UNIQUE FOREX NEWS FROM A VERY UNIQUE FOREX BROKER CTRADER | FIX API | PAMM | CUSTOM LIQUIDITY | MT4

USEFUL MUSINGS

brought to you by your favorite forex broker | FXPIG™

Trying to figure out what to trade? Check out Market Analysis for a selection of financial forecasts from around the web or Mr. Markets for a unique perspective on the financial world from the PIG that knows it all. Looking for the latest PIG News and Promos? Check out the Company News section to see what’s new and exciting here at FXPIG™. Maybe you just want to read something fun? A quick laugh about how ridiculous all this ridiculousness can really be? For a quick fix trot on over to Obsessed.

EUR/USD upside loses momentum

EURUSD_upside_loses_momentum_Forex_FXPIG

FX Strategists at UOB Group noted further upside in EUR/USD appears to be losing some traction.

Key Quotes

24-hour view: “Our expectation for EUR “to edge above 1.1180” was incorrect as it slumped after touching 1.1175. While the rapid decline appears to be running ahead of itself, there is no sign of stabilization just yet and the risk is still on the downside. That said, 1.1090 is a solid support and this level is unlikely to be challenged for today (there is a minor support at 1.1110). On the upside, only a move above 1.1155 (minor resistance is at 1.1140) would indicate that the current weakness has stabilized”.

Next 1-3 weeks: “The October’s peak at 1.1179 continues to thwart the advance in EUR as it retreated after failing to break this strong resistance for the third straight day (high of 1.1175 yesterday). The price action was not exactly surprising as we highlighted last Thursday (31 Oct, spot at 1.1155) that EUR has to ‘punch’ through 1.1179 convincingly or the up-move may falter. While our ‘key support’ at 1.1090 is still intact, the price action over the past few days suggests EUR may not be ready to move above 1.1179 just yet. In other words, the odds for further EUR strength have diminished. In order to rejuvenate the current flagging momentum, EUR has to move and stay above 1.1155 within these 1 to 2 days or a break of 1.1090 would indicate that the positive phase in EUR that started about one month ago has run its course”.

Source: fxstreet

FX Strategists at UOB Group noted further upside in EUR/USD appears to be losing some traction...

READ MORE

Asia: PMIs pull back

Asia_PMI_pull-back_Forex_FXPIG

Mitul Kotecha, senior emerging markets strategist at TD Securities, suggests that their composite GDP weighted Asia manufacturing PMI measure recorded a renewed slip into contraction in October while the average Asia PMI measure remained in contraction for a fifth straight month.

Key Quotes

“Our ex-China measures of PMI also remained in contraction. The outcome is disappointing given US-China trade deal hopes, but highlights the reality that a "Phase 1" deal may provide limited relief. The data also shows that Asia remains vulnerable to the worsening US manufacturing outlook. An eventual trade deal will likely boost the PMIs but the down draft on global manufacturing will not ease quickly.”

“The October manufacturing PMIs revealed declines in 5 out of 9 countries; China (-0.5), Taiwan (-0.2), Thailand (-0.6), Indonesia (-1.4), and India (-0.8), recording falls. In contrast Singapore (+0.1), South Korea (+0.4), Philippines (+0.3) and Malaysia (+1.4) gained.”

“PMIs are in contraction territory in 6 out of 9 countries, with Taiwan re-joining others recording below 50 readings. Philippines registered the strongest reading at 52.1 while Indonesia recorded the weakest at 47.7. Notably China revealed its weakest reading since February.”

Source: fxstreet

Mitul Kotecha, senior emerging markets strategist at TD Securities, suggests that their composite GDP weighted Asia manufacturing PMI measure recorded a renewed slip into contraction in October while the average Asia PMI measure remained in contraction for a fifth straight month...

READ MORE

ECB: Focus on Lagarde’s speech

ECB_focus_largarde)_FXPIG

Analysts at TD Securities point out that Christine Lagarde makes her first speech tonight since taking over as ECB President on the 1st of the month.

Key Quotes

“While there is some chatter about what exactly she'll say, tonight's appearance doesn't appear to be the kind of event where she's likely to deliver her first, big policy speech. She's speaking in Berlin at 2:30pm ET at an event celebrating Wolfgang Schauble, Germany's current President of the Bundestag and former finance minister. It may not be looked upon too kindly from the Germans if she chooses that event to harshly criticize their fiscal stance.”

“Plus if she wants to speak to a European audience, we think that she would be better to do so during European market hours, not late in the evening. So we're inclined to think that this speech will be a non-event and something quite generic, but will be keeping an eye on the headlines just in case.”


Source: fxstreet

Analysts at TD Securities point out that Christine Lagarde makes her first speech tonight since taking over as ECB President on the 1st of the month.

READ MORE

BoE to leave the policy rate unchanged – Rabobank

BoE-to-leave-policy_Forex_FXPIG

Rabobank analysts are expecting the Bank of England to leave the policy rate unchanged at 0.75% on Thursday 7 November.

Key Quotes

“This is also the consensus view and GBP OIS implies virtually no chance of a move in either direction at this week’s meeting.”

“Whilst the OIS market is –on balance– still looking for a rate cut in the first half of 2020, the implied probabilities have closely tracked those of a no-deal Brexit.”

“The immediate threat of a no-deal Brexit has been averted, but the uncertainty prevails. The UK is heading for a Christmas election, and even Johnson’s Brexit-deal leaves open a wide range of future possible trading relationships, including no trade agreement at all.”

“Business investment has been in the doldrums for almost two years, while cracks have also started to become visible in the labour market. There is a good chance that sustained weakness on this front tilts the balance within the MPC. We now expect two rate cuts in 2020.”

Source: fxstreet

Rabobank analysts are expecting the Bank of England to leave the policy rate unchanged at 0.75% on Thursday 7 November...

READ MORE

Forex Today

Forex_today_04.Nov_FXPIG

Here is what you need to know on Monday, November 4:

  • Trade: US Commerce Secretary Wilbur Ross has said that he hopes the US and China will sign a deal this month. The optimism, alongside the upbeat US jobs report and the Federal Reserve's willingness to cut if necessary, keep the mood optimistic.
  • UK politics: A fresh set of opinion polls taken after the decision to hold elections continued showing Conservatives with a comfortable lead. Prime Minister Boris Johnson plans to ratify his Brexit deal if he wins. Markit's Purchasing Managers' Indexes for the construction sector is set to show an ongoing downturn in the sector.
  • Australia: The Aussie Dollar has shrugged off the worse-than-expected increase of 0.2% in retail sales.
  • Euro-zone: Christine Lagarde, PResident of the European Central Bank, will deliver her initial speech in the job late in the day in Berlin. She is set to call on governments to do more. Earlier, Markit's manufacturing PMIs are expected to confirm the ongoing slump in October.
  • US data: Factory Orders for September are due out today and are projected to show a second consecutive drop. The ISM Manufacturing PMI disappointed on Friday and weighed on the dollar.
  • Cryptocurrencies have had a stable weekend, with digital coins consolidating around familiar levels.

Source: fxstreet

Here is what you need to know on Monday, November 4:

READ MORE

Forex Week Ahead

UK_elections_Forex-week-ahead_FXPIG

The upcoming week will focus heavily on incremental trade updates, German economic data, an RBA rate decision, Bank of England policy meeting that comes with updated economic forecasts and the beginning of campaign season for Britain’s first December general election since 1923. While investors are skeptical that China and the US will reach a broader deal, we could see risk appetite benefit on the news that Trump and Xi will find a new site for the signing of the Phase-One deal.
Brexit will dominate the UK headlines as we wait to find out whether Boris Johnson can deliver a strong election result on December 12th. Johnson needs to avoid another gridlocked Parliament in order to get a Brexit deal done. Boris Johnson will look to grow his double-digit lead over Labour, but concerns are growing he will split some of the pro-Brexit vote to Farage’s party.

Another peak earnings season week will deliver updates from Softbank, Qualcomm, Baidu, Siemens, Ryanair, BMW, Uber, Toyota, Honda, Adidas, CVS, Walt Disney, CVS, and Occidental Petroleum.


Central Banks this week (for currencies that we offer):
Monday –RBA Rate Decision
Tuesday – Riksbank publishes minutes of October 23rd meeting
Wednesday – Bank of Thailand Rate Decision (expected to cut rates by 25bps to 1.25%), Poland Rate Decision (no change expected)
Thursday – BOE Rate Decision, Inflation Report
Friday – No meetings

World leaders, Central Bank Speakers and Energy Ministers (at the time of writing)
Monday – No speeches
Tuesday – OPEC releases its World Oil Outlook, China President Xi Jinping speaks at Shanghai Expo, Fed’s Kashkari and Kaplan speak, ECB’s Villeroy speaks in Lyon
Wednesday – ECB Forum on Banking Supervision
Thursday – BOE Gov Carney Rate Press Conf, Fed’s Kaplan and Bostic speak, European Commission publishes its economic forecasts
Friday – Bank of Canada Deputy Governor Paul Beaudry speaks in Ottawa, Fed’s Daly speaks at research conference.

USD

After a third consecutive rate cut, the Fed is now on hold. Trade remains the primary catalyst for risk appetite and optimism is high for the phase-one deal to get done this month. Doubts are high for a broader deal, but we could see marginal progress keep risk appetite pressure on safe-havens including the US dollar. With a strong US consumer and a labor market that remains healthy, the US continues to seem poised to have the economy grow around 2%. For the next major leg of dollar weakness, we may need a rebound in Europe or significant weakness with the US consumer.

A dollar top was put in October and we could see further weakness for the greenback in the short-term.

BOE

Once again this is expected to largely be a non-event, with the press conference after likely to draw a lot of questions around Mark Carney’s term, which is scheduled to end at the end of January, when the UK leaves the EU. Already people are discussing whether this should be extended.

The interest rate decision itself won’t be up to much, with markets heavily pricing in no change. As ever, the inflation report will hold the clues, with Boris Johnson’s deal enabling the smooth Brexit that the BoE has long based their assumptions on.

Bitcoin

China’s openness to Blockchain saved Bitcoin in October. Regulatory hurdles will take years to develop, so for now, Bitcoin remains king in the digital coin space.  It seems the $7,500 to $10,000 range is firmly in place, with investor appetite slowly returning for cryptos.

Oil

Oil continues to trade in a range as rising supply concerns cap any rallies we see driven on optimism for demand.  Remains vulnerable to global growth worries and further attacks in the middle east.

Gold

Gold has mixed flows ETF investors have turned bullish while futures trades are bears. Despite a blowout US nonfarm payroll and trade optimism for a phase-one deal to get done this month, gold remains supported on macro risks to the global outlook.   If gold breaks out above $1,550 an ounce, watch out, we could see bullish momentum takeover.

Brexit

Brexit is on hold and the UK is in election mode as Boris Johnson works to secure the majority that will enable him to get his deal ratified by Parliament before 31 January. This is the most unpredictable election in decades with voters forced in many cases to choose between party allegiance and Brexit. This creates the perfect void that the Brexit party and Liberal Democrats have all-too-happily filled. The Conservatives remain favourites to secure a majority in Parliament but ultimately it comes down to what group will get over the line, the second referendumers/revokers or those fully committed to leaving on 31 January, whether with Boris’ deal or none. It will be close and there could be a few surprises on 12 December. Until then, markets are looking very relaxed with the pound continue to hover around post-deal highs, around 1.30 against the dollar.

No deal risks may have receded, alleviating pressure on the currency but a new headwind my materialise if Corbyn can repeat his surge in 2017. This wasn’t enough to stop May then but it did prevent a Conservative majority. A Labour led coalition government may still be a big concern for markets.

US

Impeachment inquiries or the narrowing of the Democratic field will likely see limited impact in the short-term.  Candidates Warren and Sanders continue to make calls for stronger action on powerful tech companies. If we see a progressive Democratic nominee, this will weigh on stocks and in particular, Amazon and Facebook.

Japan

BOJ unchanged. In watch and wait mode. Industrial Production rose but data generally average to poor. Two minsters resigned over improper donations. Trade sensitive. BOJ running out of monetary options. No other significant impact.

Hong Kong

HK Adv. Gdp growth slumps to -3.2%, officially in recession. HKMA cuts rates after FOMC. HSBC cuts prime lending rate for 1st time in 11 years. China direct intervention remote. Early signs capital flight as Singapore offshore deposits rise. Ongoing violent protests.

China

It all comes down to whether US and China can agree terms to the “Phase One” trade deal ahead of a scheduled meeting between Xi and Trump next month. China official PMI lower at 49.3 with Caixan PMI Friday. V. Bad number. China Industrial Profits fell. Weak economic data out of China has a serious knock-on effect for most of Asia, who rely heavily on exports to China. It’s also likely to filter down to slower global growth.

North Korea

No News.  No direct impact for markets at the moment.

Malaysia

Continued soft data from Malaysia as it suffers budgetary constraints and trade war fallout. Negara policy decision next week. Likely to cut after the FOMC cut. Capital flight if EM cannot rally on interim trade deal or US/China relations worsen.

Australia

Australia home sales to rise 7.3% PPI stuck at 0.4% Aussie retail sales Sunday and PMI Mondy key indicators for RBA. Very trade sensitive. Risk of housing bubble as high street shopping sector collapses.

