The USD/JPY strengthened six days in a row

Good morning from rainy Hamburg and welcome to our last Daily FX Report for this week. An EU summit has begun in Brussels aiming for agreement on carbon emission cuts which would make Europe a global leader again in climate policy. They have proposed a 40 percent cut in CO2 emmisions by 2030 and will aim to boost the use of renewable energy to 27 percent in the total energy mix. Beyond that the gunman who attacked Canada’s capital acted alone.

Anyway, we wish you a relaxing weekend.

Market Review – Fundamental Perspective

Yesterday the Dow Jones Index of shares climbed 1.3 percent and the Standard & Poor’s Index rose 1.2 percent. On Thursday reports showed that retail sales in U.K. dropped more in the past month than the market had estimated and added concern that economy is loosing momentum. The Office for National Statistics said yesterday the volume of Britain’s sales including auto fuel weakened 0.3 percent from August. Bank of England policy maker Ben Broadbent said that the central bank will raise interest rates when economic headwinds fade. Today according to economist data might show that gross domestic product in U.K. only climbed 0.7 percent in the past quarter. As a result the GBP decreased versus most of its 16 major peers. It tumbled for a third day against the USD to 1.6021, the longest streak in almost three weeks. The EUR/GBP gained 0.1 percent to 0.7892.
Yesterday a U.S. report revealed the fewest initial jobless claims in 14 years countered bets the U.S. economy will not suffer from faltering global growth. Initial jobless claims fell to 281,000, the lowest since May 2000, from 284,000 the week before. Furthermore the Federal Reserve Bank of Chicago’s national index of economy activity climbed more than predicted to 0.47 in the past month, versus a forecast of 0.15 and an August reading that was revised down to minus 0.25. The USD/JPY strengthened six days in a row, the longest since August. It rose 1.1 percent to 108.27. Yesterday data also showed that manufacturing in the euro area expanded more than estimated, which might be a sign that the economy may have moved one step away from another contraction. The euro-reagion factory PMI advanced to 50.7 in October from 50.3 and the measure for services was at 52.4. Reading below 50 indicates contraction. The EUR/JPY rallied 1 percent to 136.84 and the EUR/USD was nearly unchanged at 1.2646.

Daily Technical Analysis

AUD/USD (4 Hours)

As you can see our forecast from Monday came true and the pair continued to move in a sideways trend between the resistance level around 0.8830 and the support line around 0.8670. As long as these two barriers remain intact the current trend will continue.

Support & Resistance (4 Hours)