labour MP Richard Burgon was out with some comments in the last hour and said that party will back a general election if EU agrees to an extension of the Brexit deadline beyond October 31st.
Labour's position is that as soon as no deal is off the table, we want a general election... Holding a referendum first - as pushed by Watson, Thornberry and Starmer - is "fantasy politics".
The comments did little to influence the British Pound, albeit renewed uncertainty kept the bulls on the defensive. The GBP/USD pair held on to its mildly softer tone and remained well below the 1.2900 round-figure mark.
09:45 France Business Climate registered at 99, below expectations (102) in October
France Business Climate registered at 99, below expectations (102) in October
09:21 Shrinking bets for further USD/JPY gains – UOB
USD/JPY is now facing risks of further consolidation around current levels, suggested FX Strategists at UOB Group. Key Quotes 24-hour view: “USD trade
USD/JPY is now facing risks of further consolidation around current levels, suggested FX Strategists at UOB Group.
Key Quotes
24-hour view: “USD traded between 108.43 and 108.72 yesterday, narrower than our expected sideway-trading range of 108.35/108.80. The subsequent soft daily closing in NY (108.47) has increased the risk of a pullback towards 108.05. For today, the next support at 107.80 is not expected to come into the picture. On the upside, 108.80 is expected to be strong enough to cap any intraday USD strength”.
Next 1-3 weeks: “There is not much to add to the update from Monday (21 Oct, spot at 108.40) as USD traded in a relatively quickly manner yesterday. As highlighted, the recent USD strength has run its course and USD is likely to trade sideways within a 107.80/109.00 range for now. Downward momentum has picked up slightly and the risk for the next few days is for USD to probe the bottom of the expected range at 107.80. At this stage, the prospect for a sustained decline below this level is not high”.
09:17 Norges Bank preview: Time for a breather – ING
ING analysts points out that the Norwegian central bank has hiked rates three times so far in 2019 with oil investment/activity has been a key factor
ING analysts points out that the Norwegian central bank has hiked rates three times so far in 2019 with oil investment/activity has been a key factor behind this hawkish stance.
Key Quotes
“The recovery in global oil prices has seen both energy services, as well as investment in equipment, increase - especially given that break-even production costs are considered to be quite a bit below current market pricing for oil, according to the central bank.”
“But with global risks mounting, the Norges Bank signalled a prolonged pause at its September meeting. It’s latest projections have interest rates flatlining for the next couple of years.”
“We expect a similar signal at the next meeting on Thursday. While the Norwegian krone is noticeably weaker than the fourth-quarter average the central bank was projecting back in September, oil prices are a tad lower. All else equal, a weaker currency means a higher interest rate projection, while lower oil prices are assumed to reduce economic growth and therefore pull down on the rate forecast.”
“Putting the two together still suggests that there will be no more tightening this year (and we'd note we won't get a new set of forecasts this week). However, we wouldn’t totally rule out a further hike in 2020.”
09:13 UK: Politics all the way – TDS
Analysts at TD Securities note that on Tuesday evening, the UK government's new Withdrawal Agreement Bill was put to Parliament to vote on for its fir
Analysts at TD Securities note that on Tuesday evening, the UK government's new Withdrawal Agreement Bill was put to Parliament to vote on for its first time (the "second reading"), which passed with 329 in favour versus 299 against.
Key Quotes
“This was the first time that Parliament has actually had a majority for any form of Brexit. Although it admittedly doesn't represent as much progress as it first appears, as many MPs voted in favour of the Bill only with an eye to supporting an amendment to change the Bill before the third reading. However, the government's plan to push the WAB through Parliament on an accelerated schedule, in order to deliver Brexit by 31 October, was scuppered when Parliament voted against a proposed timetable for the week (with the 3rd reading planned for Thursday evening) with 308 in favour and 322 against. While earlier in the day, the media was reporting that the government would call an election if the timetable were voted down, the government seemed to change its mind on that one and then later on the idea of a 10 day extension was floated.”
“Boris Johnson was still taking a very hardline tone in Parliament after the timetable was voted down, repeating that the UK would leave the EU on 31 October and talking about accelerating no-deal Brexit preparations, and shelving the Bill for now until after talking to EU leaders. So now we wait until the PM makes his decision on the next steps and reports back to Parliament to find out whether we're going to face a short extension or an immediate general election.”
09:07 GBP/USD will find it hard to recover after falling from the highs — Confluence Detector
GBP/USD has dropped below 1.29 after the UK parliament rejected the government's expedited timetable for Brexit, forcing a delay. How is it positioned
GBP/USD has dropped below 1.29 after the UK parliament rejected the government's expedited timetable for Brexit, forcing a delay. How is it positioned? The path of least resistance is down.
The Technical Confluences Indicator is showing that GBP/USD faces fierce resistance at 1.2910, which is a dense cluster of lines including the Simple Moving Average 100-1h, the SMA 5-one-day, the Fibonacci 38.2% one-day, the Bollinger Band one-hour Middle, and the Pivot Point one-month Resistance 2.
Support awaits at 1.2830 – and it is weaker than resistance. It is the convergence of the BB 1h-Lower, the PP one-day Support 1, and the Fibonacci 38.2% one-week.
Below, the next significant support line is 1.2724, which is the meeting point of the SMA 10-one-day, and the SMA 200-one-day.
Beyond 1.2910, the next upside target is 1.2990, which is the confluence of the previous weekly high and the previous daily high.
This is how it looks on the tool:
Confluence Detector
The Confluence Detector finds exciting opportunities using Technical Confluences. The TC is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc. Knowing where these congestion points are located is very useful for the trader, and can be used as a basis for different strategies.
This tool assigns a certain amount of “weight” to each indicator, and this “weight” can influence adjacents price levels. This means that one price level without any indicator or moving average but under the influence of two “strongly weighted” levels accumulate more resistance than their neighbors. In these cases, the tool signals resistance in apparently empty areas.
Learn more about Technical Confluence
09:03 GBP/USD technical analysis: Bearish technical indicators signal return of sub-1.2600 area
Not only bearish signals from MACD and RSI but pair’s sustained trading below the short-term key trend line also portrays GBP/USD weakness.
Bearish MACD joins sustained trading below the support line (now resistance).An upside clearance of 1.3000 becomes necessary to disappoint sellers.Not only bearish signals from MACD and RSI but pair’s sustained trading below the short-term key trend line also portrays its weakness as it trades near 1.2865 ahead of the London open on Wednesday.
While the 12-bar Moving Average Convergence and Divergence (MACD) histogram flashes red signals, 14-bar Relative Strength Index (RSI) stays well above the oversold conditions and indicates a continuation of the present downpour.
Also adding strength to the declines is the pair’s extended weakness below one-week-old rising trend line.
With this, highs marked on October 15 and 11, around 1.2800 and 1.2700 respectively, could keep the sellers entertain ahead of challenging them with September 20 top, close to 1.2590, likely to be bears’ favorite then after.
Alternatively, pair’s upside seems to have a strong resistance around 1.3000/10 area, a successful break of which becomes necessary for buyers to target May month high around 1.3180.
GBP/USD 4-hour chart
Trend: bearish
09:00 Denmark Consumer Confidence: 1.7 (October) vs previous 4.3
Denmark Consumer Confidence: 1.7 (October) vs previous 4.3
08:58 China’s CommerceMin: Will introduce policies and measures to promote the high-quality development of trade – Caixin
China’s Caixin recently came out with the news report while quoting the dragon nation’s Minister of Commerce Zhong Shan.
China’s Caixin recently came out with the news report while quoting the dragon nation’s Minister of Commerce Zhong Shan as showing readiness to take measures to promote trade developments. The news follows earlier upbeat comments from the United States’ (US) Trade Secretary Wilbur Ross.
Key quotes"Specific policy measures to promote the high-quality development of trade will be introduced soon.""Affected by factors such as slowing global economic growth, fluctuations in international financial markets, and adjustments in monetary policy in developed countries, global demand has continued to weaken, geopolitical complexity has changed, and uncertainties have increased significantly."FX implications
With the Chinese diplomat following the footsteps of the US lawmakers, chances are high that the present risk aversion gets healed soon. As a result, the Antipodeans could regain their strength while traditional safe-havens might have to trim recent gains.
08:51 Malaysia: Soft inflation on volatile food items – ANZ
ANZ analysts note that inflation in Malaysia undershot expectations at 1.1% y/y in September. Key Quotes “The data continue to underscore our view tha
ANZ analysts note that inflation in Malaysia undershot expectations at 1.1% y/y in September.
Key Quotes
“The data continue to underscore our view that the current pace of economic activity is insufficient to generate meaningful price pressures, a trend that we expect to extend into the coming months.”
“We expect a cut early next year, given challenges to growth on both the domestic and external fronts.”
08:41 JPY Futures: extra rangebound looks likely
Following flash data from CME Group for JPY futures markets, open interest shrunk by just 252 contracts on Tuesday and volume extended the downtrend,
Following flash data from CME Group for JPY futures markets, open interest shrunk by just 252 contracts on Tuesday and volume extended the downtrend, this time decreasing by only 428 contracts.
USD/JPY appears consolidative above 108.00USD/JPY is down for the second session in a row so far on Wednesday. The recent daily drop was in tandem with declining open interest and volume in the Japanese safe haven, which should play against further appreciation of the safe haven and in turn favour some sideline trading.