Argentina

Now that the elections are over, Argentina’s new leadership could explore more unconventional measures to support the economy. One idea that is getting some momentum is the idea of dollarization. Argentina always seems to be flirting with economic emergencies over most Argentineans lifetimes. This would be a nuclear option, that could help bring back economic integrity to Buenos Aires.

A default on its debt by Argentina is not a new item, but it has gained traction despite the best efforts of the current government, the IMF and even the candidate most likely to lead the next government. Contagion risks are high as confidence in the region would suffer if the US-China trade war remains active. The IMF will not make a decision until holding formal talks with Fernandez, with uncertainty remaining high.

Chile

Chile’s cancellation of the APEC summit showed the world that President Pinera is nowhere near controlling the social unrest. Chile’s peso fell to a 16 year low and further pressure could be on the horizon as no end is in site for this wave of protests. If protests continue, Chilean markets will continue to suffer despite improved risk appetite. Copper prices have risen as Chilean mine union have joined the protests by halting production on certain dates. Chile is a major producer of the red metal.

Brazil

The Brazilian government is continuing to make strong efforts to boost the economy with a new economic package. The October 30th rate decision delivered another 50bps rate cut, with policymakers emphasising benign inflation paves the way for further policy adjustment. The BCB is expected to cut again in December.

South Africa

Moody’s expected downgrade of South Africa’s credit outlook to negative should come as no surprise to investors following the release of their budget.  Investors might try to buy the rand on a dip as South African assets still provide a strong advantage for their fixed income market.

This Week

Sunday, November 3rd

8:30pm AUD Retail Sales M/M: 0.4%e v 0.4% prior

Monday, November 4th

3:45am-4:00am EUR Major European Final Manufacturing Data

4:30am GBP Construction PMI: No est v 43.3 prior

4:30am EUR Sentix Investor Confidence: No est v -16.8 prior

10:00am USD Factory Orders M/M: -0.4%e v -0.1% prior

8:45pm China Caixin PMI Services M/M: 51.5e v 51.3 prior

10:30pm AUD RBA Interest Rate Decision: Widely expected to keep rates steady

Tuesday, November 5th

4:30am GBP UK Services PMI: 49.8e v 49.5 prior

8:30am USD Trade Balance: -$53.0Be v -$54.9B prior

8:30am CAD Int’l Merchandise Trade: No est v -0.96B prior

10:00am USD ISM Non-Manufacturing PMI: 53.5e v 52.6 prior

10:00am UDS Jolts Job Openings: No est v 7051 prior

4:45pm NZD Unemployment Rate: 4.1%e v 3.9% prior

7:30pm JPY Japan Final PMI Services: No est v 50.3 prelim

Wednesday, November 6th

2:00am EUR Germany Factor Orders M/M: -0.1%e v -0.6% prior

3:45am-4:00am EUR Major European Services PMI data

5:00am EUR Euro Zone Retail Sales M/M: 0.0%e v 0.3% prior  

8:30am USD Prelim Nonfarm Productivity Q/Q: 0.8%e v 2.3% prior

10:00am CAD Ivey PMI: No est v 48.7 prior

10:30am Crude Oil Inventory Report

7:30pm AUD Trade Balance (A$): 5.1Be v 5.9B prior

Thursday, November 7th

2:00am EUR German Industrial Production M/M: -0.5%e v +0.3% prior  

3:30am EUR German Construction PMI: No est v 50.1 prior

4:00am EUR Italy Retail Sales M/M: No est v -0.6% prior

4:00am EUR ECB Economic Bulletin

5:00am EUR EU Commission Economic Forecasts

6:00am ZAR South Africa Manufacturing Production M/M: -0.2%e v +1.3% prior

7:00am GBP BOE Interest Rate Decision: No changes in policy expected

8:30am USD Jobless Claims: No est v 218K prior

Friday, November 8th

CNY China Trade Data

2:00am EUR German Trade Balance: No est v €16.2B prior

2:45am EUR France Industrial Production M/M: 0.0%e v -0.9% prior

8:15am CAD Housing Starts: No est v 221.2K prior

8:30am CAD Employment Change: No est v 53.7K prior

10:00am USD Prelim University of Michigan Sentiment: 96.0e v 95.5 prior

8:30pm CNY China CPI Y/Y: 3.0%e v 3.0% prior

Source: marketpulse

The upcoming week will focus heavily on incremental trade updates, German economic data, an RBA rate decision, Bank of England policy meeting that comes with updated economic forecasts and the beginning of campaign season for Britain’s first December general election since 1923. While investors are...

READ MORE

EUR/USD trims gains ahead of NFP

EURUSD_trims-gains_NFP_Forex_FXPIG
  • EUR/USD corrects slightly lower from 1.1170.
  • The Greenback remains flat in the area of weekly lows.
  • Focus of attention stays on Payrolls and ISM manufacturing.

The buying interest around the single currency remains well and sound so far this week, with EUR/USD meandering the upper end of the range around 1.1170.

EUR/USD now looks to Payrolls

Spot is extending the upside for the fifth consecutive session so far on Friday, always tracking the poor performance of the Greenback, which has almost fully faded last week’s recovery.

Despite investors’ attention in past hours shifted to the re-emergence of trade concerns (after Chinese officials talked down the possibility of a permanent US-China trade deal in the longer run), the pair kept the bid tone unaltered as it remains supported by the recent interest rate cut by the Fed.

Later in the day, all the attention is expected to be on the release of US Non-farm Payrolls, where a modest job creation of 85K is seen during October mainly due to a strike in one of the largest US carmakers. In addition, the ISM manufacturing is also due and consensus sees a rebound from September’s poor prints.

What to look for around EUR

EUR has managed to return to the upper bound of the monthly range, always on the back of unabated selling pressure in the buck. Despite the October rally in spot has been exclusively sponsored by weakness in the Dollar, the outlook in Euroland remains fragile and does nothing but justify the ‘looser for longer’ monetary stance by the ECB and the bearish view on the single currency in the medium term at least. 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 gaining 0.05% at 1.1156 and faces the next up barrier at 1.1179 (monthly high Oct.21) seconded by 1.1186 (61.8% Fibo of the 2017-2018 rally) and finally 1.1196 (200-day SMA). On the downside, a breakdown of 1.1072 (low Oct.25) would target 1.1043 (55-day SMA) en route to 1.0925 (low Sep.3).

Source: fxstreet

The buying interest around the single currency remains well and sound so far this week, with EUR/USD meandering the upper end of the range around 1.1170...

READ MORE

The Fed moves into a ‘wait-and-see’ mode

FED-wait-and-see_forex_FXPIG

Senior Economist at UOB Group Alvin Liew reviewed the recent FOMC event, where the Committee reduced the FFTR by 25 bps.

Key Quotes

“The FOMC, as widely expected, cut its policy Fed Funds Target Rate (FFTR) by 25bps to a range of 1.50-1.75% in its October meeting, but it was again not a unanimous decision as Boston Fed President, Eric Rosengren and Kansas Fed President, Esther George both dissented for the third consecutive meeting because they wanted to keep rates unchanged”.

“The material change in the text of the October FOMC statement was the removal of the Fed Reserve’s pledge to “act as appropriate to sustain the expansion” but said the Fed “will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate.” Markets took this as a “subtle” signal that there is possibly now a higher bar for further rate cuts”.

“In his press conference, FOMC Chairman Powell said today’s rate cut was insurance against risks, but he did not commit to further near term rate cuts. Powell believes that [US] monetary policy is in a good place, and the current stance of monetary policy as likely to remain appropriate. And while Powell’s optimism seems to lower the chances of additional Fed rate cuts, Powell also gave the assurance that there needs to be a materially significant rise in inflation for the Fed to go the opposite direction and start raising rates”.

“After reviewing the latest developments and without further update to the Fed policymakers’ rate trajectory preferences via the Dotplot in the latest decision, we have moderated our view and now expect the Fed to pause (instead of cut) in the 10/11 December 2019 FOMC decision and only implement the next rate cut in 1Q 2020. We have not factored in further cuts in 2020 but, if trade tensions persist beyond 2019 and into 2020, then we think the Fed will have to take on more easing in 2020, especially if it leads to material downside impact on US and global growth”.

Source: fxstreet

Senior Economist at UOB Group Alvin Liew reviewed the recent FOMC event, where the Committee reduced the FFTR by 25 bps...

READ MORE

Forex Today

Dollar-defeated_China_Forex_FXPIG

Here is what you need to know on Friday, November 1:

  • Tension is mounting toward the US Non-Farm Payrolls, with the US Dollar consolidating its post-Fed losses. A gain of around 89,00 jobs in October. The low figure is partly due to the strike at General Motors, which may have shed more than 50,000 jobs. Bloomberg's "whisper number" stands at 100K. The Unemployment Rate is set to rise to 3.6% and wage growth to increase by 0.3% monthly and 3% yearly.

  • Trade: High-level US and Chinese negotiators will hold a telephone call later today and try to push talks forward. While they have made progress on Phase One, reports suggest that China doubts that a broad agreement is possible with President Donald Trump. Officials in both Beijing and Washington are optimistic in public but skeptical in private.
  • China: The Caixin Purchasing Managers' Index for the manufacturing sector has risen to 51.7 points, better than expected and helping improve the market mood.
  • US ISM Manufacturing PMI is published after the NFP, but is still of interest. Economists expect an increase from the lows of 47.8 points recorded in September.
  • Fed speak: Richard Clarida, Vice-Chair of the Federal Reserve, is one of three officials that will make public appearances today, and may provide more clarity on the central bank's policies.
  • UK politics: A batch of post-election announcement polls continued showing a significant lead of around 12% for Prime Minister Boris Johnson's Conservatives. Prospects of a clear majority have underpinned the pound.
  • Cryptocurrencies are stable with Bitcoin holding above $9,000.


Source: fxstreet

Here is what you need to know on Friday, November 1:

READ MORE

EUR/USD unchanged near 1.1170

EURUSD_unchanged_Forex_FXPIG
  • EUR/USD keeps the familiar range on EMU data.
  • EMU advanced Core CPI expected at 1.1% YoY in October.
  • EMU flash GDP seen expanding 1.1% YoY in Q3.

EUR/USD keeps the solid pace in the 1.1170 region on Thursday following key releases in Euroland.

EUR/USD stays bid on data

The upside momentum in the pair remains well and sound so far today after advanced inflation figures in Euroland showed headline consumer prices are expected to raise at an annualized 0.7% (from 0.8%) while Core prices are seen gaining 1.1% (from 1.0%).

In addition, flash GDP figures see the economy in the bloc expanding 1.1% on a yearly basis during the July-September period (from 1.2%).

In the meantime, the persistent weakness around the Greenback continues to sustain the up move in the pair while renewed trade concerns appear to have emerged recently after Chinese officials remain skeptical on the long term trade deal with the US (under the Trump administration).

What to look for around EUR

EUR has managed to return to the upper bound of the monthly range, always on the back of unabated selling pressure in the buck. Despite the October rally in spot has been exclusively sponsored by weakness in the Dollar, the outlook in Euroland remains fragile and does nothing but justify the ‘looser for longer’ monetary stance by the ECB and the bearish view on the single currency in the medium term at least. 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 gaining 0.19% at 1.1171 and faces the next up barrier at 1.1179 (monthly high Oct.21) seconded by 1.1186 (61.8% Fibo of the 2017-2018 rally) and finally 1.1197 (200-day SMA). On the downside, a breakdown of 1.1072 (low Oct.25) would target 1.1042 (55-day SMA) en route to 1.0925 (low Sep.3).

Source: fxstreet

EUR/USD keeps the solid pace in the 1.1170 region on Thursday following key releases in Euroland...

READ MORE

FOMC and BoJ meetings should have supported USD/JPY – Westpac

BoJ_meeting_forex_FXPIG

According to a Senior Currency Strategist at Westpac – the combination of the FOMC and BoJ meetings really should have supported USD/JPY.

Key Quotes:

The Fed delivered a priced-in rate cut and sent a clear signal of a possibly extended pause. Yet US yields reversed their initial jump on the statement, undermining USD/JPY.

The BoJ meanwhile took a leaf out of the ECB’s playbook by dropping the date reference and adopting rates guidance or yields at "present or lower levels as long as it is necessary" to guard against loss of momentum towards 2% inflation. Perhaps some had hoped for a deposit rate cut or a notable change on ETFs, as USD/JPY probed session lows around 108.60.

With the US economy still growing above trend in Q3 and Fed officials set to hit the road to promote their case for a pause, downside on yields should be limited. So too elevated global equity prices and reiteration that US-China trade talks are on track argue for USD/JPY to at least hold its ground near term. We opt for a neutral bias on the week."

Source: fxstreet

According to a Senior Currency Strategist at Westpac – the combination of the FOMC and BoJ meetings really should have supported USD/JPY....

