Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from beautiful Hamburg and welcome to our first Daily FX Report for this week. Yesterday the Spanish government said that the nurse who contracted Ebola appears to have overcome the deadly disease. The United States will issue strict new guidelines telling American health workers to cover their skin and hair when dealing with Ebola. Furthermore a recent discovered comet has past Mars and gives mankind the chance to study an object from the farthest reaches of space.
Anyway, we wish you a successful start into a new trading week.
Market Review – Fundamental Perspective
Last Friday the Dow Jones Index of shares climbed 1.6 percent and the Standard & Poor’s Index rose 1.3 percent. The ECB is going to take over as supervisor for the euro region’s top bank on November 4 and on October 26 it will announce which of Europe’s 130 largest bank have valued their assets properly and which have not, as well as whether banks need more capital to withstand another economic crash. Anticipation of the results have already affecting some bank shares.
The USD dropped for a second consecutive week for the first time since June as traders pushed out expectations for U.S. interest-rate increases to the end of 2015 with global economic growth faltering. The EUR/USD strengthened 1.1 perecnt to 1.2761, the largest weekly rose in six months. Beyond that investors sought a refuge which lead to a rising JPY versus its most major currencies. The USD/JPY declined to a five week low and was at 107.10. The EUR/JPY appreciated to 0.3 percent to 136.30 and the GBP/USD traded at 1.6080. Concerns that the global economy is loosing momentum roiled the stock and bond market last week. Today France’s finance and economy minsters will fly to Berlin and will try to convince the Germans of their plans to improve competitiveness and to press for more investment. Germany itself cut its forcast to 1.2 percent from 1.8 percent, and reduced its estimate for next year. China will set an economic growth target of about 7 percent for 2015, tolerating the weakest expansion in a generation as leaders fight against debt risks and imbalances. Nevertheless Bank of England’s chief economist said yesterday in an interview that investors have over-reacted to signs of economic slowdown.
Daily Technical Analysis
XAU/USD (Daily)
At the support level around 1189.3 the bulls took control of Gold and started a recovery which came recently to an end at the resistance level around 1242.1. Now the XAU/USD is tackling with this level while it is close to the highest Bollinger band. The Momentum is Further decrease might be seen if the pair fails to enter the upper channel of the fan by crossing the close resistance level.
Support & Resistance (Daily)
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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.