08:35 Forex Today: Brexit limbo weighs on all markets, oil pushed and pulled, Bitcoin battered again
Here is what you need to know on Wednesday, October 23: Prime Minister Boris Johnson's Brexit deal passed the first hurdle in parliament, but his expe
Here is what you need to know on Wednesday, October 23: Prime Minister Boris Johnson's Brexit deal passed the first hurdle in parliament, but his expedited schedule for passing legislation in three days. The government announced it is pausing the next phases. The vote makes leaving the EU by October impossible, and Johnson will now consult the bloc's leaders, which are likely to approve an extension until January 31, 2020, which will allow time for elections, perhaps in early December. Another option is to set a new timetable and try to push through the Brexit accord and leave earlier. The growing uncertainty has sent GBP/USD below 1.29. EUR/USD was also dragged lower. More Parliament approves Brexit, hedges on departure dateThe broader market mood "risk-off" due to Brexit and uncertainty about US-Sino trade talks. The world's largest economies may fail to complete writing Phase One of the trade deal by the APEC Summit in Chile in several weeks. The Japanse yen is strengthening, and commodity currencies are on the back foot. Oil prices are holding onto their gains after reports suggested OPEC is considering "deep cuts" to oil production in its upcoming meeting. WTI Crude Oil is hovering around $54. On the other hand, private inventory data has shown rising stockpiles, limiting the advance. Official inventory data are eyed later on. Cryptocurrencies have come under fresh pressure, with Bitcoin dipping below $8,000. The lack of significant events leaves the stage for Brexit and trade news, as tension mounts towards Thursday's European Central Bank decision.
08:31 AUD/USD keeps looking to 0.6900 near term – UOB
AUD/USD has now shifted the attention to the upper end of the range and targets the 0.6900 region in the near term, noted FX Strategists at UOB Group.
AUD/USD has now shifted the attention to the upper end of the range and targets the 0.6900 region in the near term, noted FX Strategists at UOB Group.
Key Quotes
24-hour view: “We highlighted yesterday that “AUD could edge higher but the major 0.6895 could be just out of reach”. AUD subsequently touched 0.6883 before easing off. Upward pressure has eased and AUD is likely to consolidate and trade sideways today, likely between 0.6840 and 0.6880”.
Next 1-3 weeks: “AUD didn’t do much yesterday as it eked out a fresh high of 0.6883 before slipping to close slightly lower at 0.6856 (-0.16%). For now, there is no change to our view from last Friday (18 Oct, spot at 0.6825) wherein the risk is for a higher AUD towards 0.6895. Only a break of 0.6815 (‘strong support’ level was previously at 0.6800) would indicate that our view for a stronger AUD is wrong. Looking ahead, if AUD were to break clearly above 0.6895, the next level to focus on is at 0.6930”.
08:28 EUR/GBP: Further recovery eyes EU data, Brexit news
Although pair’s recovery from five-month lows eases short-term buyers’ worries, doubts for the EU fundamentals and Brexit keep the EUR/GBP pair in check.
EUR/GBP mildly bid ahead of the EU Consumer Confidence.EU’s formal announcement of Brexit extension, UK PM’s reaction to the same awaited.Although pair’s recovery from five-month lows eases short-term buyers’ worries, doubts surrounding the EU fundamentals and Brexit keep the EUR/GBP pair under pressure around 0.8650 while heading into the European session on Wednesday.
With the United Kingdom’s (UK) Parliament’s rejection of the Prime Minister’s (PM) Progress Motion, the pair ignored previous news from the European Council that five of the region’s economies are at risk of breaching fiscal rules.
Also adding to the pair’s recovery was the European Union’s (EU) readiness to allow a three-month extension to the Brexit’s final date of October 31 that was criticized by France and could lead to a snap election in the UK.
While there has been a little information on the political front, markets could wait for the preliminary reading of October month Consumer Confidence data from the Eurozone, expected -6.7 versus -6.5 prior.
On the political front, the EU’s formal announcement of the Brexit extension is still pending, which may reveal any surprises, while the UK PM’s reaction to the same, whether a snap election will be held or not, is eagerly awaited and could keep traders guessing.
Technical Analysis
Only if the pair rises back beyond 0.8785/90, it can avoid the risk of visiting sub-0.8500 area.
08:27 NZ: Trade deficit narrowed for September – TDS
Analysts at TD Securities note that New Zealand’s trade deficit for September narrowed from NZ$1.6b in August to NZ$1.2b this month, better than marke
Analysts at TD Securities note that New Zealand’s trade deficit for September narrowed from NZ$1.6b in August to NZ$1.2b this month, better than market estimates for a trade deficit of NZ$1.4b.
Key Quotes
“Exports in September rose from NZ$4.08b to NZ$4.47b in September, beating market estimates of NZ$4.3b. Imports remained unchanged at NZ$5.71b from a revised figure of NZ$5.71b in August.”
08:27 GBP Futures: downside looks unconvincing
In light of preliminary figures for GBP futures markets from CME Group, investors kept trimming their open interest positions on Tuesday, now by aroun
In light of preliminary figures for GBP futures markets from CME Group, investors kept trimming their open interest positions on Tuesday, now by around 3.8K contracts. Volume, instead, ticked up for the second straight session, now by almost 40K contracts.
GBP/USD still targets 1.30 and beyondCable continues to look to Brexit developments for direction. The ongoing correction lower from tops just above the key 1.30 the figure was in tandem with shrinking open interest, removing some tailwinds from the leg lower. On the other hand, the recent pick up in volume could keep fresh buyers at bay for the time being.
08:23 Riksbank: Short-term SEK upside possible on meeting – ING
Analysts at ING believe the Riksbank is likely to push back the date of its next rate hike on Thursday, but at the same time don't think it will do aw
Analysts at ING believe the Riksbank is likely to push back the date of its next rate hike on Thursday, but at the same time don't think it will do away with its hawkish bias completely, which could be a short-term SEK positive.
Key Quotes
“The Riksbank meets this Thursday, and the key question is whether policymakers continue to signal a rate hike later this year or early next.”
“The deterioration in the domestic dataflow suggests the timing of the next rate hike will get pushed back again. But equally, we expect the central bank to retain its hawkish bias - particularly given the ongoing weakness in the Swedish Krona (SEK).”
“Policymakers may still signal a rate hike over the next six months or so, although given the downside to domestic data and wage growth, we aren't convinced this will ultimately materialise. We expect interest rates to remain on hold in Sweden for the foreseeable future.”
08:15 GBP/USD: short-term top in place? – UOB
In view of FX Strategists at UOB Group, the inability of Cable needs to surpass the 1.30 level on a sustainable tone could reinforce the idea that a n
In view of FX Strategists at UOB Group, the inability of Cable needs to surpass the 1.30 level on a sustainable tone could reinforce the idea that a near term top is in place.
Key Quotes
24-hour view: “Expectation for GBP to “retest the 1.3010/15 level” was incorrect as GBP rose briefly to 1.3000 before plummeting to 1.2862 during NY hours. Upward pressure has dissipated and the short-term risk is for a deeper pullback. That said, any weakness is viewed as a lower trading range of 1.2810/1.2920 and a sustained decline below 1.2810 appears unlikely for now”.
Next 1-3 weeks: “GBP tried to break clearly above 1.3000 for the second straight day yesterday (22 Oct) but slumped after touching 1.3000. For now, there is no change to our view from Monday (21 Oct, spot at 1.2880) wherein “GBP has to ‘punch’ above 1.3000 and register a NY closing above this level in order to indicate that the current rally has enough ‘ammunitions’ to extend to 1.3050, possibly as high as 1.3150”. While there is no change to our view, severely overbought conditions suggest GBP could ill afford to dither below 1.3000 or the risk of a short-term top would increase rapidly. From here, unless GBP cracks and stays above 1.3000 within these 1 to 2 days, a break of 1.2770 (no change in ‘strong support’ level) would indicate that the positive phase that started more than a week ago (see annotations in the chart below) has run its course. Looking ahead, a breach of 1.2770 would suggest that GBP is ready to ‘take a breather’ after the steep rally over the past couple of weeks”.
08:10 USD/CHF technical analysis: 0.9912/15, 4H 200MA limit immediate upside
The USD/CHF pair’s recovery from 0.9840 seems to lack momentum as the quote witnesses a pullback to 0.9900 ahead of the European session opening on Wednesday.
USD/CHF struggles to hold the latest recovery gains.A seven-week-old rising trend line, 50% Fibonacci retracement acts as the closest upside barrier.61.8% of Fibonacci retracement offers adjacent support.The USD/CHF pair’s recovery from 0.9840 seems to lack momentum as the quote witnesses a pullback to 0.9900 ahead of the European session opening on Wednesday.
With this, the 61.8% Fibonacci retracement level of September-October rise, at 0.9885, acts as the close support to watch as a break of which can recall 0.9840 on the chart.
Assuming the price decline below 0.9840, September month bottom close to 0.9800 will be on the sellers’ watch-list.
On the upside, a seven-week-old rising trend line, 50% Fibonacci retracement acts as an adjacent resistance, near 0.9912/15, ahead of 200-bar simple moving average on the four-hour chart (4H 200MA), at 0.9930 now.
It should, however, be noted that the pair’s rise past-0.9930 enables it to aim for 1.0000 round-figure and then rush to the monthly top surrounding 1.0015/20.
USD/CHF 4-hour chart
Trend: bearish
08:10 EUR Futures: extra losses in the pipeline
Open interest in EUR futures markets rose for the second session in a row on Tuesday, this time by around 3.3K contracts, according to advanced figure
Open interest in EUR futures markets rose for the second session in a row on Tuesday, this time by around 3.3K contracts, according to advanced figures from CME Group. In the same line, volume reversed two consecutive drops and went up by around 19.6K contracts.