READ MORE

Forex Today

Dollar_deperessed_FED_Forex_FXPIG

Here is what you need to know on Thursday, October 31:

  • The US Dollar remains on the back foot after the Federal Reserve's decision. The Fed cut rates and signaled a pause in the short term. While the bank is unlikely to reduce rates again in the next few months, Chair Jerome Powell set an even higher bar for raising rates, requiring a substantial rise in inflation. Markets continue to digest the decision.
  • US data: The bank's decision came after the US reported a marginal slowdown in growth, to 1.9% annualized in the third quarter. The gap between upbeat consumption and weak manufacturing and investment was sustained (see analysis). ADP's jobs report met expectations at 125,000 private-sector positions gained in October, maintaining expectations for Friday's Non-Farm Payrolls.
    The US releases Core Personal Consumption Expenditure (Core PCE) – the Fed's preferred inflation figure, alongside Personal Spending and Personal Income.
  • Trade: The Chinese media has reported that negotiations with the US are advancing. Top officials will hold a telephone call on Friday. Beijing may also remove some extra tariffs on US agricultural products to help importers achieve the $50 billion target. Presidents Donald Trump and Xi Jinping may find another spot for a summit after Chile canceled the APEC Summit in mid-November.
  • China: The official Chinese Purchasing Managers' Index for the manufacturing sector missed with 49.3 points, showing an ongoing contraction.
  • The Bank of Japan has left its interest rate unchanged but strengthened its forward guidance, abandoning the time frame for keeping low rates. The dovish move opens the door to rate cuts.
  • Euro-zone: The 19-country currency bloc publishes initial Gross Domestic Product figures for the third quarter and preliminary inflation figures for October. Both are set to show a slowdown. Initial GDP figures from France have not altered early expectations.
  • Canada: The Bank of Canada left interest rates unchanged but said it would be hard to sustain the positive trends amid global headwinds. While a rate cut is not imminent, the Canadian Dollar lost ground. GDP figures for August are expected to show a pickup in economic expansion.
  • UK: Opinion polls continue showing a lead for Prime Minister Boris Johnson's Conservatives. The ruling party may receive a boost if Nigel Farage's Brexit Party decides to withdraw candidates and facilitate Tories' victories in several marginal seats. GBP/USD is rising.
  • Cryptocurrencies are stable, with Ripple's XRP standing out with holding its gains close to $0.30.

Source: fxstreet

Here is what you need to know on Thursday, October 31:

READ MORE

FOMC : 11 major banks expectations

FOMC_11-major-banks-expectations_Forex_FXPIG

Today, world markets are keenly awaiting the outcome of the all-important Federal Open Market Committee (FOMC) monetary policy decision for the month of October, which will be announced at 1800 GMT. As we move towards the decision timings, here is a sneak preview of the expectations of the economists and researchers of 11 major banks regarding the outcome of the meeting.

The consensus amongst most economists and analysts suggest that the Fed will deliver its third consecutive cut since July of 25bps.

Danske Bank

Danske Bank analysts expect the Federal Reserve will cut rates again by 25bps.

“While economists are evenly divided between those expecting a cut and those expecting the Fed to remain on hold, investors have nearly fully priced in a cut (90% probability, according to Bloomberg).”

It is one of the interim meetings so the Fed will not publish updated projections (hence, no new dot plot). Focus will be on the statement and the press conference following. We do not expect major changes to the statement but it was interesting that the FOMC members discussed whether to include some forward guidance on when to expect the Fed to end rate cuts for insurance reasons. We expect the Fed to keep the sentence that it "will act as appropriate to sustain the expansion ", i.e. easing bias without pre-commitment.”

“A 25bp rate cut is currently priced in with more than 90% probability. Given that we expect the easing bias to be maintained, but without a pre-commitment to further reductions, the impact on the US treasury market should be limited.”

TD Securities

“We expect the Fed to cut rates by 25bp, delivering the third consecutive cut since July,” TD Securities analysts said previewing Wednesday Federal Open Market Committee (FOMC) meeting.

“The FOMC should communicate patience in deciding future policy moves as they assess the impact of the three cuts they have already delivered. We look for the Fed to temporarily pause before resuming rate cuts in Q1 2020.”

Deutsche Bank

“A 25bp cut is all but priced in but the bigger focal point for markets is what message the Fed wants to send.”

“With incoming data since the September FOMC meeting generally underperforming expectations, revisions to the statement language about recent developments should skew in a slightly dovish direction. In terms of forward guidance, the statement should retain the Committee's commitment to "act as appropriate to sustain the expansion". Ultimately the team believe that it is too early for the FOMC to communicate the end of the cutting cycle given where risks lie, the recent data and the leading indicators signaling a further slowdown ahead.”

“One point they do make though is that the Chair could implicitly raise the bar for further cuts as they await the outcome of a few event risks related to trade policy and take time to assess incoming data. In effect, the threshold for cutting could change from not seeing an improvement in the data – which is how we interpreted the guidance from the past several meetings – to needing to see some further deterioration. This could be communicated by emphasising the magnitude of easing to date and the long lags in monetary policy or by providing a more positive assessment of the distribution of risks around the outlook, among other possibilities. We’ll get the decision at 6pm GMT followed shortly by Powell’s press conference shortly after.”

Rabobank

“We expect the Fed to cut the target range for the federal funds rate by 25 bps on October 30.”

“The Fed may also indicate that it thinks the mid-cycle adjustment has come to an end.”

“However, we expect a recession in 2020 that will force the Fed to cut rates all the way to zero before the end of 2020.”

National Bank Financial

“In the U.S., the main event will be the central bank’s monetary policy meeting. In line with market expectations, we expect the Fed to lower benchmark rates, highlighting heightened uncertainties and slowing global growth as factors justifying its decision.”

Nordea Markets

“We expect the Fed to cut for a third consecutive time at next week’s FOMC meeting. When re-assessing the three reasons the FOMC gave in July and September for cutting rates – i) signs of deceleration in economic activity, ii) prudency from a risk-management perspective and iii) the inflation outlook – we think a rate cut is warranted.”

“Overall, we think there should be little doubt that the Fed will cut again next week even though the Bloomberg consensus a bit surprisingly, in our view, roughly indicates a 50/50 spit between economist projecting a cut and being on hold.”

“In contrast to the September meeting, we do not expect the Fed to cut its two other key rates - the interest on excess reserves (IOER) and the overnight reverse repo rate (RRP) - by morethan 25 bp (both were cut by 30 bp in September).”

“The Fed will most likely again be divided in its decision to cut rates by 25 bp. We expect both George and Rosengren to dissent wanting rates unchanged, while Bullard could favor a 50 bp rate cut (only taking 2019-voters into account here).”

Westpac

“Pricing for the FOMC to cut the funds rate for a third consecutive time, from 1.75-2.00% to 1.50-1.75%, is above 90%. Pricing for another move in December is only about 20%. Arguably the FOMC could hold steady as it waits for clarity on US-China trade relations and with the US stock market at a record high.”

“There are also no quarterly forecasts (“dot plot”) until December. Indeed we should see at least 2 dissents against the expected rate cut, which may be best seen as a further unwinding of 2018 rate hikes which turned out to be unnecessary due to the deterioration in the global economy and not entirely coincidental deepening of US trade protectionism.”

ANZ

“A rate cut from the Fed looks a done deal this week as it takes out more insurance against elevated external risks.”

“Forward policy guidance may point to the FOMC taking some time out to observe the impact of recent cuts.”

“The risk is for more easing, at some point, given low inflation expectations, modestly above trend growth and elevated downside risks.”

BBVA

According to the Research Department at BBVA, the Federal Reserve (Fed) will cut rates for the third time this year. They expect a 25bps cut, as elevated trade uncertainty and weakening investment outlook continue to weigh on the committee’s outlook.

“Markets have aligned with the October interest rate cut, but have lowered their expectations for an additional cut in December.”

“The committee will likely remain split over how to approach future interest rate decision. The hawks, fearing that overly accommodative conditions could fuel financial instability, and the centrist, wanting to allow for time to evaluate the impact of increased accommodation, will likely support a pause. After fulfilling the “mid-cycle” adjustment, the doves, despite concerns that delaying rate cuts could jeopardize the current expansion, may support a temporary pause if trade tensions between the U.S. and China remain in abeyance.”

“On the balance sheet, in an effort to disentangle the current efforts to replenish bank reserves with the stance of monetary policy, the committee will likely maintain its current policy course announced over the intermeeting period.”

“We expect that options for addressing the uptick in money market volatility such as the scope of the reserve shortfall, the impact of liquidity and capital requirements, regulatory guidance, standing repo facility and the presence of regime changes in reserve preferences will be discussed at the meeting.”

ABN AMRO

Previewing this week's critical Federal Open Market Committee (FOMC) meeting, “the US Fed is expected to cut rates for a third time at their policy meeting on 30 October,” said ABN AMRO chief economist Han de Jong. “We are forecasting a fourth cut in December, but our conviction level has fallen a little.”

“The Fed has explained the cuts as ‘insurance’ against an undesirable weakening of the economy. Economic data have generally shown some weakening, but not excessively so. In addition, one can wonder how much insurance one requires. Whether or not there will be a fourth cut this year in December will depend on the dataflow between now and then.”

ING

“Eric Rosengren will oppose another rate cut having said on October 11 that “my forecast for the economy does not envision additional easing being necessary”. James Bullard, meanwhile, continues to emphasise downside risks, encouraging “the committee to take action”.”

“Other Fed voters have been more equivocal in their views, but the general use of the word “risks” has been a key theme. Given the deteriorating growth story and the benign inflation backdrop we feel that a majority will once again come down in favour of a rate cut. Economists are mixed, but with the market currently pricing in 23bp of a 25bp rate cut for Wednesday we believe the Fed will take action.”

“Assuming the economy continues to soften in line with our view – we expect sub 2% 3Q19 GDP growth and sub 1.5% growth in 4Q – then the Fed will likely follow up with additional rate cuts in December and January.”

Source: fxstreet

Today, world markets are keenly awaiting the outcome of the all-important Federal Open Market Committee (FOMC) monetary policy decision for the month of October, which will be...

READ MORE

EUR/USD could still visit the 1.1180 region

EURUSD_could-visit-1.1180_Forex_FXPIG

In opinion of FX Strategists at UOB Group, the upside momentum in EUR/USD could extend to the 1.1180 region.

Key Quotes

24-hour view: “EUR traded between 1.1072 and 1.1118 yesterday, lower than our expected sideway-trading range of 1.1080/1.1125. The relatively firm daily closing in NY (1.1110, +0.11%) has resulted in an uptick in momentum. From here, barring a move below the strong 1.1070 support (minor support is at 1.1090), EUR could edge higher towards 1.1130. The next resistance at 1.1160 is likely out of reach”.

Next 1-3 weeks: “EUR came close to taking out the 1.1070 ‘strong support’ level again yesterday but it rebounded after touching 1.1072 (note that EUR touched 1.1071 last Friday). As highlighted yesterday (29 Oct, spot at 1.1100), the prospect for further EUR strength has diminished but “there is still a slim chance for a move to 1.1180”. That said, in order to rejuvenate the flagging momentum, EUR has to move and stay above 1.1160 within these 1 to 2 days or a break of 1.1070 would suggest the positive phase in EUR that started earlier this month has run its course. Looking forward, a breach of 1.1070 would suggest EUR could trade sideways to slightly lower for a

Source: fxstreet

In opinion of FX Strategists at UOB Group, the upside momentum in EUR/USD could extend to the 1.1180 region....

READ MORE

Server Time Change

Server_time_change_Forex_FXPIG

Starting from market open on Monday (November 4th, 2019) the GMT offset on our trading servers will be adjusted to GMT +2.

This change will not impact open trades in any way or hinder the process of opening new trades or closing and or modifying existing trades. In any case we strongly recommend that you check the time settings on your custom Indicators and EA’s to be sure they continue operating correctly.

Starting from market open on Monday (November 4th, 2019) the GMT offset on our trading servers will be adjusted to GMT +2.

READ MORE

Forex Today:

Forex_today_30.10.2019_FXPIG

Here is what you need to know on Wednesday, October 30:

  • Brexit: Brits will go to the polls on December 12 after the House of Commons finally made its decision on Tuesday. The British press has dubbed the pre-Christmas elections as "jingle polls." Prime Minister Boris Johnson's Conservatives are leading the polls and aim to pass the Brexit deal. The opposition Labour, Liberal Democrats, and the Scottish National Party want a second referendum. GBP/USD has remained in the mid-1.2800s.
  • Super Wednesday: A significantly busy day awaits US traders. The day kicks off with ADP's private-sector jobs report (see preview), which serves as a hint toward Friday's Non-Farm Payrolls. The first estimate of US Gross Domestic Product for the third quarter is set to show a slowdown to sub -2% annualized growth. See GDP preview: How slow is slow? The Conference Board's Consumer Confidence gauge for October fell short of expectations.
  • Fed: Later in the day, the Federal Reserve is set to cut interest rates for the third consecutive time but signal that it plans to pause. Inflation has picked up, and trade tensions have eased, but the labor market and investment are of concern. Jerome Powell, Chair of the Federal Reserve, may struggle to explain how three rate reductions do not consist of an easing cycle.

  • Trade: US-Sino trade talks continue with contradicting reports about the chances of signing a deal in the APEC Summit on November 17. China said that US criticism of human rights violations in Xinjiang is "unhelpful."
  • BOC: The Bank of Canada also announces its decision today and is set to leave interest rates unchanged (see BOC preview). Canadian employment is upbeat, and inflation has steadied at healthy levels. The Canadian Dollar has been gaining ground in recent weeks.
  • Australia: Consumer prices rose by 0.5% in the third quarter, as expected. The data feed into next week's rate decision. AUD/USD remains stable.
  • Euro-zone: Preliminary Consumer Price Index figures from Germany are expected to show another slowdown in inflation ahead of the euro-zone numbers on Thursday.
  • Gold remains below $1,500, while WTI Crude Oil is hovering around $55 ahead of the Fed decision.
  • Cryptocurrencies are on the back foot, reversing some of the gains recorded on Tuesday. Bitcoin holds above $9,000.

