American FX Outlook: quiet start to a busy week, Dollar rules

Valeria Bednarik FXStreet

What happened?

The American dollar opened higher against all of its major rivals, compliments to a weaker yen as a result of PM Abe's ruling coalition victory in the snap election, which got more than two-thirds of Parliament's 465 seats.

US tax reform, also a major factor in market's price action, after the Senate passed the budget bill late last week. House Speaker Paul Ryan told members that he wants tax reform enacted by the end of the year.

The Nikkei up-roared, adding roughly 240 points and leading to gains in European equities. Wall Street is poised to open higher and at record highs, following the lead of its overseas counterparts.

EUR's strength dented by local political jitters, but investors cautious ahead of ECB's meeting later this week.

Upcoming key events for the day

The macroeconomic calendar is scarce, which means that stocks and US-yields will remain as the main market motor. EU´s October preliminary Consumer Confidence index the only relevant figure, ahead of Asian opening. On Tuesday, attention will center on Markit preliminary PMIs for the EU and the US.

Majors' technical outlook

The dollar is broadly higher across the board, although the absence of macroeconomic news keeps majors within familiar levels. Commodity-linked currencies and the yen are the weakest heading into the US opening, although the EUR has its good share of weakness too. The British Pound is the one fighting back the most, also weak anyway.

EUR/USD: Bearish 1.1720 immediate support en route to 1.1660, where it bottomed in August and September.

GBP/USD: Neutral, risk turns bearish below 1.3145, Fibonacci support.

AUD/USD: Bearish looking to test 0.7332, October low.

USD/JPY: Bullish, but with a bearish gap in the way. 114.40 major bullish target, May and July high.

USD/CAD: Bullish, rally continues despite oil holds on to gains, amid poor Canadian data released on Friday.

Gold: Bearish on dollar's, equities strength. Trading at 3-week lows, en route to October low at 1,260.54.

Economic Calendar

GMT	Event	Actual	Consensus	Previous
Monday, Oct 23
07:00	EUR ECB's Praet Speech
10:00	EUR German Buba Monthly Report
10:00	GBP CBI Industrial Trends Survey - Orders (MoM)	-2	9	7
12:30	USD Chicago Fed National Activity Index	0.17	-0.10	-0.37 Revised from -0.31
12:30	CAD Wholesale Sales (MoM)	0.5%	0.5%	1.5%
14:00	EUR Consumer Confidence		-1.1	-1.2
15:30	USD 3-Month Bill Auction			1.09%
15:30	USD 6-Month Bill Auction			1.24%
Tuesday, Oct 24
00:30	JPY Nikkei Manufacturing PMI		53.1	52.9
06:45	EUR Business Climate		110	110
07:00	EUR Markit Services PMI		56.9	57.0
07:00	EUR Markit PMI Composite		57.0	57.1
07:00	EUR Markit Manufacturing PMI		55.9	56.1
07:30	EUR Markit PMI Composite		57.6	57.7
07:30	EUR Markit Services PMI		55.6	55.6

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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