EUR/USD could test the 55-day SMA in the mid-1.10s
Tuesday’s pullback in EUR/USD broke below the key 100-day SMA and was accompanied by rising open interest and volume, noting that fresh sellers are entering the market. That said, further downside remains on the cards with the next relevant target at the 55-day SMA near 1.1050.
08:01 The positive view still persists in EUR/USD – UOB
According to FX Strategists at UOB Group, EUR/USD could still attempt a move to the 1.1200 region in the near term. Key Quotes 24-hour view: “EUR trad
According to FX Strategists at UOB Group, EUR/USD could still attempt a move to the 1.1200 region in the near term.
Key Quotes
24-hour view: “EUR traded between 1.1116 and 1.1157 yesterday, lower and narrower than our “lower trading range of 1.1120/1.1170”. The price action is still viewed as part of a consolidation phase and EUR is expected to continue to trade sideways for today, likely between 1.1110/1.1150”.
Next 1-3 weeks: “EUR slipped and closed lower by -0.21% yesterday (NY close of 1.1124). While we continue to hold the same view from Monday (21 Oct, spot at 1.1150), the ‘healthy’ rally that we highlighted appears to have suffered a minor setback. That said, only a break of 1.1070 (no change in ‘strong support’ level) would indicate that EUR is not ready to tackle 1.1200 just yet. To put it another way, if EUR were to move below 1.1070, it would mean the current positive phase that started more than a week ago (see annotations in the chart below) has run its course and EUR would likely consolidate and trade sideways for a period”.
08:00 Singapore Consumer Price Index (YoY) meets expectations (0.5) in September
Singapore Consumer Price Index (YoY) meets expectations (0.5) in September
07:59 China: SMEI shows early signs of stabilisation – Standard Chartered
Standard Chartered analysts points out that their latest nationwide survey of SMEs in China showed initial signs of stabilisation in October. Key Quot
Standard Chartered analysts points out that their latest nationwide survey of SMEs in China showed initial signs of stabilisation in October.
Key Quotes
“Our headline SMEI (Bloomberg: SCCNSMEI <index>) picked up to 54.5 from a record low of 53.1 in September; the growth momentum indicator (new orders minus finished-goods inventory, 12mma) stabilised at the bottom. All three sub-indices of ‘current performance’, ‘expectations’ and ‘credit conditions’ rose during the month, increasing the likelihood of a tepid recovery in Q4 on continued counter-cyclical policy measures.”
“Real activity indicators improved across the board in October. Sub-component readings by sector suggest that domestic demand recovered slightly, driven largely by a stronger performance in the construction and manufacturing sectors on the back of policy support.”
“This drove an acceleration in production activity and investment, and boosted financing demand during the month. External trade remained a major headwind to the economy, reflected in weaker export orders and a deterioration in exporters’ performance. We expect enhanced counter-cyclical measures in Q4 to boost domestic demand and shore up the economy.”
“SMEs’ credit conditions remain a concern. The ‘credit’ sub-index rose in October on improved cash flows at SMEs, but their access to bank credit did not improve, which kept their borrowing costs high. The central bank reiterated that it will lower financing costs via reform of the interest-rate transmission mechanism.”
“We forecast another 50bps cut in the reserve requirement ratio (RRR) before year-end, two 10bps cuts in the medium-term lending facility (MLF) rate (in Q4 and Q1-2020), and tighter regulations on structured deposit products, which should gradually lower the loan prime rate (LPR) in the coming months.”
07:56 US Dollar Index extends gains to 97.60, 3-day high
The Greenback is extending the recovery from recent 2-month lows and it has already regained the 97.60 region, or 3-day tops when gauged by the US Dol
DXY moves higher and prints highs around 97.60.Yields of the US 10-year note deflated from recent tops.Markets’ attention remains on Brexit, ECB event.The Greenback is extending the recovery from recent 2-month lows and it has already regained the 97.60 region, or 3-day tops when gauged by the US Dollar Index (DXY).
US Dollar Index looks to Brexit headlines
The index keeps recovering ground lost early on Wednesday, extending the surpass of the key 200-day SMA (97.39) and reaching multi-day highs around 97.60. Once again, disappointing news from the Brexit process has undermined the sentiment in the riskier assets and played in favour of the buck.
In addition, above-estimates results from the ongoing US earnings season have been also propping up the upbeat mood around the Greenback since the beginning of the week.
Very thin US docket will only see MBA’s weekly Mortgage Applications and the report on US crude oil inventories by the EIA, ahead of Thursday’s New Home Sales, Durable Goods Orders and advanced PMIs.
What to look for around USD
The index managed to regain fresh buying impetus and clinch tops above 97.50 amidst rising scepticism on the US-China trade front and negative developments from the Brexit negotiations. In the meantime, investors’ attention has now shifted to the increasing likeliness of another insurance cut by the Fed at the October meeting amidst some loss of momentum in the US economy, particularly after recent figures from the manufacturing sector, mixed inflation results and some slowdown in consumer spending. On the broader view, the constructive outlook in DXY looks a bit damaged but it still is in play amidst a divided FOMC vs. a broad-based dovish stance from the rest of the G-10 central banks. In addition, the positive view on USD remains well sustained by its safe haven appeal and the status of ‘global reserve currency’.
US Dollar Index relevant levels
At the moment, the pair is gaining 0.04% at 97.55 and a breakout of 97.60 (high Oct.23) would open the door to 97.80 (100-day SMA) and finally 99.25 (high Oct.9). On the flip side, the next support lines up at 97.14 (monthly low Oct.18) seconded by 97.03 (monthly low Aug.9) and then 96.67 (low Jul.18).
07:55 US: Downward surprise in Housing data – TDS
Analysts at TD Securities note that the US existing home sales surprised to the downside in September, posting a larger 2.2% decline after an upward-r
Analysts at TD Securities note that the US existing home sales surprised to the downside in September, posting a larger 2.2% decline after an upward-revised 1.5% gain in August and a solid 2.5% increase in July.
Key Quotes
“The drop was largely driven by a 2.6% decline in the single-family segment, while condos were up 1.7% m/m for a second consecutive month. Despite the September retreat, existing home sales remain at firm levels (similar to 2016-17) and also maintain the recovery from the mid-2018 to Jan-2019 slowdown in the series.”
07:46 Wilbur Ross looks to negotiations to ease trade dispute with EU – FT
Quoting the recent interview for its newsletter Trade Secrets, the Financial Times shares the news from the US Commerce Secretary Wilbur Ross.
Quoting the recent interview for its newsletter Trade Secrets, the Financial Times shares the news that the United States’ (US) Commerce Secretary Wilbur Ross has floated new talks with the EU as an alternative to imposing tariffs on automotive imports next month. The news also cites Commerce Secretary Ross as optimistic about the US-China trade deal.
Key quotes“President Donald Trump could choose “some other form of negotiation” as a possible path in the face of the administration’s controversial conclusion that automotive imports are a threat to US national security.”“One [option] would be to say, ‘I’m just not going to do anything’, the second would be to impose tariffs on some or all [countries] . . . the third might be some other form of negotiation.”“Mr. Trump “has quite a lot of alternatives as to what he can decide to do, and I don’t think we should prejudge what the conclusion will be”.“You never know with paperwork, you can always run into a glitch at the last minute. But I’d say [the chances] are better — far better than 50/50 that it’s signable on or about the time of the Chile conference”“China was “following through in good faith on the promises that they made” earlier this month to press ahead with big purchases of US farm products.”FX implications
While no major market reaction could be witnessed to the news, this could help recede the latest risk aversion wave and might renew the strengths of the Dollars of Australia, New Zealand and Canada.
07:31 Forex Today: Risk aversion continues amid a light news/data flow, trade/Brexit in focus
With the light economic calendar and thin news flow, forex market extends previous risk aversion ahead of the European open on Wednesday.
Few, but negative, news concerning the US-China trade deal escalated risk-off moves.Brexit uncertainty prevails amid a wait for the EU’s response to Brexit extension, UK PM’s reaction.Light data calendar saw NZ trade numbers, second-tier data from the US/Canada up for publishing.With the light economic calendar and thin news flow, forex market extends previous risk aversion ahead of the European open on Wednesday. Brexit/Trade continues to be the key catalysts while International Monetary Fund’s (IMF) Asian growth outlook cut and the Reserve Bank of New Zealand (RBNZ) policymaker’s support for further rate cuts added to the risk-off mood.
Having said that, the US Dollar (USD) keeps its gains while the Japanese Yen (JPY) and Gold also benefit from the investors’ rush to safety. Dollars of Australia, New Zealand and Canada decline amid trade pessimism while the Euro (EUR) and the British Pound (GBP) keep bearing the burden of pessimistic political headlines. Among them, speculations that the United Kingdom’s (UK) Prime Minister (PM) Boris Johnson may call a snap election and the European Council’s signal that nearly five economies to breach the region’s fiscal rule grabbed market attention. Additionally, the US Department of Commerce’s (DOC) proposal for investigating China’s aluminum exports, coupled with downbeat comments from the White House Economic Adviser Larry Kudlow, earlier were in the spotlight.Main Topics in AsiaIMF lowers 2019 growth outlook for Asia
RBNZ's Hawkesby: Happy with the way interest rate cuts are feeding into the economy - MNI News
Goldman Sachs lowers 2020 US oil growth forecast
US President Trump: Good news on Turkey, Syria and the Middle East
Trudeau spoke to Trump today and discussed progress on USMCA
New Zealand Trade Balance improves on YoY, NZD/USD remains on the back foot
US Department of Commerce proposes investigations of aluminium wire and cable imports from ChinaKey Focus AheadExcept for the EU’s Consumer Confidence numbers, US Housing Price Index, Canadian Wholesale Sales and weekly Crude inventory numbers from the US Energy Information Administration (EIA), the economic calendar is almost light. As a result, investors will continue to search for trade/Brexit headlines for fresh impulse.
