Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from beautiful Hamburg and welcome to our Daily FX Report. Turkey announced that they will allow Iraqi Kurdish fighters to reinforce fellow Kurds in the Syrian town of Kobani on Turkey’s border. In addition the United States air-dropped arms to help the Kurds there resist an Islamic State assault. In the meantime an emergency military deployment with stealth ships and helicopters were hunting for a foreign submarine in the Stockholm archipelago and caused Sweden’s largest military mobilization since the Cold War. Concerns were rising about Russian Intentions in the Baltic Sea region.
Anyway, we wish you a great trading day.
Market Review – Fundamental Perspective
Last Friday the Dow Jones Index of shares climbed 0.1 percent and the Standard & Poor’s Index rose 0.9 percent. Investors pushed out expectations for the Federal Reserve to raise interest rates amid signs of slowing global growth. Dallas Fed President Ricahrdc Fisher said he continued to be hawkish on rates but wanted to be sensible. The USD dropped against higher- yielding counterparts and was little changed at 106.95 JPY. The EUR/USD climbed 0.3 percent to 1.2800 and the EUR/JPY strengthened 0.4 percent to 136.89. The AUD/USD gained 0.5 percent to 0.8788 and the NZD fetched 0.6 percent to 0.7967 USD. Yesterday Bank of Japan Governor Haruhiko Kuroda said that policy makers would maintain monetary easing until the inflation rate stabilizes at 2 percent. Each month Japan central bank buys about 7 trillion yen ($65.3 billion) in bonds each month.
Reports showed that U.K. home prices advanced 2.6 percent in October for a second month and consumer confidence increased. Furthermore U.K. government bonds went up for the first time in three days while economists estimated that the Bank of England’s first interest-rate increase since 2007 might happen in February and not next month. Beyond that the market forecasted that reports at the end of this week will shot U.K. gross domestic product expanded for a seventh consecutive quarter. This Thursday Minutes of BOE policy makers’ most recent meeting are going to be published. The GBP rallied 0.2 percent to 1.6139 USD and the EUR/GBP strengthened 0.1 percent to 0.7922. Meanwhile yesterday Germany and France sought to paper over deep differences about how to bolster a faltering European economy. Joint proposals should be unveiled by early December.
Daily Technical Analysis
EUR/USD (4 Hours)
At the beginning of the last week the currency pair moved out of the bearish trend channel and started to increase inside a new bullish equidistant channel. According to the moving average further gains inside the channel are more than likely while the Demarker has still room to raise.
Support & Resistance (4 Hours)
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Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.