    Source: fxstreet

Here is what you need to know on Wednesday, October 30:

READ MORE

Further upside in EUR/USD lost traction

EURUSD_lost-traction_forex_FXPIG

FX Strategists at UOB Group noted the bullish outlook on EUR/USD appears to have lost some momentum despite a test of 1.1180 still remains on the cards.

Key Quotes

24-hour view: “EUR traded in a relatively narrow range between 1.1074 and 1.1107 before ending the day slightly higher at 1.1098 (+0.18%). The quiet price action offers no fresh clues and EUR could continue to trade sideways for today, likely between 1.1080 and 1.1125”.

Next 1-3 weeks: “EUR dipped to 1.1071 on Friday (25 Oct), just one pip above our ‘strong support’ indicated in our last update on 23 Oct (spot at 1.1130). The prospect for further EUR strength has clearly diminished but there is still a slim chance that EUR could muster one more push high towards last week’s top near 1.1180. However, a break of 1.1070 would suggest EUR could trade sideways for a period”.

Source: fxstreet

FX Strategists at UOB Group noted the bullish outlook on EUR/USD appears to have lost some momentum despite a test of 1.1180 still remains on the cards...

READ MORE

BoC to leave the policy rate unchanged

BoC_to-leave-policy-unchanged_Forex_FXPIG

Rabobank analysts are expecting the Bank of Canada to leave the policy rate unchanged at 1.75% on 30th October.

Key Quotes

“This is expected by 27 of the 29 analysts surveyed by Bloomberg and CAD OIS implies almost no chance of a move in either direction.”

“CAD OIS currently points to around a 20% chance of a cut by the middle of next year but we see this as significantly under-priced - we expect four 25bp cuts next year.”

“Despite global headwinds and underlying domestic weakness, Governor Poloz is likely to adopt an optimistic but cautious neutral tone at this week’s meeting.”

“We will see a new Monetary Policy Report which is likely to downgrade growth forecasts.”

“In terms of USD/CAD, we have seen a significant decoupling from interest rate differentials but we expect this to continue and we see a repricing of the Canadian curve pushing USD/CAD higher into year-end.”

Source: fxstreet

Rabobank analysts are expecting the Bank of Canada to leave the policy rate unchanged at 1.75% on 30th October...

READ MORE

Forex Today

Forex_today_29.10.2019_FXPIG

Here is what you need to know on Tuesday, October 29:

  • Trade: US President Donald Trump has said that most of the trade deal with China is done, pushing stocks higher. Commodity currencies are up, and USD/JPY is close to the highs, trading around 109.
  • Brexit: UK Prime Minister Boris Johnson has accepted that Brexit will not happen on October 31. The EU is set to formalize the extension to January 31, 2020. The PM has failed in his latest attempt to call elections but is set to succeed by using a different legal route. Together with the Liberal Democrats and the Scottish National Party (SNP), parliament is expected to promote a bill that will allow a poll on December 9 or December 12. Labour is reluctant to support the accord due to poor polling numbers and its fear that a no-deal Brexit is still on the cards. GBP/USD is awaiting developments around 1.2850.
  • Bitcoin has been retreating from the highs after China issued a warning about blockchain. BTC/USD is still trading around $9,400.
  • Japan: Inflation figures for the Tokyo region have shown weakness. The Bank of Japan announced its decision early on Thursday.
  • Europe: Outgoing European Central Bank President Mario Draghi reiterated his call on governments to do more in a ceremony where he passed the baton to successor Christine Lagarde.
  • Fed: Tension is mounting ahead of the Federal Reserve's decision on Wednesday. The Fed is set to cut rates but signal a pause is coming.
  • Data: The Conference Board's Consumer Confidence gauge for October stands out today. Consumers have been leading the economy.

    Source: fxstreet

Here is what you need to know on Tuesday, October 29:

READ MORE

Brexit, FOMC - market movers this week

Brexit_Fomc_Forex_FXPIG

The Danske Bank analysts provide brief insights on the important events of note, scheduled this week.

Key Notes:

We have a slow start to a very important week today. Today we get euro area monetary aggregates and loan data and Swedish trade balance is also released. After years of negative prints, the trend is once again positive, surely helped by the weak SEK. Our forecast is for a SEK5bn surplus, but this should not be a market mover.

Focus this week will be on the Brexit deadline on Thursday (although we expect another extension) and FOMC meeting on Wednesday (where we expect a cut). We also have Bank of Japan policy meeting where markets price around some 50% probability of a rate cut.

On Friday, we expect a weak US job report, with an increase of just 50,000. Preliminary Q3 GDP data for both the euro area and the US are due out."

Source: fxstreet

The Danske Bank analysts provide brief insights on the important events of note, scheduled this week...

READ MORE

Gold consolidates in a range, just above $1500 mark

Gold_consolidates_in_a_range_Forex_FXPIG
  • Fed rate cut expectations helped gain some traction on Monday.
  • US-China trade optimism/positive US bond yields capped gains.

Gold refreshed daily tops during the early European session, albeit lacked any strong bullish conviction and remained well below three-week tops set on Friday.

The precious metal failed to capitalise on its goodish intraday positive move on Friday, rather witnessed some selling near the $1520 region amid fading safe-haven demand. This coupled with a late pickup in the US Dollar demand exerted some additional downward pressure on the dollar-denominated Gold.

Upside remains limited

Meanwhile, expectations that the Fed will cut interest rates further at its upcoming meeting on October 29-30 helped the non-yielding yellow metal to regain some positive traction on Monday. However, a combination of negative forces kept a lid on any strong follow-through move up, at least for now.

The Greenback remained well supported by the ongoing recovery in the US Treasury bond yields, while the incoming positive trade-related headlines remained supportive of a generally risk-on mood and continued weighing on the precious metal's perceived safe-haven status.

In the latest development, the US Trade Representative's office said on Friday that the US and China have made progress in trade talks and have come close to finalising parts of a “phase one” trade deal. The US officials have said they hope to sign a deal in mid-November.

In absence of any major market-moving economic releases from the US, the commodity seems more likely to continue with its subdued/range-bound price action as investors start re-positioning for this week's key event risk – the latest FOMC monetary policy update scheduled later this week.

Source: fxstreet

Gold refreshed daily tops during the early European session, albeit lacked any strong bullish conviction and remained well below three-week tops set on Friday...

READ MORE

EUR/USD Technical Analysis

EURUSD_tech-analysis_Forex_FXPIG
  • EUR/USD is rebounding from recent lows in the 1.1070 region after two consecutive daily pullbacks.
  • Despite the ongoing recovery, Thursday’s bearish ‘outside day’ remains well in place and still points to further losses in the near term.
  • That said, a deeper pullback should see the 55-day SMA at 1.1042 retested. This area of support is reinforced by the proximity of the 21-day SMA, today at 1.1036.
  • On the upside, the 100-day SMA at 1.1128 emerges as the initial target.

Source: fxstreet

EUR/USD is rebounding from recent lows in the 1.1070 region after two consecutive daily pullbacks...

READ MORE

Forex Week Ahead

Forex_week_ahead_bankers_FXPIG

Hugely busy week ahead

A fascinating week ahead as three major central banks hold monetary policy meetings, with two potentially pulling the trigger on a rate cut. The Fed is the most likely of these with markets pricing in more than a 90% chance of a third consecutive 25 basis point reduction. The meeting may come a little early for the BoJ but markets suggest a 20 basis point cut is in the offing.

  • Central banks take centre stage
  • Brexit goes into extra time
  • US jobs report caps off chaotic week

Brexit will dominate the UK headlines as we wait to find out how long an extension the country is going to be granted, with a flat rejection being highly unlikely. That may depend on whether Boris Johnson can convince Jeremy Corbyn to have an election, something that doesn’t come without its own demands, namely the complete removal of no deal and confirmation of an extension.

It’s not often that earnings season and the trade war are further down the agenda, particularly moving into a heavy period for the former, but that looks to be the case next week. It’s been a mixed season so far not to mention an unusual one. It’s not often that Tesla significantly beats just before Amazon disappoints but that’s the world we now find ourselves in.

Finally we have the US jobs report which will bring an exciting end to an otherwise exhausting week.

Central Banks this week (for currencies that we offer):

Monday – No meetings

Tuesday – No meetings

Wednesday – Federal Reserve (90% chance of 0.25% cut), BoC (Canada)

Thursday – Bank of Japan (26% chance of 0.2% cut), CBRT meeting summary and inflation report

Friday – No meetings

Central Bank Speakers (at the time of writing)

Monday – No speeches

Tuesday – Philip Lowe (RBA Governor), Mark Carney (BoE Governor)

Wednesday – Jerome Powell (Fed Chair – Post Rate Decision), Stephen Poloz (BoC Governor – Post Rate Decision)

Thursday – Thomas Jordan (SNB Chair)

Friday – No speeches

Markets

The fate of the dollar could be decided by the upcoming Fed policy decision. While the market is fully pricing in a third consecutive rate cut, the odds for another cut in December have dropped to 40%.  The Fed is likely to cut rates but possibly signal they will wait-and-see the impact of recent batch of cuts.  Powell has highlighted Greenspan’s mid-cycle adjustment in the 1990s and we could see that remain the game plan.

The trade war should see incremental updates, but we may not see a major move until we get to the Trump-Xi meeting at the APEC summit next month.

The dollar has weakened significantly in the early part of October and we could see this recent rebound be short-lived if the deep pessimism for the global outlook eases. Bond yields remain near recent highs and if we don’t see another major downturn, we could see the dollar to remain very vulnerable.

The results of the Argentinean presidential elections are almost a foregone conclusion at this point. Barring a shock outcome, Alberto Fernandez will take over from Mauricio Macri following the path set by the former’s solid victory in the primaries.

The IMF has withheld the next tranche of its loan to Argentina awaiting to have assurances from the new government before releasing the funds.

The Mexican peso has appreciated in October on the back of rising optimism of a trade deal between the US and China. The liquidity of the MXN makes it sensitive to regional risk events and could trade lower if the elections and official statements fail in Argentina fail to deliver confidence for investors.

A default on its debt by Argentina is not a new item, but it has gained traction despite the best efforts of the current government, the IMF and even the candidate most likely to lead the next government.

Contagion risks are high as confidence in the region would suffer if the US-China trade war remains active. The IMF will not make a decision until holding formal talks with Fernandez, with uncertainty remaining high.

Libra back in the news this week after Mark Zuckerberg appeared in Washington. The anti-Libra sentiment was clear from Congress which has knocked sentiment in the crypto space.

Bitcoin has been quiet by its own standards over the last month prior to Zuckerberg’s appearance. The latest drop may spur it back to life.

Oil prices have been rising towards the back end of the week aided by a surprise inventory drawdown on Wednesday. Oil has been gradually rising since testing its summer lows. Remains vulnerable to global growth worries and further attacks in the middle east.

Gold has been creeping off its lows but is still struggling to gather any upward momentum. A softer dollar has aided the resilience in the yellow metal but it continues to linger around $1,500. Gold volatility has been relatively muted but the risk environment remains fragile.

Politics

The UK remains in limbo as the country waits to hear whether its extension will be accepted and how long it will be.

Boris Johnson has proposed to Labour that in exchange for an election on 12 December, he will extend the timetable for the Brexit bill until 6 November. Labour expected to respond on Monday once extension from EU becomes clear.

It’s unclear when the EU will respond as there’s apparently a dispute around whether to offer the full three months or just a couple of weeks, reportedly favoured by France. It’s extremely unlikely it will be rejected altogether but the currency remains volatile.

Impeachment inquiries or the narrowing of the Democratic field will likely see limited impact in the short-term.  Financial market participants’ concerns over an Elizabeth Warren presidency have eased.

If Elizabeth Warren can reset her campaign and become the favorite for becoming the next President, we could see that derail the bullish case for a much higher stock market in 2020.

The economic impact of the ongoing protests is starting to be felt. Office occupancy by mainland Chinese tenants in Central area has slumped to just 14% compared with 58% in 2018 and 57% in 2017. September average office vacancy rates across the whole of Hong Kong have almost doubled to a 14-year high of 7.4% compared to a year ago.

The next set retail sales data for Sep are due Friday November 1 and are unlikely to improve from August’s -23% slump. Q3 GDP data is due on November 15.

Tear gas is regularly used to disperse protesters, “mob violence” has seemingly taken over. The risk of a “heavy-handed” response from China grows steadily. The Hang Seng is holding up relatively well while USD/HKD is constantly knocking on the 7.85 trading band upper limit.

It all comes down to whether US and China can agree terms to the “Phase One” trade deal ahead of a scheduled meeting between Xi and Trump next month. Data-wise, the first PMIs for October come on Thursday and Friday with initial forecasts suggesting a weaker number.

Weak economic data out of China has a serious knock-on effect for most of Asia, who rely heavily on exports to China. It’s also likely to filter down to slower global growth.

It’s been a bit quiet on the war-mongering front. North Korea‘s Kim Jong-Un has said he has a “good” relationship with Trump, whatever that means. Frictions with the South are increasing, but likely to remain localised for now.

A potential trade spat between India and Malaysia has been avoided, all related to palm oil. The border dispute hasn’t hit the headlines recently, so appears to be let to simmer.

An escalation of friction between the two neighbours could hit risk appetite in the region and force superpowers from both East and West to be dragged into the skirmish and forced to choose sides. That would be a huge negative for risk appetite.