While the widely anticipated three-month Brexit extension from the European Union (EU) recently gained criticism from France, markets await the UK PM Johnson’s reaction to the same as he previously said to call a snap election if such an outcome arrives. On the trade front, China is yet to respond to the US DOC’s proposal for anti-dumping investigation and the same would invite repercussions from the US, which in turn could add global pessimism.
EUR/USD: Back below 100-day MA, focus on German yields
EUR/USD's breakout above the 100-day MA was short-lived. German 10-year yield dropped four basis points on Tuesday. Focus today is on EU's consumer confidence data and German yields.
GBP/USD: Crucial support breached on Brexit impasse
GBP/USD is on the defensive, having breached the crucial 50-hour MA support. Cable could suffer a deeper drop in Europe on lingering Brexit uncertainty and risk-off mood in markets.
USD/JPY: Bears flex their stuff in Tokyo open with a pop down below 200-HR MA to 108.25
USD/JPYbears take control and bust down below the 200-hour MA. It was Brexit stealing the show overnight, weighing on US yields and risk.
07:30 NZ: Bounce back in Merchandise Trade – ANZ
Susan Kilsby, agriculture economist at ANZ, notes that New Zealand economy posted an unadjusted monthly trade deficit of $1.24bn for September, which
Susan Kilsby, agriculture economist at ANZ, notes that New Zealand economy posted an unadjusted monthly trade deficit of $1.24bn for September, which was slightly smaller than anticipated.
Key Quotes
“On an unadjusted basis, export returns were up 5.1% y/y in September while imports were down 2.1%.”
“Dairy export returns were strong, up 20.4% m/m on a seasonally adjusted (sa) basis, while volumes were up 13%. Meat export volumes were up 8.6% sa in September despite there not being a lot of stock available for processing. In value terms meat exports were up 21.5% sa from the previous month.”
“The importance of China as an export destination continues to grow. The value of goods exported to China has increased by 20.3% over the past year. We have also seen growth in exports to most other Asian countries.”
“September was a strong month for imports which is expected as importers stock up for Christmas demand. However this was tempered by a weak month for petrol imports which were back 26.6% on the previous month.”
“Looking forward, export volumes for October will be bolstered by the increase in dairy production – September milk production was up 0.7% on a milksolid basis with the products manufactured from this milk ready to be exported in October. We are likely to see an uptick in petrol imports next month following lower imports in September.”
07:27 USD/INR technical analysis: On the back foot below 200-bar SMA, seven-week-old trendline
USD/INR registers sustained trading below 200-bar SMA and a seven-week-old trendline resistance.
USD/INR repeatedly bounces off the 70.70/76 area since the month’s start.61.8% Fibonacci retracement adds to the resistance.Although USD/INR registers repeated bounces off 70.70/76 area since the month’s start, pair’s sustained trading below 200-bar SMA and a seven-week-old falling trend line portrays the pair’s weakness. By the press time of the pre-European session on Wednesday, the quote trades around 71.00.
While 200-bar Simple Moving Average (SMA) near 71.20 acts as immediate upside resistance, a downward sloping trend line since early-September, around 71.60, and 61.8% Fibonacci retracement level of September month downpour, at 71.77, could limit pair’s further advances.
Should prices keep rising past-71.77, also clear 71.80 round-figure, 72.30 and September month high close to 72.65 will lure bulls.
Alternatively, pair’s declines below 70.70, can recall September 27 low adjacent to 70.35. Though, 70.00 and late-July highs close to 69.40 could question sellers afterward.
USD/INR 4-hour chart
Trend: bearish
07:19 EUR/USD: Back below 100-day MA, focus on German yields
EUR/USD is flashing red, having found acceptance below the 100-day moving average (MA) on Tuesday. The common faced selling pressure, possibly due to
EUR/USD's breakout above the 100-day MA was short-lived. German 10-year yield dropped four basis points on Tuesday. Focus today is on EU's consumer confidence data and German yields. EUR/USD is flashing red, having found acceptance below the 100-day moving average (MA) on Tuesday. The common faced selling pressure, possibly due to the drop in the British Pound triggered by the Brexit impasse.
Brexit optimism had pushed the common currency above the 100-day MA on Oct. 18. The follow-through to the breakout, however, was weak.
The pair created an inverted hammer on Monday and closed well below the inverted hammer's low of 1.1139 on Tuesday, confirming a bearish reversal.
The EUR, therefore, could suffer a deeper drop, especially if the German 10-year bond yield extends Tuesday's four basis point drop to -0.38%.
Also, the US Dollar may draw haven bids, adding to the bearish pressures around EUR/USD, courtesy of the risk-off mood in the equity markets.
On the data front, EU's Consumer Confidence is scheduled for release at 14:00 GMT. Elsewhere, ECB's Andrea Enria is scheduled to speak at an event in Madrid at 08:45GMT.
Technical analysis
AceTrader writes:
Although price has retreated after Monday's brief break of Friday's high at 1.1173 to a 2-month peak at 1.1179 and minor consolidation would be seen, as 1.1140 has contained downside, upside bias remains and above said resistance would extend upmove from October's 28-month trough at 1.0880 to 1.1209/10 later before prospect of correction due to loss of momentum.
06:51 GBP/USD: Crucial support breached on Brexit impasse
GBP/USD is looking heavy, having breached key support on Tuesday, courtesy of Brexit delay. The currency pair fell below the 50-hour moving average, c
GBP/USD is on the defensive, having breached the crucial 50-hour MA support. Cable could suffer a deeper drop in Europe on lingering Brexit uncertainty and risk-off mood in markets. GBP/USD is looking heavy, having breached key support on Tuesday, courtesy of Brexit delay.
The currency pair fell below the 50-hour moving average, confirming a bearish reversal on short duration charts. The key MA had consistently reversed pullbacks throughout the rally from 1.22 to 1.30 and may work as stiff resistance henceforth.
The GBP was offered as Prime Minister Johnson's Brexit bill won parliamentary support, but the government’s timetable of just 3 days debate on the bill was rejected.
With the parliamentary defeat, the probability of Britain leaving the European Union (EU) before the Oct. 31 deadline has dropped sharply.
Further, a source in Prime Minister Boris Johnson’s office said on Tuesday that a new election would be the only way to move on from Britain’s Brexit crisis if the European Union agrees to a delay until January.
The lingering Brexit uncertainty could continue to weigh over the GBP during the European session, more so, as key support of the 50-hour MA has been breached, as noted earlier. Also, the pair is trading well below the 100-hour MA for the first time since Oct. 11.
Also, the American Dollar may draw haven bids due to the risk-off mood in the equities and amid trade uncertainty. The US Department of Commerce (DOC) has proposed antidumping duty (AD) and countervailing duty (CVD) investigations of imports of aluminum wire and cable from China to the US International Trade Commission (ITC).
At press time, GBP/USD is trading just below 1.2850 and the 50- and 100-hour MAs are located at 1.2940 and 1.2905, respectively.
06:39 Asian stocks: Trade/Brexit headlines weigh on market sentiment
Not only increasing uncertainty at the UK’s Parliament but recently downbeat trade news from the US also weigh on Asian equity traders’ confidence.
Trade optimism fades after fresh news from the US.UK PM witnessed another disappointment through the Parliament.MSCI’s index of Asia Pacific shares follows Wall Street’s footsteps.Not only increasing uncertainty at the UK’s Parliament but recently downbeat trade news from the US also weigh on Asian equity traders’ confidence during early Wednesday.
While a political limbo in the United Kingdom (UK), followed a “NO” to the program motion, keep Brexit pessimism highlighted, statements signaling the question mark on the US-China trade talk’s next level from the White House Economic Adviser Larry Kudlow exerted initial downside pressure on the equities at Wall Street.
The move was then carried forward by the US Dollar (USD) strength, backed by risk aversion and positive manufacturing data, together with the below-market consensus forecast of current-quarter revenue by Texas Instruments.
During the early Asian session, the news that the US Department of Commerce proposed anti-dumping investigation on China’s aluminum exporters and the International Monetary Fund’s (IMF) degradation of 2019 Asian growth outlook negatively affected the trading sentiment.
With this, the US 10-year treasury yields extend declines to 1.75% while Gold and the Japanese Yen (JPY) recover recent losses.
Also, the MSCI’s index of Asia Pacific shares outside Japan trades more than 0.50% in red while Japan’s NIKKEI clings to 0.10% loss by the press time. Further, Australia’s ASX 200 seesaws near 0.20% in the negative area but New Zealand’s NZX 50 is losing more than 2.00% amid mixed trade balance data and also despite the Reserve Bank of New Zealand (RBNZ) policymaker’s comments favoring further rate cuts. Additionally, Hong Kong’s HANG SENG and India’s BSE SENSEX stay around 1.0% in red while writing.
Moving on, investors will keep a tab over the trade/Brexit headlines amid a lack of major data/events on the economic calendar.
