British Pound rally could not help the FTSE100

Market Recap

XAGUSD         ▲ 0.43%         17.24
GBPUSD        ▲ 0.29%         1.3262
GBPJPY         ▲ 0.08%         148.9
EURCHF        ▼ -0.03%        1.1539
DJIA                ▼ -0.14%        22,841.01
EURUSD        ▼ -0.24%        1.1830

Prices as of previous day instrument closing.

  • US indices closed in negative territory and Q3 earnings were the main driver of risk appetite on equities.The financial sector  underperformed industrial goods as Bank of America Corp., JP Morgan Chase lost ground but Citi did even worse with a -3.43% loss as revenue from trading sank and the consumer credit division saw lower margin. DJIA closed down 31.88 points or -0.14% to 22,841 and the Nasdaq Composite slid 12.04 points or -0.18% to 6,591. In England the FTSE100 made a record close at 7,5556.24 with a +0.3% gain.

  • Quite a volatile session for the British Pound. The probability of a transition period and the plan in case no deal will be reached with the EU are mirrored in the price fluctuations of GBP and Cable had a 160 pips range yesterday.  EURUSD  retraced  after it rose for 3 consecutive session.  Both Kiwi and Aussie dollar rose against the Greenback thus they rallied with more energy against the EUR.

  • Precious metals rally continued and Palladium could test soon its 2017 top in area 1,000 $/oz. XAUUSD is trading below 1,300 $/oz but the medium term trend is still bullish and the recent FED concerns about inflation below the target helped the shiny metal. XAGUSD closed above its 200 day MA.

Chart of the day FTSE100 Record Close


ftse

The FTSE100 made a bullish breakout of the supply line that links lower highs and made also a pullback and a record close. The gauge today is losing ground and it chances to make another record close will depend also on its correlation with the British Pound. A weak GBP lifted UK stocks to unchartered territory but there are inflationary pressures that could trim savings and income.

ftse

Even GBPUSD is making higher highs and higher lows the pair is still below its pre Brexit level and is helping the stock market.  BoE monetary policy also did its part as interest rates at 0.25% (historical low) pushed investors to risky assets.

Economic Calendar and Today Session (CET Time)

Friday October 13, 2017

Forecast

Previous

08:00

GER

Consumer Price Index (Sep; YoY)

1.8%

1.8%

09:15

CHF

Producer and Import Price (Sep;YoY)

0.3%

0.3%

14:30

US

Retail Sales (Sep; MoM)

1.7%

0.2%

14:30

US

Consumer Price Index (Sep;YoY)

2.3%

1.9%

14:30

US

Consumer Price Index Core (Sep;YoY)

1.8%

1.7%

14:30

US

Fed’s Boston President Rosengren  Speech

 

 

16:15

EUR

ECB Vice President Vitor Constancio Speech

 

 

17:30

US

FOMC Member Kaplan Speech

 

 

19:00

EUR

FOMC Powell Speech

 

 

19:00

US

Baker Hughes Oil Rig Count

 

740

20:00

US

Monthly Budget Statement

$6B

$-10B

21:30         

 

CFTC Net Position on FX, Gold and Crude Oil

 

 

 

The last session of the week started with Chinese Trade Balance data that decreased its surplus in September. Germany CPI matched the consensus and Swiss Producer and Import Prices were above the consensus.  US Retail Sales and CPI data will be the main catalyst of today trading session. If Core prices on YoY should disappoint expectations the December rate hike probability could decrease.  Before the opening bell will be released in US Q3 earnings of Wells Fargo and Bank of America thus financial stocks could be more volatile than other sectors. Several FED officials will held speeches during the session.  The British Pound is gaining ground and is up for the 5th consecutive session.

 

Technical Analysis

EURUSD (Daily timeframe)

eurusd

The pair found resistance near the supply line and is trading between the 21 and the 55 daily MA. If EURUSD should close the session above 1.1890 buying pressure would increase. If the rate should drop below 1.18 it could test the 1.1665 support. Beneath this area bearish could be in control even the 200 day MA is near 1.12.

 

USDJPY (Daily timeframe)

usdjpy

USDJPY made a breakout of the supply but it did not make a bullish leg. Trading range activity followed the breakout with several bearish spikes. In case the pattern will show a fake breakout USDJPY could drop to 110 and then test its September lows in area 107.55. Above 113.7 and 114.5 the pair could rally to 118.66, its 2017 top.

 

GBPUSD (Daily timeframe)

GBPUSD

GBPUSD broke the short term supply line and could test the 21 day MA at 1.3361. A breakout of this dynamic resistance could lift the pair to 1.3420, the 61.8% Fibonacci retracement of the most recent bearish wave. The medium term is still bullish and only beneath 1.30 selling pressure should increase. The 200 day MA is now near area 1.28.

 

GBPJPY (Daily timeframe)

GBPJPY

GBPJPY looks ready to test its September top 152.86 after it retraced just a bit more than 38.2% of the bullish wave started in August. Yesterday bullish candlestick could bring more trend followers and only 147 the pair could slide to test its 55 MA near 145.5

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