Quarterly CPI data on Wednesday could be a market mover, but it’s not the RBA’s major focus at the moment. Prices have been trending lower since Q2 last year. Weak CPI data could give the RBA more wiggle space for rate cuts, which would be AUD negative.

Protests in the capital Santiago shocked markets given the relative stability of Chile. Poverty levels are way ahead of the region, but inequality after a metro rate increase sparked protests that have backed the government into a corner after earlier mishandling of the situation.

If protests continue, Chilean markets will continue to suffer despite improved risk appetite. Copper prices have risen as Chilean mine union have joined the protests by halting production on certain dates. Chile is a major producer of the red metal.

The Brazilian Central Bank will announce the benchmark interest rate on Wednesday, October 13. The central bank has been slashing the interest rate aggressively since the start of the year. Inflation remains tame, leaving the BCB with the flexibility to keep cutting. The BCB is anticipated to cut the benchmark rate by 50 basis points.

The Central Bank of Colombia will announce its rate decision on Thursday, October 31. The central bank is not as likely to join the global path of lower rates this year, but given how inflation has been trickling lower it would not be a shock.

A rate cut in Colombia is not expected, but given the low inflation pressures it would not be a complete shock, given regional and global central bank.

Source: fxstreet

A fascinating week ahead as three major central banks hold monetary policy meetings, with two potentially pulling the trigger on a rate cut. The Fed is the most likely of these with markets pricing in more than a 90% chance of a third consecutive 25 basis point reduction...

READ MORE

Brexit: EU to extend Brexit deadline without a date - Reuters

Brexit_extend_deadline_Forex_FXPIG

Citing a senior European Union (EU) official familiar with the matter, Reuters on Friday reported that the EU was expected to announce a decision, in principle, to extend the Brexit deadline without specifying a date.

The British Pound ignored these comments and the GBP/USD pair was last seen trading at 1.2845, down 0.05% on the day. On the other hand, the EUR/GBP pair was up 0.18% on the day at 0.8655.

Source: fxstreet

Citing a senior European Union (EU) official familiar with the matter, Reuters on Friday reported that the EU was expected to announce a decision, in principle, to extend the Brexit deadline without specifying a date...

READ MORE

Gold climbs to fresh two-week tops, above $1505 level

gold-climbs-to-fresh-tops_forex_FXPIG
  • Reviving safe-haven demand helped build on the recent positive move.
  • Fed rate cut expectations/subdued USD price action remained supportive.

Gold edged higher on the last trading day of the week and climbed to fresh two-week tops, around the $1507 region in the last hour.

The precious metal gains some follow-through traction for the fourth straight session on Friday and added to this week's positive move, further beyond the key $1500 psychological mark amid reviving safe-haven demand.

Bulls trying to seize near-term control

Against the backdrop of growing concerns about slowing global economic growth, risk of an early snap election in the UK weighed on investors' sentiment and drove flows towards traditional safe-haven assets – including Gold.

The global flight to safety was further evident from a modest downtick in the US Treasury bond yields, which coupled with firming Fed rate cut expectations provided an additional boost to the non-yielding yellow metal.

Adding to this, a subdued US Dollar price action further underpinned demand for the dollar-denominated commodity, albeit the uptick seemed to lack any strong bullish conviction on the back of US-China trade optimism.

Reports suggested that China aims to buy at least $20 billion of American farm products as a part of the phase one deal in the first year. This would bring purchases back to 2017 levels, or before the US-China trade war began.

In the absence of any major market-moving economic releases from the US, the broader market risk sentiment and the USD price dynamics might produce some short-term trading opportunities on the last day of the week

Source:fxstreet

Gold edged higher on the last trading day of the week and climbed to fresh two-week tops, around the $1507 region in the last hour...

READ MORE

FOMC: Still no pre-commitment to more easing

FOMC_still-no-pre-commitment_Forex_FXPIG

Danske Bank analysts expect the Federal Reserve will cut rates again by 25bp when it meets next week (announcement Wednesday 19:00 CEST).

Key Quotes

While economists are evenly divided between those expecting a cut and those expecting the Fed to remain on hold, investors have nearly fully priced in a cut (90% probability, according to Bloomberg).”

It is more difficult to predict Fed actions than previously, as policymakers disagree on the best way forward. There were three dissents last time (two voting for unchanged, one voting for a bigger cut), which is a lot looking back at Fed actions historically. However, we would have expected the Fed to talk down market expectations more explicitly if it was not easing again. We also believe it makes sense to ease when looking at the data.”

Source: fxstreet

Danske Bank analysts expect the Federal Reserve will cut rates again by 25bp when it meets next week (announcement Wednesday 19:00 CEST)...

READ MORE

ECB meeting to be a relatively uneventful

ECB_meeting_uneventful_Forex_FXPIG

According to Rabobank analysts, Mario Draghi’s final meeting as President of the ECB today should be a relatively uneventful policy-wise.

Key Quotes

“A comprehensive policy package was announced only last month and this has yet to be implemented fully (recall that both net asset purchases and the tiered remuneration of excess reserves will only start at the end of this month).”

“Nonetheless, President Draghi’s farewell may not be the party he was hoping for. The ECB’s latest policy decision caused quite some division in the Council. Moreover, the ECB President is waving goodbye against an economic backdrop that is not as bright as he would have liked to see it as he leaves office.”

“If the incoming data remain weak, incoming President Lagarde may have to step in Draghi’s footsteps and lower the ECB’s deposit rate again at her first policy meeting in December. But we do note that division in the Council has increased the likelihood that the next cut will be delayed into 2020.”

Source: fxstreet

According to Rabobank analysts, Mario Draghi’s final meeting as President of the ECB today should be a relatively uneventful policy-wise...

READ MORE

Forex Today: Brexit in the EU's hands, EUR/USD may struggle with Draghi one last time, Bitcoin battered

Forex_today_24.10.2019_FXPIG

Here is what you need to know on Thursday, October 24:

  • Brexit: GBP/USD has stabilized around 1.29 as the EU is considering a delay to the UK's exit. France reportedly wants only a short delay from October 31 to November 15, while other countries tend to approve a postponement to January 31, 2020 – as stated in Britain's extension request. A long delay will likely result in snap elections while a short one in another push to complete legislation. Brussels will likely indicate its decision on Friday.
  • Mario Draghi, President of the European Central Bank, will preside over his last decision at the helm. He will likely defend his eight-year tenure, and mostly his last decision to cut rates and restart the bond-buying scheme. If he justifies the stimulus by painting a dark picture of the euro-zone economies, EUR/USD may struggle.
  • Ahead of the ECB's decision, preliminary euro-zone Purchasing Managers' Indexes for October will provide an update on the economy.
  • Several other countries will announce their rate decisions today, with Turkey standing out. US President Donald Trump announced that he is lifting sanctions after Ankara committed to a permanent ceasefire in Northern Syria. The CBRT is set to cut interest rates. USD/TRY volatility is set to remain high.
  • The market mood has somewhat improved, with the safe-haven USD, JPY, and Gold in retreat. US Vice President Mike Pence will deliver a significant speech on China later in the day, and markets will watch it as guidance for trade talks.
  • US data: US Durable Goods Orders for September provide an indication for US GDP next week and are set to move markets. Weekly Unemployment Claims, News Home Sales, and Markit's PMIs are also of interest.
  • Cryptocurrencies are licking their wounds at lower ground, with Bitcoin trading below $7,500. Facebook founder Mark Zuckerberg testified on Capitol Hill and defended the social media's Libra cryptocurrency project. He seemed to have failed to convince lawmakers that the project is needed and that it will compete with Chinese initiatives.

Source: fxstreet

Here is what you need to know on Thursday, October 24:

READ MORE

ECB: Draghi’s last Governing Council meeting – Deutsche Bank

Draghi-last-governing-meeting_Forex_FXPIG

Deutsche Bank analysts suggest that the market highlight today comes from the ECB, in what will be President Mario Draghi’s last Governing Council meeting before Christine Lagarde takes over on 1 November.

Key Quotes

“His final choice of tie colour will be of great interest to all. Maybe it will be a novelty bow-tie. Over his 8 years in charge, the Euro Area has emerged from its sovereign debt crisis and seen unemployment fall to 7.4%, its lowest since May 2008. However, inflation has proved stubbornly difficult to return to target (averaging 1.19% over the period), standing at just +0.8% in September, while five-year forward five-year inflation swaps stand at just 1.202%, so not exactly a vote of confidence from the markets that they expect the ECB to get inflation back up again anytime soon.”

“Although Draghi’s term has another week to go we thought we’d mark his last press conference with a look at the performance of our usual sweep of key global assets under his 8 year tenure.”

Source: fxstreet

Deutsche Bank analysts suggest that the market highlight today comes from the ECB, in what will be President Mario Draghi’s last Governing Council meeting before Christine Lagarde takes over on 1 November...

READ MORE

EU will react to Brexit delay request

Brexit_delay-request_Forex_FXPIG

The European Union Council President Donald Tusk, speaking in the parliament this Tuesday, said that we are ready for all scenarios and will react to Brexit delay request in the coming days. Still consulting leaders on Brexit extension, which will depend on what UK lawmakers decide or do not, Tusk added further.

The comments did little to influence the British Pound as investors held back from placing any bets and look forward to a second reading of the UK Prime Minister Boris Johnson's Withdrawal Act Bill (WAB)

Source: fxstreet

The European Union Council President Donald Tusk, speaking in the parliament this Tuesday, said that we are ready for all scenarios and will react to Brexit delay request in the coming days...

READ MORE

EUR/USD: Steady trading

EURUSD_steady-trading_Forex_FXPIG

Analyst at Commerzbank, notes that EUR/USD held steady yesterday and continues to target initially the 200 day ma at 1.1207 and then the top of the channel at 1.1290.

Key Quotes

“The 55 week ma lies at 1.1258. Intraday dips are indicated to be likely to hold in the 1.1120/1.1085 vicinity. This guards the short term uptrend at 1.1047. Longer term the critical resistance to overcome is the 200 week ma at 1.1355 and while we would allow for this zone of resistance to hold the initial test, longer term we look for a break higher to feature. This will target 1.1520/70, the 2019 high, as a minimum.”

“Below 1.0879 we have the January 2017 low at 1.0829 and the 78.6% Fibonacci retracement of the 2017-2018 advance at 1.0814.”

Source: fxstreet

Analyst at Commerzbank, notes that EUR/USD held steady yesterday and continues to target initially the 200 day ma at 1.1207 and then the top of the channel at 1.1290...

READ MORE

Forex Today:

Forex_today_22.10.2019_FXPIG

Here is what you need to know on Tuesday, October 22:

  • Brexit: Parliament will have its first say on Prime Minister Boris Johnson's deal today after 18:00 GMT. After Speaker John Bercow denied the government another "Meaningful Vote", Johnson has opted for the full legislation, known as the Withdrawal Act Bill (WAB). The House of Commons will then vote on the voting program which aims to conclude the process within three days, to get Brexit done by October 31. The opposition is set to push for amendments, including a customs union and a second referendum, which may derail the process. The EU is watching the process and ready to grant an extension. Another volatile day is likely for GBP/USD, which hovers around 1.30.
  • Trade talks: US officials have been sending mixed signals about the state of negotiations. White House adviser Larry Kudlow suggested that the US may drop its intention to slap new tariffs on December 15 if talks go well. President Donald Trump was also optimistic, while others suggested it may take move time. The broad market mood is positive. USD/JPY is below 109 and Gold under $1,500.
  • Canada: Incumbent Prime Minister Justin Trudeau won a minority government and lost the popular vote. He is set to be returned as PM but will need support to pass major legislation. The Canadian dollar held up its gains, with USD/CAD trading below 1.31. The Bank of Canada's Business Outlook Survey and Canadian Retail Sales are on the agenda today.
  • US Existing Home Sales and the Federal Budget Balance are of interest, but trade and Brexit will likely set the tone.
  • Cryptocurrencies have stabilized with Bitcoin around $8,200,

Source: fxstreet

Here is what you need to know on Tuesday, October 22:

READ MORE

EUR/USD could test the 1.1200 region

EURUSD_test-the 1.1200_forex_FXPIG

In opinion of FX Strategists at UOB Group, the upside momentum in EUR/USD could extend to the 1.1200 neighbourhood in the next weeks.

Key Quotes

24-hour view: “While we expected EUR to strengthen last Friday, we held the view “the major 1.1165 resistance level is likely out of reach”. The subsequent advance in EUR exceeded our expectation of it rose to 1.1172 before closing on a strong note at 1.1169 (+0.42%). The rally is deep in overbought territory and further sustained gain is not likely for today. EUR is more likely to consolidate and trade sideways, expected to be within a 1.1130/1.1180 range”.

Next 1-3 weeks: “We maintain our positive outlook for EUR and highlighted last Friday (18 Oct, spot at 1.1120) that “the focus is firmly at the 1.1165 resistance now”. EUR subsequently rose to 1.1172 before ending the day (and the week) on a strong note (NY close of 1.1169, +0.42%). The current EUR rally still appears ‘healthy’ and a move above 1.1200 would not be surprising but 1.1250 is a much stronger resistance and may not yield as easily. On the downside, only a break of 1.1070 (‘strong support’ level slightly higher than 1.1050 previously) would indicate that the current positive phase in EUR that started more than a week ago has run its course”.