06:18 USD/JPY technical analysis: Head-and-shoulders breakdown on 4H chart
USD/JPY is operating on slippery grounds, courtesy of Brexit-led risk aversion in the equity markets. The pair is currently trading at 108.30, represe
USD/JPY's 4-hour chart shows head-and-shoulders breakdown. The breakdown has opened the doors for sub-108.00 levels. USD/JPY is operating on slippery grounds, courtesy of Brexit-led risk aversion in the equity markets.
The pair is currently trading at 108.30, representing a 0.16% loss on the day.
The pair may end with a much bigger daily loss, as the 4-hour chart is reporting a head-and-shoulders breakdown.
That pattern represents a transition from the bullish to bearish market and suggests scope for a drop to 107.86 (target as per the measured move method).
The breakdown is also supported by a below-50 reading on the relative strength index (RSI).
The bearish view would be invalidated if the spot finds acceptance above the neckline resistance (former support) at 108.40.
4-hour chartTrend: Bearish
Technical levels
05:50 IMF lowers 2019 growth outlook for Asia
The International Monetary Fund (IMF) on Wednesday lowered its 2019 growth forecasts for the Asian economy to 5% from 5.4% projection made in April. T
The International Monetary Fund (IMF) on Wednesday lowered its 2019 growth forecasts for the Asian economy to 5% from 5.4% projection made in April.
The Fund has also revised the 2020 growth forecast lower to 5.1% from 5.4%.
The global economy's growth rate is seen cooling to 3% – the weakest since 2008 – down from 3.2% in a July forecast.
The downward revision of the Asian growth forecasts could bode well for the anti-risk assets like Japanese Yen and Gold.
05:36 GBP/USD technical analysis: Losing altitude after bearish Doji reversal
GBP/USD is facing selling pressure in the Asian session with the daily chart reporting a bearish candlestick pattern. The currency pair is currently t
GBP/USD's daily chart shows a bearish reversal pattern. Lingering Brexit uncertainty could keep the GBP under pressure. The ascending 10-day average support could soon come into play. GBP/USD is facing selling pressure in the Asian session with the daily chart reporting a bearish candlestick pattern.
The currency pair is currently trading at 1.2854, representing 0.13% losses on the day, having closed Tuesday below Monday's low of 1.2874.
Tuesday's weak close and a drop to 1.2854 in the Asian session indicates the period of indecision represented by Monday's Doji candle has ended with ended in a victory for the bears.
So, now the path of least resistance is to the downside. Supporting the bearish case is the pair's dip below the 100-hour moving average, the first since Oct. 10.
Also, the crucial 50-hour MA support has been breached. That average had consistently reversed pullbacks during the rally from 1.22 to 1.30.
All-in-all, a deeper drop to the 10-day MA, currently ta 1.2784, could be in the offing.
The bullish view would be revived if the spot finds acceptance above Monday's high of 1.3012, although as of now, that looks unlikely.
The Pound will likely remain under pressure as Brexit bill's defeat in the UK parliament has made it unlikely that Britain would leave the European Union before the Oct. 31 deadline.
Daily chartTrend: Bearish
Technical levels
05:07 USD/IDR technical analysis: 38.2% Fibo, 14,195/205 confluence region question latest pullback
The USD/IDR pair’s U-turn from five-week low still fails to overcome near-term key resistances as the quote trades near 14,045 during early Wednesday.
USD/IDR bounces off the five-week low.23.6% Fibonacci retracement and a four-month-old rising trend-line act as immediate supports.The USD/IDR pair’s U-turn from five-week low still fails to overcome near-term key resistances as the quote trades near 14,045 during early Wednesday.
Among the upside barriers, 38.2% Fibonacci retracement of May-July declines, at 14,095 appears as the nearest resistance, a break of which could escalate the pair’s recovery towards 14,195/205 confluence region including 50% Fibonacci retracement and 200-day Exponential Moving Average (EMA).
Should prices manage to rise past-14,205 on a daily closing basis, current month high nearing 14,275 and 61.8% Fibonacci retracement at 14,311 will become buyers’ favorite.
On the downside, 23.6% Fibonacci retracement level of 13,962 and an upward sloping trend line since late-June, at 13,943 could restrict the pair’s immediate declines.
Assuming bears refrain from respecting 13,943 supports, a horizontal area including July and September month low, near 13,880 will be the key to watch.
USD/IDR daily chart
Trend: sideways
05:04 RBNZ's Hawkesby: Very Happy with interest rate cuts feeding into the economy - MNI News
Reserve Bank of New Zealand's (RBNZ) Assistant Governor Christian Hawkesby told MNI News that he is "very happy" with the way in which interest rate c
Reserve Bank of New Zealand's (RBNZ) Assistant Governor Christian Hawkesby told MNI News that he is "very happy" with the way in which interest rate cuts are feeding through into the economy.
Hawkesby further added that rising house prices could boost consumption and ultimately inflation.
The central bank in August stunned markets by cutting the official cash rate (OCR) by a bigger-than-expected 50 basis points to 1.00%.
04:49 EUR/JPY drops to key trendline support amid risk aversion in equities
EUR/JPY is flashing red amid risk-off tone in the financial markets. As of writing, the pair is trading at 120.54, representing a 0.12% loss on the da
EUR/JPY is facing selling pressure, possibly due to risk aversion in the equity markets. The pair has tested support of trendline falling from September 2018 highs. A deeper drop could be seen if German yields extend Tuesday's drop. EUR/JPY is flashing red amid risk-off tone in the financial markets.
As of writing, the pair is trading at 120.54, representing a 0.12% loss on the day, having printed session lows on the support of the trendline falling from September 2018 and April 2019 highs at 120.43.
The Anti-risk JPY is drawing bids, possibly due to losses in the equities. At press time, the futures on the S&P 500 are down 0.20%. Benchmarks in Australia, New Zealand, and South Korea are also reporting losses. Japan's Nikkei, however, is currently adding 0.26%.
The risk-off mood could be associated with the lingering Brexit uncertainty. British lawmakers on Monday rejected the timetable to fast-track legislation for Prime Minister Boris Johnson Brexit deal, dashing hopes of Britain leaving the European Union before the Oct. 31 deadline.
Looking forward, the pair may find acceptance below the trendline support of 120.43 if the equity markets remain on the defense and the German bond yields extend Tuesday's drop, weakening the bid tone around the EUR.
On Tuesday, the 10-year German bond yield fell by four basis points to -0.38%.
Technical levels
04:44 USD/CHF struggles to justify latest recovery as risk-tone remains heavy
With the recently rising trade pessimism exerting downside pressure on the USD/CHF pair, the quote fails to hold on to recovery gains.
The USD/CHF pair looks for more USD strength to counter risk aversion.Trade headlines have been downbeat off-late, Brexit uncertainty prevails.With the recently rising trade pessimism exerting downside pressure on the USD/CHF pair, the quote fails to hold on to recovery gains while trading near 0.9900 during early Wednesday.
Although news from Turkey signals receding geopolitical tension in the Middle East, uncertainty surrounding the US-China trade deal and Brexit, coupled with an absence of USD positive catalysts, stop the USD/CHF buyers after dominating the pair momentum since the week’s start.
The US Department of Commerce recently proposed an investigation into China’s exports of aluminum wires and cables and the same could weigh on the trading sentiment after the latest run of upbeat expectations from a likely November month negotiation round between the two global superpowers, namely the United States (US) and China.
With this, the US 10-year Treasury yield weakens further below 1.80% to 1.75% by the press time.
Following upbeat comments that the US and China are close to a trade deal by the respective diplomats, markets’ risk-on sentiment strengthened, which in turn negatively affected the Swiss Franc (CHF) due to its safe-haven status.
Also exerting the downside pressure was the US Dollar (USD) strength backed by upbeat manufacturing data.
Looking forward, an absence of major data/events on the economic calendar will keep pushing traders to search for the qualitative catalysts to forecast near-term pair direction.
Technical Analysis
The pair needs a successful rise beyond early-month low surrounding 0.9905 in order to challenge a 200-day Simple Moving Average (SMA) level of 0.9957, failing to which could drag it back to recent low close to 0.9837.
04:35 Gold technical analysis: Bears lining up for a possible breakout to the downside
Gold prices are consolidated between a 23.6% Fibonacci retracement level and the 21-day moving average. At this juncture, should the bulls continue to
Gold is squashed between a 23.6% Fibo and the 21-DMA. Gold bears eyeing a break to a 50% mean reversion. Gold prices are consolidated between a 23.6% Fibonacci retracement level and the 21-day moving average. At this juncture, should the bulls continue to fail below 1500, a slide to the downside is the most likely path of least resistance.
A 50% mean reversion of the late June swing lows to recent highs level around 1460/70 remains compelling. However, should the bulls break above the 50-DMA on a closing basis, then a subsequent advance beyond the psychological 1500 level ahead of the 1520 area will open prospects for a test back to the key 1535 resistance target.
Gold daily chart
04:20 USD/JPY: Bears flex their stuff in Tokyo open with a pop down below 200-HR MA to 108.25
USD/JPY has been grinding slightly lower from 108.60 to 108.45 prior to the open in Tokyo but there has been a burst of energy from the bears with Yen
USD/JPYbears take control and bust down below the 200-hour MA.It was Brexit stealing the show overnight, weighing on US yields and risk. USD/JPY has been grinding slightly lower from 108.60 to 108.45 prior to the open in Tokyo but there has been a burst of energy from the bears with Yen picking up a bid across the board. USD/JPY is currently trading down -0.13% at the time of writing having travelled from a high of 108.51 to a low of 108.25.
From a fundamental basis, it was Brexit stealing the show once again overnight and trade-war and Middle East war headlines were taking a backseat to the commotion in the UK Parliament.
