Good morning from wonderful Hamburg. The new week and the new month have started with still a lot of hopes of an economic pick-up while the major central banks will decide if they cut interest rates this week. Nevertheless we wish you a successful and nice week.
Market review
The USD steadied on Monday, after reaching its biggest monthly gain in more than 17 years in October. Investors expect another round of interest rate cuts this week by the world’s major central banks. The European Central Bank, the Bank of England and the Reserve Bank of Australia are all expected to reduce interest rates. The plan is to support their struggling economies from the threat of a looming global recession. They’re all expected to reduce 50 bps like the U.S. Federal Reserve last week as the bank reduced the rates to 1% as well as the Bank of Japan with a cut of 20 bps. Emerging Markets like China and India have also reduced rates last week. The EUR/USD is currently trading at 1.2857. The pair has lost around 9.6% in October. The single EUR had its worst monthly performance since its launch in 1999. The USD/JPY is still trading below 100 but is up from a day-low of 98.19 to 99.17.
The Toronto-Dominion Bank deems it likely that the Canadian economy will formally tip into a recession at the end of this year, while there are falls in export activities and sidelined business investments. “The Canadian economic outlook is a reflection of the crossfire of global financial turbulence and a deeper U.S. recession.” The TD said. The CAD/USD is still pending around the 1.2 level. The pair trades now at 1.1951 after touching a day-high of 1.2116.
AUD/USD
Since the middle of July the AUD/USD has been trading in a bearish trend channel with a resistance level at 0.85. After touching the lower level of the channel twice the market came back again and it trades currently at the upper trend line. If the pair breaks this support level we could expect a rising phase.
USD/CHF
Since the middle of July the USD/CHF has been trading in a rising phase. As you can see the market touched the upper Fibonacci fan line twice but did not give up its bullish trend movement. If the market doesn’t enter the Fibonacci fan lines, it could continue the upward movements.