Source: fxstreet

In opinion of FX Strategists at UOB Group, the upside momentum in EUR/USD could extend to the 1.1200 neighbourhood in the next weeks...

READ MORE

Breaking: GBP/USD breaks above 1.30

Breaking_GBPUSD_breaks-above-1.3_Forex_FXPIG

GBP/USD has topped 1.30 and is trading at the highest levels since mid-May – a five-month high. The pound has extended its gains as the chances for parliament to approve the Brexit deal have improved.

The latest development has come from the Northern Irish Democratic Unionist Party. The small party has stated it will object an amendment to add a customs union to the agreement. Forcing such a change would practically void the accord. Jim Shannon told Sky News the party would not support such an amendment.

While the DUP is vehemently opposed to having a customs border at the Irish Sea, they are more concerned about the change in the consent mechanism. Prime Minister Boris Johnson's Brexit deal strips NI unionists from their veto on changes in the province.

The next targets are 1.3045, 1.3080, and 1.3135. Support awaits at 1.2985 and 1.2900.

Source: fxstreet

GBP/USD has topped 1.30 and is trading at the highest levels since mid-May – a five-month high. The pound has extended its gains as the chances for parliament to approve the Brexit deal have improved...

READ MORE

Forex Today:

Forex-today_21.10.2019_FXPIG

Here is what you need to know on Monday, October 21:

  • Brexit: GBP/USD kicked off the week with a drop toward 1.29 after an eventful weekend. Parliament forced the government to ask for an extension to Article 50. Prime Minister Boris Johnson still continues trying passing all the relevant legislation this week. It is unclear if House Speaker John Bercow will allow another "Meaningful Vote" which failed on Saturday, but the vote on the Withdrawal Bill is set to be debated on Tuesday. While Johnson may be nearing the votes to pass his Brexit agreement, the opposition may try to add amendments, for a customs union or for a second referendum. EU Leaders will be watching and are ready to approve an extension if lawmakers fail to approve Brexit. Sterling volatility is set to remain elevated.
  • The US Dollar kicked off the week little changed after falling on Friday. Richard Clarida, Vice-Chair of the Federal Reserve has not pushed back against market pricing of a rate cut later this month. Some speculated that he quietly endorsed a rate reduction. Moreover, weak Retail Sales weighed on the greenback last week.
  • Trade: Chinese Vice-Premier Liu He said the US and China made concrete progress. In the meantime, China left the Loan Prime Rate (LPR) unchanged. The world's second-largest economy thus postpones monetary stimulus to 18 of its banks.
  • Europe: Incoming European Central Bank President Christine Lagarde has put the blame for the global slowdown on US President Donald Trump's trade wars. Other reports suggest the ECB will leave refrain from introducing additional stimulus this year. Outgoing ECB President Mario Draghi presides over his last decision on Thursday.
  • Canada holds Federal Elections today with a tight race between incumbent Justin Trudeau and contender Andrew Scheer. battle for the top job. Markets will be content with both candidates if either gain an absolute majority.
  • Cryptocurrencies have recovered from the lows with Bitcoin trading above $8,000.

Source: fxstreet

Here is what you need to know on Monday, October 21:

READ MORE

Forex Week Ahead

Brexit_Optimism_Forex-week-ahead_FXPIG

The British pound is near 5-month highs ahead of Saturday’s showdown as the UK parliament is being asked to ratify the deal that PM Johnson and his EU counterparts reached to avoid a hard Brexit on October 31. The odds of Boris Johnson rallying lawmakers to support his deal are not good, but anything Brexit related comes with room for a surprise result. Theresa May’s decision to trigger a snap election that took the DUP from the fringes of UK politics to king makers and the Northern Ireland MPs could end up derailing this new deal on the table.

China’s GDP on Thursday night confirmed the slowdown of the Asian economy. The Chinese economy was losing momentum even before a prolonged trade war with the US and posted a 6% quarterly growth, the lowest since March 1992, when records began to be kept. Industrial production beat expectations but was the single upbeat indicator as consumers met expectations excluding car sales that have been on a downward spiral for the last 15 months.

Euro rises as Brexit Hopes Boost Single Currency

Next week ECB President Mario Draghi will deliver his last speech as head of the central bank as he makes way for his successor Christine Lagarde who takes over in November. The central bank has taken interest rates to negative territory and has renewed its QE program to avoid the EU falling into a recession.

The ECB’s arsenal appears depleted and leaves Lagarde few options outside of diplomacy to enact economic change in Europe. Draghi was well known for this “whatever it takes” attitude, but the ECB might have overextended itself as per his critics who are already pressuring Lagarde to reduce stimulus.

The economic calendar is light on US indicator releases. The economy is sending mixed signals and the market has been more sensitive to data missing the mark as it expects the U.S. Federal Reserve to cut its benchmark rate on October 30.

The limited agreement struck between the US and China last Friday sparked a wave of optimism but as the days drag on it is starting to wear off.

The US dollar is on the back foot as risk aversion eased and investors looked for higher yields and sold the greenback.

The Brexit deal agreed between the UK PM and European leaders supported the risk on mood, but as the odds of parliament ratifying the deal started to get long the US dollar is likely to find its footing ahead of the weekend and the uncertainty of the outcome.

USD/CAD
The loonie appreciated in the last five trading sessions and looks to close the week on positive territory. Oil prices have defied expectations, but there could be an impact from the election results.

Canadians will head to the polls on Monday with a minority government the most likely result. The Liberals will lose their majority and without conservatives closing the gap, the big winners could be the New Democratic Party forming a party with the Liberals.

The USD is on the back foot, and more risk appetite could push the CAD to break under 1.30 against the greenback.

BITCOIN
Bitcoin traders are breathing a sigh of relief after the plummet below $8,000 seems temporary. Thursday’s rise is significant as the past few days saw many investors join the bearish camp. If Bitcoin can finish out the week above the noted $8,000 level we could finally see it consolidate back towards the $8,750 region.

Bitcoin is more stable, but still pressured to the downside with the rise of the USD.

OIL
Oil prices brushed off a large buildup in US crude inventories and keeps moving higher as gasoline and distillates had a larger than expected drawdown. Growth concerns are balanced against US-China trade deal hopes and energy is caught in the middle.

Middle East tensions eased, but potential supply disruptions do not move the current market that is more focused on macro headwinds and less on supply/demand fundamentals. Oil is sensitive to various developments be it inventories, global growth, the trade war, Iranian sanctions or OPEC.

GOLD
Gold fell on the news PM Boris Johnson got a Brexit deal done with the EU, but that price action was short-lived. Gold is seeing buyers emerge and it seems it is only a matter of time before we see another run towards the $1,500 an ounce level.

With earnings starting to come in more mixed, the lack of fresh record high with US equities will likely see flows come back to oil. Trade optimism could evaporate giving gold a leg up.

New positions could be opened in the metal as price becomes more attractive with a high level of uncertainty still in the market.

POLITICS

Turkey’s steady military initiative in Syria is taking a break after VP Pence and President Erdogan reached an agreement for a cease-fire.

Turkey’s economy is in a very fragile state and while they expect 2020 to be a year which sees the economy rebound, if they get hit with fresh sanctions, that could derail a wrath of stimulus that is waiting to help growth enter a more sustainable path.

The lira volatility is likely to remain high as we will probably see a resumption of military attacks from Turkey after the cease-fire ends. Turkey is nowhere near being satisfied with their concerns that the Kurdish control an area so close to its border.

US – Iran
As Saudi Arabia and the US ramp up their defensive measures to protect critical hubs of oil protection, markets remain on edge over what will be the next escalation in tensions in the Middle East.

The US is deploying more troops in Saudi Arabia and helping the Saudis improve their anti-drone technologies. Right now, it feels like a game of chess with each side strategical enhancing their missile systems. We are one tanker attack, drone strike or missile offensive from going to war. It seems all parties do not want war, but we could the risks for accidentally getting to one are growing.

US Elections
It is a long way until the fifth Democratic debate on November 20th and that means we should see the focus shift to fundraising. While the field remains plentiful, markets are starting to expect the final four to become Warren, Biden, Buttigieg, and Sanders.

If Biden secures more funding in the coming weeks, he should be the favorite for the Democratic nomination. Warren and Sanders continue to split the progressive vote and we could see Bernie get a bounce after key endorsements from AOC and a solid performance at the last debate.

BREXIT
Boris Johnson has a tough job ahead of Saturday’s Parliamentary vote. He needs to convince MPs to vote for his Brexit deal or seek an extension of Article of 50. Johnson may choose to try to take UK out of the EU with a hard exit at the end of the month, but that may be less likely as he could lose that battle in the courts, thus giving up a lot of recently won political capital.

The upcoming Brexit vote is too close to call, but even if we see Johnson’s deal pass, this does not include a trade agreement so sterling’s gains would likely be capped around the 1.35 to 1.3750 region.

Market events to watch this week:

Tuesday, Oct 22
• 8:30am CAD Core Retail Sales m/m
• 10:30am CAD BOC Business Outlook Survey


Wednesday, Oct 23
• 10:30am USD Crude Oil Inventories


Thursday, Oct 24
• 3:15am EUR French Flash Services PMI
• 3:30am EUR German Flash Manufacturing PMI
• 3:30am EUR German Flash Services PMI
• 7:45am EUR Main Refinancing Rate
• 7:45am EUR Monetary Policy Statement
• 8:30am EUR ECB Press Conference
• 8:30am USD Core Durable Goods Orders m/m

*All times EDT

Source: marketpulse

The British pound is near 5-month highs ahead of Saturday’s showdown as the UK parliament is being asked to ratify the deal that PM Johnson and his EU counterparts reached to avoid a hard Brexit on October 31. The odds of ...

READ MORE

USD/JPY upside could be losing momentum

USDJPY_upside-could-be-losing-momentum_Forex_FXPIG

The upside momentum in USD/JPY appears to be running out of steam, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “USD traded between 108.45 and 108.93 yesterday, lower than our expected sideway-trading range of 108.50/109.00. The underlying tone has weakened and the risk for today is tilted to the downside. From here, barring a move above 109.00 (108.85 is already quite a strong level), USD is expected to weaken to 108.35, possibly 108.10”.

Next 1-3 weeks: “USD eked out a fresh high of 108.93 before retreating to end the day slightly lower at 108.65 (-0.09%). For now, there is no change in our view from Wednesday (16 Oct, spot at 108.80) wherein the positive USD outlook is still intact and a break of 109.00 would shift the focus to 109.30. However, as highlighted, in view of overbought conditions, USD could ill afford to dither as a consolidation at these elevated levels would quickly increase the risk of short-term top. From here, unless USD cracks 109.00 and stays above this level by end of today’s NY session, a breach of 108.10 (no change in ‘strong support’ level) would indicate a short-term top is in place. In other words, the odds for further USD strength have diminished”.

Source: fxstreet

The upside momentum in USD/JPY appears to be running out of steam, noted FX Strategists at UOB Group...

READ MORE

EUR/USD now looks to a test of 1.1165 – UOB

EURUSD_looks-to=test_Forex_FXPIG

Following the recent up move, FX Strategists at UOB Group now expect EUR/USD to advance to 1.1165.

Key Quotes

24-hour view: “While we held the view “further EUR gains appear likely”, we expected any EUR strength to encounter “solid resistance near last month’s peak at 1.1110 (next resistance at 1.1135)”. EUR subsequently surged to 1.1139 during London hours before trading mostly sideways and ended the day on a strong note at 1.1122 (+0.47%). The advance is in overbought territory now but strong momentum suggests EUR could move above the 1.1139 peak even though the major 1.1165 resistance level is likely out of reach for today. On the downside, support is at 1.1100 but only a break of 1.1080 would suggest the current strong upward pressure has eased”.

Next 1-3 weeks: “We indicated yesterday (17 Oct, spot at 1.1075) that “upward momentum has improved considerably” and “a break of 1.1110 would not be surprising”. EUR subsequently soared to 1.1139 before ending the day on a strong note. As highlighted yesterday, the next resistance at 1.1165 is a significant mid to long-term resistance and if EUR were to register a weekly closing above this level, it would suggest further EUR strength in the coming weeks/months. Meanwhile, the focus is firmly at 1.1165 and only a break of 1.1050 (‘strong support’ was at 1.1000 yesterday) would indicate the risk of a break of 1.1165 has dissipated. Looking ahead, the next resistance above 1.1165 is at 1.1200 followed by 1.1250”.

Source: fxstreet

Following the recent up move, FX Strategists at UOB Group now expect EUR/USD to advance to 1.1165...

READ MORE

Forex Today

Forex_today_19.10.2018_FXPIG

Here is what you need to know on Friday, October 18:

  • Brexit remains in the spotlight as Prime Minister Boris Johnson is scrambling to get the votes in parliament to support his Brexit deal. The UK and the EU announced a deal on Thursday, sending sterling higher. However, the Democratic Unionist Party's rejection of the deal and uncertainty about what happens in case parliament fails to pass it limit the pound's gains. The House of Commons votes on the deal on Saturday and speculation about the vote is set to dominate trading.  An extension, a second referendum, elections, and also a hard Brexit are on the cards.