"The quick take is that PM Johnson’s bill won parliamentary support in principle but the government’s timetable of just 3 days debate on the bill was rejected. Johnson will now meet once more with EU leaders to discuss the timetable and an early election is increasingly likely, but with Brexit delayed beyond the election. Key for markets is that a no-deal Brexit remains unlikely," analysts at Westpac explained.
In the aftermath of all of that, EU's Tusk announced that he will recommend the EU accept a UK request for an extension out to January 31 2020. While a no-deal Brexit remains unlikely, UK politics, is as ever, up in the air and likely to keep risk at bay. However, on evidence compounds that a no deal Brexit is off the table, a relief in markets should be seen through a rally in the Pound and a softer Yen.
US data and US yields in focus
As for data overnight, in the US, the Oct Richmond Fed manufacturing survey rose firmly to +8 (est. -7, prior -9). "Gains were broad-based with noted lifts in employment and new orders with expectations edging higher in addition to stronger current conditions. US Sep existing home sales slid -2.2%m/m (est. -0.7%m/m). However, at 5.38mn (est. 5.45mn) the annualised level remains close to post record highs and NAR’s chief economist continues to cite a shortage of stock/supply," the analysts at Westpac explained.
US 2-year Treasury yields were moving between 1.59% and 1.63 while the 10-year yield travelled between 1.76% and 1.80%. "Markets are pricing 22bp of easing at the 30 October meeting and a terminal rate of 1.24% (vs 1.88% currently)," the analysts at Westpac noted.
USD/JPY levels
04:16 PBOC sets Yuan reference rate at 7.0752
The People's Bank of China (PBOC) has set the Yuan reference rate at 7.0752 vs Tuesday's fix at 7.0668.
The People's Bank of China (PBOC) has set the Yuan reference rate at 7.0752 vs Tuesday's fix at 7.0668.
04:16 AUD/USD technical analysis: Clings to 100-day SMA amid bullish MACD
Despite taking a U-turn from 50% Fibonacci retracement, AUD/USD refrains from declining below 100-day SMA.
AUD/USD stays below 50% Fibonacci retracement of July-October declines.Bullish MACD, refrain from declining below 100-day SMA portrays the pair’s strength.Despite taking a U-turn from 50% Fibonacci retracement, AUD/USD refrains from declining below 100-day SMA. The quote takes the bids to 0.6860 during early Wednesday.
Not only the 100-day Simple Moving Average (SMA) level of 0.6855 but bullish signals from 12-bar Moving Average Convergence and Divergence (MACD) indicator also favors the pair’s further rise.
In doing so, 50% Fibonacci retracement around 0.6880 acts as an immediate upside barrier ahead of September month high close to 0.6900.
During the pair’s further run-up below 0.6900, July month low around 0.6910 and 61.8% Fibonacci Retracement level of 0.6925 becomes the key to watch.
Meanwhile, 38.2% Fibonacci retracement level near 0.6830 and October 11 high of 0.6811 could come back on the chart if prices slip below 0.6855.
AUD/USD daily chart
Trend: bullish
03:55 NZD/USD technical analysis: Holds above 0.64, Tuesday's low is key support
NZD/USD is currently trading largely unchanged on the day at 0.6408. The pair clocked a high and low of 0.6436 and 0.6399, respectively, on Tuesday an
NZD/USD created a Doji candle on Tuesday, signaling indecision in the market. A break below Doji's low would confirm a bearish reversal. NZD/USD is currently trading largely unchanged on the day at 0.6408.
The pair clocked a high and low of 0.6436 and 0.6399, respectively, on Tuesday and ended the day on a flat note at 0.6405 on Tuesday, forming a Doji candle with a long upper shadow.
The Doji candle is widely considered a sign of indecision in the market. Therefore, the immediate bullish outlook stands neutralized.
Acceptance below Doji's low of 0.6399 would mean the period of indecision has ended with a victory for the bears. Put simply, it would confirm a bearish reversal and shift risk in favor of a drop to 0.6330-0.63.
On the other hand, a close above 0.6436 (Tuesday's high) is needed to revive the bullish view.
Daily chartTrend: Neutral
Technical levels
03:46 WTI ignores upbeat API data amid growing concerns on demand-supply matrix
With the growing uncertainty surrounding the global oil demand-supply matrix, coupled with receding geopolitical tension, WTI extends the latest declines.
WTI extends pullback from the eight-day high.News of likely OPEC+ output cut and a decline in the US shale production growth confronts lower demand forecast.Receding geopolitical tension in Syria seems to be the latest one to exert downside pressure.With the growing uncertainty surrounding the global oil demand-supply matrix, coupled with receding geopolitical tension, WTI extends the latest declines to $54.20 by the press time of early Wednesday.
While demand-side concerns have been fuelled by the talks of a likely production cut by the members of Organization of the Petroleum Exporting Countries and its allies (OPEC+), supply-side news has been affected by Russia’s Energy Minister Alexander Novak’s comments that the US oil production is set to peak out in few years and Goldman Sachs’ forecast of a lower oil output growth by the US shale.
Also exerting the downside pressure is the receding geopolitical tension in the Middle East. The latest tweet from the United States’ (US) President Donald Trump, which marks Syria, should be quoted for the reference. Additionally, doubts over the US-China trade deal becomes an extra worry for the Oil bulls.
Danske Bank seems to have favored the same in their latest reports while saying, “We expect oil prices to remain depressed close to current levels in the coming years mainly due to weak global demand on the back of weak growth, trade tensions and a strong USD. We forecast Brent will average USD65/bbl in Q4 and USD60/bbl in 2020.”
It’s worth mentioning that weekly US oil stocks report by the American Petroleum Institute (API), for the week ended on October 18, weakened to 4.45M versus 10.50M earlier readouts.
While trade/political headlines will keep directing near-term Oil prices, weekly Crude Oil Stocks Change, for the period till October 18, from the that the US Energy Information Administration (EIA) will also be the key to watch. Forecasts suggest the official inventory figure to decline to 1.725M from 9.281M.
Technical Analysis
Not only 21-day Exponential Moving Average (EMA) level around $54.30 but an area including monthly tops and 50-day EMA, near $55.00/10 will also keep WTI prices under check before highlighting 100-day EMA level close to $56.00. On the downside, WTI’s declines below a monthly rising trend line around $52.20 could recall $50.50 back to the chart.
03:27 Goldman Sachs lowers 2020 US oil growth forecast
Goldman Sachs has revised lower the forecast for US oil growth for 2020 by 300,000 barrels per day to 700,000 barrels per day, citing lower shale acti
Goldman Sachs has revised lower the forecast for US oil growth for 2020 by 300,000 barrels per day to 700,000 barrels per day, citing lower shale activity and a possible uptick in the decline rates in oil fields as reasons behind the downward revision.
Overall US oil output will grow by 1.1 million barrels per day this year and by 700,000 barrels per day in 2020, having risen by 1.7 million barrels per day in 2018, according to Goldman Sachs' forecast.
The Permian output is seen declining to 600,000 barrels per day in 2020, and then 500,000 barrels per day in both 2021 and 2022. Even so, Goldman Sachs believes the Permian output will account for 116% of all non-OPEC oil output growth as oil production of non-OPEC countries except the US is forecast to fall by 800,000 barrels per day.
The brokerage also shaved its 2020 outlook for global oil demand growth to 1.3 million barrels per day from 1.4 million barrels per day previously.
So far, Goldman Sachs' forecast has not had a notable impact on prices. WTI and Brent are currently trading at $59.42 and $51.14, respectively, representing marginal losses on the day.
Both benchmarks are stuck in a narrowing price range since Oct. 11.
03:06 USD/CAD technical analysis: Bounces off 1-year-old rising trendline towards 61.8% Fibo.
Having recovered from a three-month low, USD/CAD clings to the yearly support line while taking rounds to 1.3090 during the Asian session on Wednesday.
USD/CAD pulls back from three-month low amid oversold RSI conditions.61.8% Fibonacci retracement holds the key for the pair’s further recovery.July lows will be on the sellers’ radar during further declines.Having recovered from a three-month low, USD/CAD clings to the yearly support line while taking rounds to 1.3090 during the Asian session on Wednesday.
Supporting the recovery is oversold conditions of 14-bar Relative Strength Index (RSI), which in turn questions the strength of 61.8% Fibonacci retracement of late-2018 upside, around 1.3120.
Though, pair’s sustained rise past-1.3120 enables it to question September 10 low near 1.3135 before targeting 1.3170/75 resistance area.
Alternatively, pair’s declines below medium-term trend line support, at 1.3190 now, can recall July lows nearing 1.3015 back to the charts
USD/CAD daily chart
Trend: pullback expected
03:06 EUR/JPY technical analysis: A series of bearish wicks paints a bearish bias on the daily chart
The cross has been unable to sustain a bid beyond the 121 handle and a series of bearish wicks paints a bearish bias on the daily chart. EUR/JPY, howe
EUR/JPY bulls capped ahead of 122 handle and 200-DMA on the horizonBears to run into stronger bids in 119.40/118.80 territories.The cross has been unable to sustain a bid beyond the 121 handle and a series of bearish wicks paints a bearish bias on the daily chart. EUR/JPY, however, is holding in the 120s ahead of a key support being the 13th Sep highs at 120.01. However, after completing nine consecutive days of higher closing lows, something had to give and a period of consolidation is on the cards at this juncture.
