Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from beautiful Hamburg and welcome to our last Daily FX Report for this week. Ukraine, Russia and the European Union signed a deal on Thursday on the resumption of Russian natural gas supplies to Ukraine for winter after several months of delay during the conflict in Ukraine. European Commission President Jose Manuel Barroso, who witnessed the three-way signing ceremony in Brussels as he prepares to leave office on Friday, said: "There is now no reason for people in Europe to stay cold this winter."
Anyway, we wish you a successful trading day and a relaxing weekend!
Market Review – Fundamental Perspective
As the U.S. economy expanded more than forecasted in the thirs quarter to confirm the Federal Reserve`s decision to end its bond-buying program, the dollar touched a three-week high against its major counterparts. The dollar index climbed as far as 86.491 - a high last seen on Oct. 6 - after U.S. gross domestic product grew at an annual pace of 3.5 percent in the third quarter, beating forecasts for 3.0 percent. The index has since eased back to 86.174, but was still up 0.5 percent so far this week. Against the yen, the greenback bought 109.32, near a fourweek high of 109.47 reached overnight. The euro fell as low as $1.2545, but managed to recover to $1.2606. The GDP report should go some way in justifying the Fed's optimistic stance on the economy when it announced the end of its monthly bond buying stimulus program on Wednesday. The New Zealand dollar climbed to $0.7837, turning around from a slide to a fourweek low of $0.7765 on Thursday after the Reserve Bank of New Zealand softened its tightening bias. The Canadian dollar held steady against a stronger greenback on Thursday as investors limited their bets and mulled over the implications of the more hawkish tone adopted by the U.S. Federal Reserve and comments by the governor of the Bank of Canada. The Canadian dollar closed at C$1.1196 to the U.S. dollar, or 89.32 U.S. cents, little changed from Wednesday's finish of C$1.1191, or 89.36 U.S. cents. Both benchmark Brent and U.S. crude gained about 1 percent a day earlier as U.S. crude stockpiles rose less than expected last week, ending two weeks of builds that pressured the market. Brent crude for December delivery settled down 88 cents a barrel at $86.24, after falling to as low as $85.92. Front-month U.S. crude finished down $1.08 at $81.12, after a session low at $80.80.
Daily Technical Analysis
EUR/USD (Daily)
Since June the euro experienced a sharp decline versus the dollar until the currency pair dropped to the support level at 1.2508 where it rebounded. After that we observed a small recovery of the European shared currency in the last weeks, but the USD was able to regain its strength and forced the EUR to decline. At the moment the pair is traded slightly above the first support line and it remains to be seen whether this support will hold. The indicators support the thesis that we may see a sideward movement or even a tiny appreciation of the EUR against the USD in the near future.
Support & Resistance (Daily)
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