  • The impact goes well beyond GBP/USD. The US Dollar remains on the back foot amid a risk-on atmosphere.
  • China reported Gross Domestic Gross of 6% yearly in the third quarter, the worst since the 1990s, and lower than expected. On the other hand, Industrial Production rose by 5.8% in September, substantially above expectations and providing relief.
  • John Williams, President of the New York branch of the Federal Reserve, expressed optimism about the US economy and seemed reluctant to cut rates again later this month. Vice-Chair Richard Clarida speaks later today and will be the last Fed official to talk ahead of the October 30 decision.
  • Turkey has agreed to pause its operations in Northern Syria, allowing the Kurds to retreat. The Turkish lira strengthened.
  • Cryptocurrencies have stabilized. Ripple's XRP has retreated from the $0.30 level it topped on Thursday.

    Source: fxstreet

Here is what you need to know on Friday, October 18:

READ MORE

ECB speakers advocated fiscal easing

ECB_fiscal_easing_Forex_FXPIG

Deutsche Bank analysts point out that we heard from a number of ECB Governing Council members over the last 24 hours with the ECB’s Chief Economist Philip lane advocating fiscal easing.

Key Quotes

"He said “If there were fiscal expansion in these current conditions, the multiplier will be quite big. This goes back to finance ministers thinking about fiscal policy as a macro tool.” On growth, he said “Our assessment is that we’re not at the edge, but of course we’re closer to the edge than we were.” However, Bundesbank President Jens Weidman, who also spoke overnight was measured in his response on fiscal easing as he said that while some additional spending might be possible in the short term, “with respect to macroeconomic stabilization, any further stimulus appears unnecessary, unless a perceptible deterioration in the economic outlook becomes apparent. Germany’s output gap is about to close and forecasts don’t foresee a marked deterioration.”

“On the other hand, Dutch governor Klaas Knot and French Governor Francois Villeroy de Galhau both called for a review of both the ECB and EU’s economic strategy with Klass Knot saying that the ECB could increase its flexibility by introducing a symmetric band around the inflation aim, and governments could simplify the Stability and Growth Pact to put more emphasis on debt levels relative to budget deficits.”

French Governor Francois Villeroy de Galhau also said that Germany among euro-area countries has fiscal room to spend more and could help take some weight off the ECB. Lastly, Austrian Governor Robert Holzmann, said that one of the main tasks of Christine Lagarde will be to restore harmony in the decision-making Governing Council and added “I expect that Lagarde will start a process in the ECB that more strongly integrates national central banks.”

Source: fxstreet

Deutsche Bank analysts point out that we heard from a number of ECB Governing Council members over the last 24 hours with the ECB’s Chief Economist Philip lane advocating fiscal easing...

READ MORE

EUR/USD Technical Analysis

EURUSD_tech-analysis_17.10.2019
  • EUR/USD has quickly climbed to fresh 2-month highs near 1.1140 boosted by news of a Brexit deal.
  • While the 100-day SMA at 1.1140 should offer initial resistance, the continuation of the buying impetus could lift the pair to, initially, 1.1163 (high August 26th) ahead of the Fibo retracement at 1.1186.
  • Further up emerges the critical 200-day SMA at 1.1210.

Source: fxstreet

EUR/USD has quickly climbed to fresh 2-month highs near 1.1140 boosted by news of a Brexit deal...

READ MORE

GBP/USD: Slight consolidation here

GBPUSD_consolidation_Forex_FXPIG

Karen Jones, analyst at Commerzbank, points out that GBP/USD has reached the 61.8% retracement of the move seen this year, at 1.2838.

Key Quotes

“We are seeing some slight consolidation here, but provided dips lower hold over 1.2582 (20th September high) an immediate upside bias is maintained. There is scope for further strength towards the 200 week ma at 1.3156.”

“Immediate support lies at 1.2582 the 20th September high ahead of the 1.2382 17th July low and the 1.2248 uptrend. The near term uptrend guards 1.2196/94.”

“Below the current October low at 1.2194 lies the early and mid-August lows at 1.2091/15 and major support lies at the 1.1958 September low.”

Source: fxstreet

READ MORE

Brexit talks drag

Brexit_talks-drag_Forex_FXPIG

Ahead of the European session opening on Wednesday, the Bloomberg ran a story confirming that the Brexit talks will continue on Wednesday, citing EU sources, mainly due to the non-confirmation of support by the Democratic Unionist Party (DUP). It also confirms the talks dragged into late-night on Tuesday but failed to offer any final solution.

The news report mentions that getting a Brexit deal from the European Union (EU) is easy for the United Kingdom’s (UK) Prime Minister (PM) Boris Johnson but he insists getting support from DUP in order to get it through the Parliament at home.

The story also quotes the DUP leader Arlene Foster after she spoke with the UK PM for 90 minutes while saying that it would be fair to indicate gaps remain and further work is required.

FX implications

While no major reaction to the news could be witnessed, it depicts the uncertainty surrounding the key issue for the UK and the EU that will dominate the GBP/USD pair today. The quote seesaws near 1.2750 by the press time.

Source: fxstreet

Ahead of the European session opening on Wednesday, the Bloomberg ran a story confirming that the Brexit talks will continue on Wednesday, citing EU sources, mainly due to the...

READ MORE

EUR/USD still targets 1.1100 and above

EURUSD_still-targets-1.11_Forex_FXPIG

FX Strategists at UOB Group see EUR/USD advancing to levels above the 1.1100 handle on a daily close beyond 1.1050.

Key Quotes

24-hour view: “EUR traded between 1.0989 and 1.1045 yesterday before closing little changed at 1.1031 (+0.03%). The registered range was lower than our expected sideway-trading range of 1.1000/1.1050. The underlying tone has improved somewhat and the immediate bias is skewed to the upside. That said, any advance is likely limited to a test of last week’s peak near 1.1060 (a sustained advance above this level is unlikely). Support is at 1.1005 followed by 1.0970”.

Next 1-3 weeks: “EUR briefly dipped to 1.0989 before rebounding quickly to close at 1.1031 (+0.02%). The NY closing is still below 1.1050 and as highlighted on Monday (14 Oct, spot at 1.1025), EUR has to close above this level in order to indicate it is ready to move higher to 1.1110. The relatively quiet price action over the past couple of days has resulted in a loss in momentum. From here, unless EUR can move clearly above 1.1050 within these 1 to 2 days, a break of 1.0970 (no change in ‘strong support’ level) would mean that EUR is not ready for 1.1110 just yet and it could consolidate and trade sideways for a period. At this stage, we would say the probability for a NY closing above 1.1050 within these 1 to 2 days is slightly less than even”.

Source: fxstreet

FX Strategists at UOB Group see EUR/USD advancing to levels above the 1.1100 handle on a daily close beyond 1.1050...

READ MORE

Forex Today:

Forex_today_16.1.2019_FXPIG

Here is what you need to know on Wednesday, October 16:

  • Brexit negotiations:  The UK and the EU seem close to a deal that includes an open border on the island of Ireland and a customs border in the Irish Sea. Some dub the accord as "Theresa May's deal with lipstick" – implying significant concessions from UK Prime Minister Boris Johnson. The Northern Irish Democratic Unionist Party (DUP(has concerns while hardline Brexiteers seem to be on board. Talks in Brussels continue with Chief EU Negotiator Michel Barnier to brief diplomats on progress around 12:00 GMT. Late in the day, the PM will brief his Conservative Party. The aim is to declare a deal in the EU Summit on Thursday. GBP/USD has dropped from the highs near 1.28.
  • Hopes for an accord have impacted the market sentiment beyond the pound and the UK. The yen reached multi-month lows, EUR/USD advanced, and gold came under pressure.
  • Trade: China has demanded that the US remove US tariffs and say that otherwise, it cannot reach the target of buying $50 billion worth of agricultural goods. Moreover, the world's second-largest economy is unhappy with the intention of American lawmakers to support protesters in Hong Kong. USD/JPY that was carried higher amid Brexit hopes has retreated.
  • US Retail Sales for September stand out on the economic calendar. Moderate increases in all measures are expected, confirming the strength of the American consumer.
  • UK Consumer Price Index is set to rise, final euro-zone CPI to be confirmed at low levels, and Canadian inflation to drop on a monthly level. Mark Carney, Governor of the Bank of England, will participate at a panel discussion and will likely refrain talking about Brexit. Jens Weidmann, President of the German Bundesbank, may continue criticizing the decision to restart the European Central Bank's bond-buying scheme.
  • The Federal Reserve publishes its Beige Book later today. Alongside speeches from several Fed officials, markets will try to gauge if the bank will cut rates later this month.
  • Cryptocurrencies have been consolidating losses suffered on Tuesday.

Source: fxstreet

Here is what you need to know on Wednesday, October 16:

READ MORE

China: Widening divergence between CPI and PPI – ANZ

China_widening-divergence_forex_FXPIG

Analyst at ANZ, suggests that for the Chinese economy, the consumer price index (CPI) and the producer price index (PPI) are both important indicators of changes in prices and underlying inflation over time.

Key Quotes

“Since 2016, China’s CPI and PPI have been negatively correlated since 2016.”

“Indeed, the divergence between China’s CPI and PPI has widened to 4.2ppt y/y in September. The divergence stems from China’s supply-side reforms, notably capacity reduction and property tightening, put in place since 2016. As a result, the prices in some sectors have soared due to reduced supply, but the prices at downstream sectors have remained relatively stable.”

“China does not have a single inflation gauge, so its monetary policy does not practise inflation targeting. The current policy preference is to implement measures specific to certain economic segments rather than broad-based easing. The magnitude of any cut in the benchmark interest rate will thus be relatively limited compared with other central banks.”

Source; fxstreet

Analyst at ANZ, suggests that for the Chinese economy, the consumer price index (CPI) and the producer price index (PPI) are both important indicators of changes in prices and underlying inflation over time...

READ MORE

UK jobs report -how could it affect GBP/USD?

UK-job-reports_Forex_FXPIG

UK Jobs report overview

The UK labor market report is expected to show that the average weekly earnings, including bonuses, in the three months to August rose by 3.9% as against 4.0% growth recorded in the previous month. Excluding bonuses, the wage growth is seen ticking lower to 3.7% during the reported period from 3.8% previous. Meanwhile, the number of people seeking unemployment-related benefits is forecasted to come in at 27.9K in August and the ILO unemployment rate is expected to hold steady at 3.8%.

How could the data affect GBP/USD?

As Yohay Elam, FXStreet's Analyst explains – “An upbeat advance in pay will likely have a more significant positive effect if the UK and the EU are closer to a deal, and GBP/USD already enjoys an uptrend. If headlines are pessimistic, sterling may be unable to benefit from upbeat economic developments.”

“The same goes for a disappointing outcome. A substantial slowdown in wage growth may exacerbate cable's fall if headlines are pessimistic. However, if the market believes that a Brexit deal that can pass parliament is imminent – sterling will likely shrug off weak data,” he added further.

Source: fxstreet

The UK labor market report is expected to show that the average weekly earnings, including bonuses, in the three months to August rose by..

READ MORE

EUR/USD drops to session lows

EURUSD_drops_to-session-lows-ZEW_Forex_FXPIG
  • EURUSD comes under pressure near 1.1010.
  • German ZEW survey coming up next.
  • NY Empire State index, Fedspeak due later in the US docket.

A renewed bout of selling pressure around the European currency is now dragging EUR/USD to fresh daily lows in the vicinity of 1.1010.

EUR/USD focused on German data

The pair has quickly faded the earlier spike to the 1.1050 region and is now focusing instead on the lower end of the weekly range near the key support at 1.1000 the figure.

The knee-jerk in spot comes in response to the continuation of the correction higher in the Greenback amidst steady US yields and some fresh effervescence from the US-China trade front.

Later in the session, EUR will be under further scrutiny in light of the publication of the key German/EMU Economic Sentiment tracked by the ZEW survey. Across the pond, the regional gauge of the manufacturing sector by the Empire State index will be the salient event in tandem with speeches by FOMC’s Bostic, George and Daly.

What to look for around EUR

The pair met strong resistance in the mid-1.10s, where sits the key 55-day SMA, sparking some profit taking and the ongoing retracement to the vicinity of the 1.10 support. The corrective upside, however, remains well in place for the time being and supported by the improved mood in the riskier assets and a weak Dollar. Looking at the broader picture, the relentless slowdown in the region 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. On another front, potential US tariffs on imports of EU cars remain well on the table, while the Brexit limbo and UK politics could also maintain gains somewhat limited.

EUR/USD levels to watch

At the moment, the pair is retreating 0.02% at 1.1022 and a breakdown of 1.0985 (21-day SMA) would target 1.0879 (2019 low Oct.1) en route to 1.0839 (monthly low May 11 2017). On the flip side, the next barrier emerges at 1.1049 (55-day SMA) seconded by 1.1062 (monthly high Oct.11) and finally 1.1109 (monthly high Sep.13).

Source: fxstreet

A renewed bout of selling pressure around the European currency is now dragging EUR/USD to fresh daily lows in the vicinity of 1.1010...

READ MORE

Forex Week Ahead

Saving_money_forex_week_ahead_FXPIG

Following a week that was filled with critical updates with the US-China trade war, markets will now focus on the beginning of earnings season, Brexit negotiations, a wrath of Chinese data that will look to see if GDP growth will test below 6% for the first time, and annual meetings from the IMF, which will deliver downward revisions to global growth forecasts when they present the latest World Economic Outlook.

Over the weekend, Chinese President Xi and Indian Prime Minister Modi hold informal meetings.  On Sunday, Poland will hold elections were the ruling Law & Justice party are heavy favorites to win.  Hungary also holds municipal elections.