Indeed, the 200-day moving average of 122.25 is a likely target area for the bulls, but 121.50 has to give first with a confluence of the 121.34/ 50% Fibonacci retracement – "This is also the location of the 2018-2019 downtrend, the top of a near term channel and the 121.38 late July high - the break has been minor and we look for it to continue hold the topside," analysts at Commerzbank explained, adding, "Dips lower will find support at the 55 day ma at 118.84/44, ahead of the 117.65 uptrend."
EUR/JPY daily chart
02:32 GBP/USD consolidates around 1.2890 amid mixed news from trade/Brexit
With the mixed sentiment concerning the trade/Brexit restoring the US Dollar (USD) weakness against the British Pound (GBP), the GBP/USD pair bounces off.
GBP/USD recovers from the recent drop to 1.2860.The EU is widely anticipated to offer a three-month Brexit extension, France doesn’t like it.The US DOC proposes an investigation of Chinese Aluminium wires’ and cables’ imports while good news from Syria also gets noticed.With the mixed sentiment concerning the trade/Brexit restoring the US Dollar (USD) weakness against the British Pound (GBP), the GBP/USD pair bounces off to 1.2890 amid initial Asian trading session on Wednesday.
The pair trimmed more than 100 pips off its five-month high after the United Kingdom’s (UK) House of Commons rejected the motion to push the Brexit proceedings with October 31 be the deadline.
With this, the Prime Minister (PM) Boris Johnson is waiting for the formal approval of the European Union’s (EU) new Brexit date, which is January 2020 as per most market consensus. It should also be noted that the Tory leader previously said that he will call for a snap election on such outcomes. Furthermore, France seems to have a dislike for the widely anticipated three-month Brexit extension.
On the other hand, trade sentiment has been down by the news that the US Department of Commerce (DOC) proposed antidumping duty (AD) and countervailing duty (CVD) investigations of imports of aluminum wire and cable from China to the US International Trade Commission (ITC). However, risk sentiment might have recovered from the US President’s tweet assuring good news from Syria.
While the UK PM’s reaction to the EU’s Brexit extension will be the key to watch, trade/political headlines concerning the US will also be crucial for the Cable traders to follow for fresh direction.
Technical Analysis
Only if the prices manage to break recent high surrounding 1.3013, buyers can take aim at May month top, close to 1.3180, else the quote can revisit June month high around 1.2785.
02:05 GBP/JPY technical analysis: 200-day SMA in the spotlight
Having slipped back beneath 61.8% Fibonacci retracement of March-August downpour, GBP/JPY traders await a downside break of 200-day SMA.
GBP/JPY fails to hold strength beyond 61.8% Fibonacci retracement.A downside break of 200-day SMA can recall a 50% Fibonacci retracement level.The late-may high will be on the bull’s radar.Having slipped back beneath 61.8% Fibonacci retracement of March-August downpour, GBP/JPY traders await a downside break of 200-day SMA for confirmation of the latest weakness. The quote seesaws near 139.70 by the press time of Wednesday’s Asian session.
Should prices decline below 200-day Simple Moving Average (SMA) level of 138.74, 50% Fibonacci retracement level of 137.70 will become the sellers’ target.
However, early-July high and September month top, close to 136.30 and 135.65 respectively, will lure bears during pair’s further declines below 137.70.
Meanwhile, buyers will look for a successful break above the late-May high of 141.75 to target April month lows near 143.75.
It’s worth noting that 140.00 round-figure can act as an immediate upside barrier.
GBP/JPY daily chart
Trend: pullback expected
01:55 US President Trump: Good news on Turkey, Syria and the Middle East
US President Trump has been crossing the wires with an update on the Middle East sayin that: "Good news seems to be happening with respect to Turkey,
US President Trump has been crossing the wires with an update on the Middle East sayin that:
"Good news seems to be happening with respect to Turkey, Syria and the Middle East. Further reports to come later!" - Twitter
Developing story...
Market implications:
Oil is the one to watch here as well as currencies such as the Yen and CAD with respect to the tradable majors. Oil has been on the bid, but OPEC has been the news there - More on that here: WTI bulls capped ahead of $55 handle as market weighs probability of OPEC+ cuts. However, peace in the ME is considered bearish for oil.
01:41 AUD/JPY clings to 74.35 after RBA’s Kent’s speech, trade/Brexit exert downside pressure
Comments from the RBA’s Kent fails to provide any clear direction to the AUD/JPY pair amid downbeat market sentiment as the pair seesaws around 74.35.
AUD/JPY shrugs of RBA’s Kent’s speech as it offers a little clear price direction.Trade/Brexit optimism fades amid recent challenges.China’s reaction to the US allegations, UK PM’s action after the EU decision will be the key.Comments from the RBA’s Kent fails to provide any clear direction to the AUD/JPY pair amid downbeat market sentiment as the pair seesaws around 74.35 amid initial Asian session on Wednesday.
While participating in a panel discussion at the International Swaps and Derivatives Association, the Reserve Reserve Bank of Australia’s (RBA) Assistant Governor (Financial Markets) Christopher Kent said that end of LIBOR (London Interbank Offered Rate) is not a risk, fact people not ready for it is the risk. RBA’s Kent further mentioned that in Australia, few signs of people making progress on the transition from LIBOR prevails.
Given the comments showing the little direction to the Australian Dollar (AUD) traders, the pair remains on the back foot after the release.
Market sentiment has recently worsened amid the trade negative headlines from the US and uncertainty surrounding the Brexit. As a result, the US 10-year Treasury yields scaled back the early Tuesday upside to 1.77% while Wall Street also marked sluggish closing.
As the economic calendar is mostly empty during today’s Asian session, trade/Brexit headlines will keep dominating market sentiment. Among them, China’s reaction to the recent blame from the US, concerning aluminium wires and cables, and the United Kingdom’s (UK) Prime Minister’s (PM) action after the mostly certain three-month Brexit extension from the European Union (EU) will be closely observed to further stretch the latest risk aversion wave.
Technical Analysis
Pair’s failure to hold to recovery gains beyond September high of 74.50 makes it an immediate resistance as a sustained run-up above the same could propel prices to 200-day Exponential Moving Average (EMA) level of 75.63. Alternatively, a 100-day EMA level of 74.00 and September 01 high close to 73.10 offer immediate supports to watch during pair’s further declines.
01:30 RBA Kent: End of LIBOR is not a risk
Speaking to the International Swaps and Derivatives Association, the Reserve Bank of Australia assistant Gov Kent says the end of LIBOR is not a risk
Speaking to the International Swaps and Derivatives Association, the Reserve Bank of Australia assistant Gov Kent says the end of LIBOR is not a risk and that the fact people not ready for it is the risk.
More from Kent: In Australia, few signs of people making progress on transition from LIBOR.
More to come...
01:28 Trudeau spoke to Trump today and discussed progress on USMCA
In recent trade, Canadian Prime Minister Trudeau spoke to Trump today and discussed progress being made toward ratifying the continental trade pact an
Canadian Prime Minister Trudeau spoke to Trump today and discussed progress on USMCA.Trudeau won a second term as Canada’s prime minister.In recent trade, Canadian Prime Minister Trudeau spoke to Trump today and discussed progress being made toward ratifying the continental trade pact and this was followed by the
US Ways and Means Committee Chairman, Neal, announcing that there will be an opportunity to meet with Canadia Trudeau in Canada soon to discuss the USMCA. In earlier news, the focus was with the Canadian elections where. Trudeau won a second term as Canada’s prime minister after the country’s federal election, but his narrow victory meant he will lead a minority government that will be forced to depend on other parties to govern. FX implications: Its all good news for the Loonie this week and coupled with promising economic data, on the whole, the CAD can continue to perform on the bid. Glancing over to oil, which is correlated to the CAD, price are elevated there also, supporting the near term bullish case for the CAD.
US Ways and Means Committee Chairman, Neal, announcing that there will be an opportunity to meet with Canadia Trudeau in Canada soon to discuss the USMCA. In earlier news, the focus was with the Canadian elections where. Trudeau won a second term as Canada’s prime minister after the country’s federal election, but his narrow victory meant he will lead a minority government that will be forced to depend on other parties to govern. FX implications: Its all good news for the Loonie this week and coupled with promising economic data, on the whole, the CAD can continue to perform on the bid. Glancing over to oil, which is correlated to the CAD, price are elevated there also, supporting the near term bullish case for the CAD.
01:15 AUD/NZD struggles with the 1.07 handle, submerged by bearish MAs
AUD/NZD remains on the backfoot and the latest data supports an upside bias in the Kiwi. Both the Aussie and Kiwi have garnered strength from trade-de
NZ trade balance does little to support NZD materially.However, 200 4-hour moving and 21-day moving averages weigh.AUD/NZD remains on the backfoot and the latest data supports an upside bias in the Kiwi. Both the Aussie and Kiwi have garnered strength from trade-deal traction and a general risk-on tone although there are still plenty of potential road bumps along the way.New Zealand Trade Balance improves on YoY, NZD/USD remains on the back footTrump insists that all is going to plan and has been quite vocal about it - The US and China aim to sign into a contract in November in Chile when they meet, and this will hopefully be making way and allowing for negotiations for a phase-2 deal to take place.
Central bank outlook
Meanwhile, from a central bank perspective, "Australian 3yr government bond yields fell from 0.79% to 0.76%, the 10yr yield from 1.18% to 1.13%. Markets are pricing 5bp of easing at the 5 Nov RBA meeting, and a terminal rate of 0.50% (RBA cash rate currently at 0.75%). Market pricing for RBNZ is for 21bp of easing on 13 November, with a terminal rate of 0.67%," analysts at Westpac explained.