Earnings season kicks off with the big banks (JP Morgan, Citigroup, Wells Fargo, Bank of America, Goldman Sachs and Morgan Stanley) and financial firms.  We also see results from Johnson & Johnson, Netflix, IBM, Coca-Cola and United Airlines.  If we see drastic cuts to guidance early this earnings season, we could see that be the trigger that finally turns the recent 5% pullback into a 10% correction.

We could see the fourth Democratic debate on Tuesday be a pivotal turning point for former Vice President Joe Biden as he looks to regain momentum from a surging Elizabeth Warren. If Senator Warren continues to rise in the polls, we could start to see diminishing forecasts for a bright 2020 for US stocks and that could weigh on USD/JPY.

On Friday, there are ratings reviews on UK (Fitch), Oman (S&P), and Croatia (Moody’s).

Monday, October 14

Chinese trade data

Singapore MAS Monetary Policy Statement

US Holiday

2:30 am INR India Wholesale Price Index

3:15 am EUR ECB’s De Guindos speaks in Madrid

5:00 am EUR Eurozone Industrial Production

8:00 am INR India Inflation data

8:10 am GBP BOE’s Cunliffe speaks in London

11:30 am SEK Riksbank’s Ohlsson speaks

8:30 pm AUD RBA Monetary Policy Meeting Minutes

8:30 pm JPY BOJ Kuroda speaks

9:30 pm CNY China Inflation data

  • Tuesday, October 15

Earnings Season Begins

12:30 am JPY Industrial Production data

3:00 am NOK Norges Bank Deputy Gov Nicolaisen speaks

4:25 am USD Fed’s Bullard speaks in London

4:30 am GBP UK Employment and Wage data

4:30 am GBP BOE Gov Carney speaks in Parliament

5:00 am EUR German ZEW survey

5:00 am EUR Eurozone ZEW survey

6:15 am SEK Riksbank Gov Ingves speaks

8:30 am USD Empire Manufacturing Index

8:30 am GBP BOE’s Vlieghe speaks

9:00 am USD Fed’s Bostic speaks

12:45 pm USD Fed’s George speaks

15:30 pm USD Fed’s Daly speaks

  • Wednesday, October 16

4:30 am GBP UK Inflation data

5:00 am EUR Eurozone Inflation data

8:30 am USD Retail Sales data

8:30 am CAD Canada Inflation data

8:30 am EUR ECB’s Knot speaks in NY

9:00 am GBP BOE Gov Carney takes part in panel at IMF event

10:45 am USD Fed’s Evans speaks

11:00 am EUR ECB’s Lane speaks

1:00 pm EUR Bundesbank President Weidmann speaks

2:00 pm USD Beige Book

4:00 pm SEK Riksbank Gov Ingves speaks

5:00 pm ECB’s Villeroy speaks

6:00 pm GBP BOE’s Carney speaks at Harvard Kennedy School

6:10 pm AUD RBA’s Debelle speaks

8:30 pm AUD Australia Employment data

  • Thursday, October 17

4:30 am GBP Retail Sales data

8:30 am USD Philly Fed Manufacturing Index, Housing data, Jobless claims

8:30 am CAD Manufacturing sales data

9:15 am USD Industrial Production data

11:00am USD Crude Oil Inventories

1:30 pm ECB’s Villeroy speaks

2:00 pm USD Fed’s Evans takes part in a panel

2:00 pm EUR ECB’s Visco speaks in DC

4:20 pm USD Fed’s Williams speaks

4:30 pm EUR ECB’s Knot and De Cos speaks in DC

7:30 pm JPY National CPI data

10:00 pm CNY China Q3 GDP data

10:00pm CNY China Industrial Production and Retail Sales data

  • Friday, October 18

9:00 am EUR Bank of Italy (BOI) release quarterly economic bulletin

9:00 am USD Fed’s Kaplan speaks

10:00 am USD CB Leading Index

10:05 am USD Fed’s George speaks

Markets

USD

The fate of the dollar firmly lies in the hands of the leaders of the world’s two largest economies. The dollar could see a major reversal if we see a trade truce that leads to greater optimism that a broader deal will be reached before the 2020 election. Monetary policy also plays an important, but for now the Fed’s lackluster pace of rate cuts is doing little to boost bearish USD bets. The interest rate differential is narrowing, but the dollar is still delivering a positive return and that will make life harder for traders to keep longer term bets against it. The next Fed policy meeting is on October 30th and we won’t see any major releases except for the advance Q3 GDP which isn’t released until hours before the Fed makes their next policy decision.

The dollar remains primarily focused on any major update with the trade war, Fed policy, and any significant risk-off trading days. Geopolitical risks could drive a strong haven bid for the dollar and we could see a temporary dollar rally on a flare up with Iran or further intensification with the Turkey/Syria war.

Bitcoin

Bitcoin seems to have found strong support around the $8,000 level. Regulatory scrutiny has heavily been priced in and we could see the crypto space focus more on both institutional and mainstream acceptance in the coming weeks.

With no major updates on the regulatory environment, pending ETF proposals or crypto conferences, we could see Bitcoin remain in broadening channel

Oil

Geopolitical risks from Ecuador, Iraq, Iran and Saudi Arabia should keep oil traders nervous about maintaining any longer-term bearish bets. A possible trade truce could provide a boost for demand outlooks globally. The steady build we have seen in recent weeks with US stockpiles is having less of an impact of late.

Oil trade should remain volatile but be slightly tilted for further upside. A major collapse in trade talk remains the main risk for another selloff with energy prices.

Gold

Political drama, trade tensions and risks of global military conflicts should provide a strong enough backdrop for gold to remain bid.  The partial trade deal will likely be scrutinized and the only see a limited selloff.  Volatility to remain high for gold traders and we could see some exaggerated moves on the break of the $1,530 an ounce level. To the downside, $1,465 remains critical support.

USD/MXN

US-China trade negotiations will set the direction of the Mexican peso. The MXN was on a downward spiral at the beginning of the week as China was seen talking a harder stance on trade with the US ahead of their talks in Washington. On Wednesday the position has softened somewhat by comments showing an open mind to a limited agreement, similar to the one just signed between the US and Japan.

Inflation remains tame in Mexico, giving the central bank room to cut its benchmark rate. The interest rate stands at 7.75% and leaves the Banxico plenty of flexibility going forward. Economic red flags have been popping up as foreign and domestic investment is down, and the gains in exports will not be enough to return the country to expansion. Mexico avoided a technical recession by having no growth in the second quarter. If it had fallen it would have marked two quarters of negative growth.

Immigration pressure from the US as 2020 presidential elections get underway. USMCA under the microscope as Democrats will not give Trump and easy political win. Domestic reforms have lagged rest of the region and political decisions are making investors uneasy.

Politics

Brexit

One week to go until the EU council meeting, at which it was hoped a Brexit deal would be agreed and ready to be signed off by all sides prior to the 31 October deadline. That is now looking very unlikely although talks will continue over the next week to work through the significant issues that still exist. Ultimately, it’s in neither side’s interest to compromise until much later in the day so we can expect more movement either later in the week or, more likely, later in the month.

The next week is likely to be comment heavy, with both sides aggressively stepping up the PR offensive which means more headlines and more volatility. UK instruments remain vulnerable to no-deal, while a short extension could provide near-term reprieve for the pound.

Spain

Snap elections scheduled for 10 November after the Socialist Party failed to form a coalition government, five months after winning the election.   Minimal risk. EUR not responsive to Spanish politics, election will be fourth in four years.

Argentina

Kristalina Georgieva started her mandate as head of the IMF this week and did not mention Argentina by name in her inaugural speech, but it will be top of her agenda. The country is nearing a default on its debt following the defeat of the pro-market president in the primaries. The election defeat by President Macri and the almost definitive victory by opposition candidate Alberto Fernandez has put serious doubts on the repayment of the debt already allocated to the South American nation.

The IMF has put on hold its disbursement of the next tranche of credit awaiting the results of the elections. After talking to all candidates last month it did not get enough warranties to greenlight the loan amount to be transferred.

As presidential elections approaches (October 27th) Alberto Fernandez’s lead appears insurmountable for Macri. An Argentinean default would rock emerging markets. IMF did not address Argentina, but a default could bankrupt the fund.

Hong Kong

The banning of wearing masks at anti-government rallies back-fired, resulting in rising tensions, more violence and the closing of some subway stations. The first direct interaction between protesters and mainland forces (simply a warning of arrest) has not escalated (yet) but it is difficult to see any light at the end of the tunnel.

Data releases are quite sparse into the end of the month, but there’s no doubt the protests are having an adverse impact on the economy. Last week’s rebound in the Hang Seng appears to be a blip and we’re heading lower this week. USD/HKD is almost at the top of its permitted trading band.

China

A mini-trade deal will heavily be scrutinized over the next couple of weeks as traders look to see if it will be reasonable to expect for a broader deal to be reached. On the data front it’s a busy week next week. Trade data is out on Monday, inflation numbers on Tuesday (not an issue for the PBOC at the moment) while retail sales, industrial production and fixed asset investment on Friday will have significant downside risks. Q3 GDP numbers also on Friday will grab the headlines. A deeper slowdown from the 6.1% expected from 6.2% in Q2 will wipe risk appetite off the slate.

PMI data was better than expected and the only data point of note next week will be new loans data on Thursday. Loans have been increasing at a tremendous lick for the past 10 months, suggesting stimulus is still flowing into the economy.

North Korea

It’s stalemate in the low-level nuclear talks between the US and North Korea with North Korea expectations and US concessions poles apart. Frictions have appeared with Japan too after a North Korean fishing trawler crashed into a Japanese patrol ship. Maybe Trump is giving up on any headline-grabbing peace deal as he focuses on impeachment, trade deals and next year’s elections.

Localised sabre rattling seems to be the norm, but an escalation in capabilities when it comes to missile firing would be a shock and negative for risk, from a geopolitical perspective.

India

The feel-good factor from the corporate tax cuts has evaporated quite quickly. India’s Q3 reporting season started today.

Wholesale inflation is on a downward path, and so is the economy, so the RBI rate cut at the start of the month could be followed by another one. The next meeting isn’t until December 5, so we should have an idea of the impact of the last rate cut.  Kashmir still remains a powder keg that could escalate and grab the headlines very quickly.

Weak earnings would pressure the IN50 index.  While not a global game-changing economy, an eventual RBI move would add to the list of dovish central banks.  An escalation of friction between the two neighbours could hit risk appetite in the region and force superpowers from both East and West to be dragged into the skirmish and forced to choose sides. That would be a huge negative for risk appetite.

Australia

The September employment report is due next Thursday and has become a major indictor for the RBA to focus on for its rate policy. Another weak report will heighten calls for another rate cut before year-end. Market pricing now suggests a near 50% chance of a 25 bps cut by December.

Talk of another cut post-jobs data will pressure the AUD across the board.  Without any news of a trade deal, or positive developments, this week will enhance the pressure on the commodity currency.

Canada

The October 21st election nears and many expect the winner to be dictated by who wins the suburbs around Toronto. Trudeau’s party seems set to win the most seats, but the popular vote could be a toss up against the Conservatives.  The loonie could see some gains if the Scheer’s conservative party wins. The election results will not likely derail any major currency flows that stem from trade war updates.

Turkey

Turkey’s offensive in Northern Syria is destabilizing the region. The US is concerned that ISIS military camps are at risks and their Kurdish partners are in harms way.   The lira could see a violent move if the 6.00 handle breaks. If the situation in Syria remains unstable and the US delivers sanctions, we could see the summer highs of 6.3756 tested.

Source: marketpulse

Following a week that was filled with critical updates with the US-China trade war, markets will now focus on the beginning of earnings season, Brexit negotiations, a wrath of Chinese data that will look to see if GDP growth will test below 6% for the...

READ MORE

GBP/JPY technical analysis

GBPJPY_tech-analysis_10.101.2019_Forex_FXPIG

Gains some follow-through traction and adds to the overnight modest uptick.
Sustained move beyond 200-hour SMA needed to confirm any bullish bias.

The GBP/JPY cross to gain some follow-through traction for the second consecutive session on Thursday and recover further from one-month lows set earlier this week. Bulls, however, struggled to capitalize positive momentum and the uptick stalled near a resistance marked by the top end of a three-week-old descending trend-channel.

The mentioned hurdle coincides with 23.6% Fibonacci level of the 135.75-130.43 recent leg down, which should now act as a key pivotal point for short-term traders. This is closely followed by 200-hour SMA resistance near the 131.90 region, which if cleared will pave the way for a further near-term appreciating move.

Meanwhile, technical indicators on the 1-hourly chart have been gaining bullish traction over the past 24-hours but are yet to catch up on 4-hourly/daily charts. Hence, it will be prudent to wait for a sustained break through the mentioned barrier before positioning for a move towards 38.2% Fibo. level around the 132.40-45 region.

On the flip side, the 130.80 horizontal zone now seems to protect the immediate downside, which if broken might accelerate the fall towards the key 130.00 psychological mark.

Source: fxstreet

The GBP/JPY cross to gain some follow-through traction for the second consecutive session on Thursday and recover further from one-month lows set earlier this week. Bulls, however, struggled to...

READ MORE
Load More

OH SH*T CALENDAR

UPCOMING FOREX NEWS EVENTS
  • LOADING...

  • DATE

    CURRENCY

    EVENT

    IMPACT

  • Loading events...