AUD/NZD levels
On a technical basis, the 200 4-hour moving average, as well as the 50 and the 21-day moving averages are a roadblock for the bulls aiming for a close above the 1.07 figure. Bears will be looking for a move to the 1.0630s and the 38.2% Fibonacci retracement located around 1.0620.
01:07 NZD/USD pays little heed to trade numbers amid downbeat market sentiment
With New Zealand’s September month trade data flashing mixed signals on MoM and YoY basis, NZD/USD stays on the back foot while taking rounds to 0.6400.
NZD/USD holds on to weakness amid trade negative sentiment, stronger USD.New Zealand trade data have been mixed.The light economic calendar will keep market focus on the US-China trade news.With New Zealand’s September month trade data flashing mixed signals on MoM and YoY basis, NZD/USD stays on the back foot while taking rounds to 0.6400 during the early Asian session on Wednesday.
As per the communiqué from the Statistics New Zealand, September month Trade Balance grew -5.21B versus $-5.49B expected YoY figure while MoM data suggests a weaker print of $-1,242M versus $-1,112M forecast. Further, Imports stood unchanged at upwardly revised $5.71B whereas Exports increased to $4.47B against $4.08B (revised from $4.13B).
Prices have been under pressure off-late as trade news from the United States (US) has been downbeat. As per the White House Economic Adviser Larry Kudlow, unresolved issues in phase one talks of the US-China trade deal will create problems in the second round of negotiations. Also, the recent notice from the US Department of Commerce concerning Aluminum wire and cables from China adds to the doubts of a successful deal between the two global superpowers.
Kiwi buyers were also taken aback by the US Dollar (USD) strength supported by the upbeat manufacturing index and a mild risk-off.
With no major data up for publishing, traders will continue taking clues from the US-China trade front for fresh impulse.
Technical Analysis
Unless breaking a 100-day Exponential Moving Average (EMA) level of 0.6450, prices can keep being liable to revisit early-month high surrounding 0.6355.
00:50 New Zealand Trade Balance improves on YoY, NZD/USD remains the back foot
As per the latest notifications from the Statistics New Zealand, September month trade data from New Zealand (NZ) have been mixed.
As per the latest notifications from the Statistics New Zealand, September month trade data from New Zealand (NZ) have been mixed with the headline Trade Balance data flashing -5.21B versus $-5.49B (YoY) figure compared to $-1,242M versus $-1,112M number on MoM basis.
Further, Imports stood unchanged at upwardly revised $5.71B whereas Exports increased to $4.47B against $4.08B.
In a reaction, the NZD/USD pair seesaws near 0.6400 while carrying the previous weakness.
00:45 New Zealand Trade Balance (YoY) came in at $-5.21B, above forecasts ($-5.49B) in September
New Zealand Trade Balance (YoY) came in at $-5.21B, above forecasts ($-5.49B) in September
00:45 New Zealand Exports increased to $4.47B in September from previous $4.13B
New Zealand Exports increased to $4.47B in September from previous $4.13B
00:45 New Zealand Imports increased to $5.71B in September from previous $5.69B
New Zealand Imports increased to $5.71B in September from previous $5.69B
00:45 New Zealand Trade Balance (MoM) came in at $-1242M, below expectations ($-1112M) in September
New Zealand Trade Balance (MoM) came in at $-1242M, below expectations ($-1112M) in September
00:40 US Department of Commerce proposes investigations of aluminium wire and cable imports from China
Early Wednesday morning in Asia, the US Department of Commerce (DOC) came out with the communication of ordering investigations on Chinese exporters.
Early Wednesday morning in Asia, the US Department of Commerce (DOC) came out with the communication of ordering the antidumping duty (AD) and countervailing duty (CVD) investigations of imports of aluminum wire and cable from China.
The notice says that the US DOC finds that exporters from this country have sold aluminum wire and cable at less than fair value in the United States at rates of 58.51% to 63.47%. In addition, Commerce determined that exporters from China received countervailable subsidies at rates of 33.44 percent to 165.63 percent.
It was further mentioned that the US International Trade Commission (ITC) is currently scheduled to make its final injury determinations on or about December 2, 2019. If the ITC makes affirmative final injury determinations, Commerce will issue AD and CVD orders. If the ITC makes negative final determinations of injury, the investigations will be terminated and no orders will be issued.
00:33 AUD/USD stays under pressure around 100-day EMA, eyes on RBA’s Kent’s speech
Following its pullback from the five-week high, AUD/USD holds on to weakness while trading around 0.6850 at the start of Wednesday’s Asian session.
AUD/USD remains on the back foot after registering the first negative daily closing in five the previous day.News concerning the US-China trade relations has been downbeat off-late.RBA’s Kent’s speech will be followed closely considering the latest swift in job numbers.Following its pullback from the five-week high, AUD/USD holds on to weakness while trading around 0.6850 at the start of Wednesday’s Asian session.
Fading positive trade sentiment and the US Dollar (USD) strength amid a mild risk-on seems to have played their roles in dragging the Aussie backward from the multi-week high.
Among the trade catalysts comments from the White House Economic Adviser that unresolved trade issues with China during the initial talks could spill over into phase two. Also adding the pessimism is the latest news from the US Department of Commerce that ordered antidumping duty (AD) and countervailing duty (CVD) investigations of imports of aluminum wire and cable from China in order to ascertain that the dragon nation sold them at less than fair value.
On the other hand, the USD recently benefited from the market’s risk aversion amid the Brexit doubts as well as upbeat reading of the Richmond Fed Manufacturing Index that avoided a negative reading and rose to the highest since April.
Investors will now keep an eye over the speech from the Reserve Bank of Australia’s (RBA) Assistant Governor (Financial Markets) Christopher Kent who is to participate in a panel discussion at the International Swaps and Derivatives Association, in Sydney. It should be noted that the recent comments from the Aussie central bank have been mixed but a surprise decline in the Aussie Unemployment Rate will be remembered while following the comments from the RBA policymaker.
With the US economic calendar being almost empty, trade/Brexit headlines will hold their importance to drive markets.
Technical Analysis
A sustained decline below the 100-day Exponential Moving Average (EMA) level of 0.6850 becomes necessary for the bears to expect the return of 0.6820 and 0.6800. Should prices reverse, an upside break of 0.6885 can propel the pair to 0.6900/10 area.
The Greenback picked up some steam this Tuesday, helping EUR/USD to decline near two-day lows.The Brexit chaos is weighing on the market mood and the Euro. The key macroeconomic event of the week is the European Central Bank (ECB) interest rate decision on Thursday.
EUR/USD daily chart
On the daily chart, the shared currency is trading in a bear trend below the 100 and 200-day simple moving averages (DSMAs). The Brexit optimism is fading somewhat and it is weighing on the Euro. Investors will start to focus on the key macroeconomic event of the week: the European Central Bank (ECB) interest rate decision on Thursday.
EUR/USD four-hour chart
EUR/USD, on the four-hour chart, is retracing down from the October highs, trading now below the 1.1140 level. As the market is weakening, the retracement can extend towards the 1.1110 and 1.1065 price levels on the way down, according to the Technical Confluences Indicator.
EUR/USD 30-minute chart
The Fiber is trading below its main SMAs on the 30-minute chart, suggesting a bearish bias in the near term. Resistance can be seen near 1.1140 and 1.1160 price levels, according to the Technical Confluences Indicator.
Additional key levels
00:14 Wall Street weighed by Brexit, US data and earnings
Dow Jones Industrial Average, DJIA, lost 39.54 points, or 0.15%, to 26,788.10. S&P 500 index lost 10.73 points, or 0.36%, to 2,995.99. Nasdaq Composi
Dow Jones Industrial Average, DJIA, lost 39.54 points, or 0.15%, to 26,788.10.S&P 500 index lost 10.73 points, or 0.36%, to 2,995.99.Nasdaq Composite Index dropped 58.69 points, or 0.72%, to 8,104.30.Benchmarks on Wall Street ended lower Tuesday with a barrage of corporate earnings reports and Brexit headlines. The S&P 500 index lost 10.73 points, or 0.36%, to 2,995.99 while the Nasdaq Composite Index dropped 58.69 points, or 0.72%, to 8,104.30. However, The Dow Jones Industrial Average, DJIA, lost 39.54 points, or 0.15%, to 26,788.10, on the back of poor and disappointing third-quarter results from McDonald’s and Traveler Cos which outweighed beats from United Technologies UTX, +2.21% and Procter & Gamble PG, +2.60%.
US data
As for US data, the US Richmond Fed manufacturing index jumped from -9 in September to +8 October – its highest reading since April.
"Gains were broad-based to boot, with shipments and orders up in the month. Employment was broadly unchanged. However, it’s a little early to call a turn in manufacturing momentum or a floor in the slowdown for that matter as these data are highly volatile. But at face value, it suggests the national ISM index could tick up in October, albeit from a weak (contractionary) read of 47.8 last month," analysts at ANZ Bank explained.
"US home sales fell 2.2% m/m in September, below market expectations for a 0.7% dip. However, these data are noisy. "And looking through that noise an upward trend remains in place. Lower mortgage rates are supporting and the recent lift in mortgage applications suggests there’s a little more strength in the pipeline," the analysts at ANZ Bank explained.
DJIA levels
The DJIA remains below the 27000s and the technical picture remains neutral while the price hovers over the 21-DMA. However, on the downside, the 21 and 50-day moving averages are guarding a run to the 200-day moving average, down in the 26000s. The bulls need to advance to the 27500s targets on a break of the 27200s. The trend-line resistance guards the July highs.
