It has been an eventful 24 hours in the trading realm following a veritable lack of activity to start the week thanks in large part to a couple of central bank meetings and some telling data about both European and US economies. As covered extensively yesterday (here and here), the Federal Reserve decided to completely taper away Quantitative Easing, a move that was widely anticipated, but also acknowledged more succinctly that the economy was improving to their liking. The positive vibes from the Fed were substantiated this morning as the Advanced US GDP for the third quarter showed stronger growth (3.5%) than expected (3.1%), and combined with Q2 (an upwardly revised 4.6%), was the strongest 6 month showing in a decade. Was the Fed privy to this before they released their statement yesterday? One can only theorize.
In addition to the US proliferation of news, the Reserve Bank of New Zealand shifted away from their hawkish stance to mimic their Australian brethren and go neutral while German and Spanish inflation data regressed even further, sporting negative values. If the European Central Bank didn’t already have a good argument for initiating their QE program, the continuously declining inflation figures in the region tips it in to the almost necessary category. Despite the positivity in the US and the negativity in the European Union, the EUR/USD has bounced off the lows following yesterday’s big drop.
The bounce in the EUR/USD also happened to coincide with a confluence of Fibonacci retracements and extensions that formed a Gartley pattern below 1.26. This level could be a staging point for another retracement to take place before we see an ultimate fall in this pair, which is the direction the ECB most likely wants to see it go.
_20141030154329.png "EURUSD")
Recommended Content
Editors’ Picks
EUR/USD retreats toward 1.0850 on modest USD recovery
EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD holds above 1.2650 following earlier decline
GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.
Gold climbs to multi-week highs above $2,400
Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.
Chainlink social dominance hits six-month peak as LINK extends gains
-637336005550289133_XtraSmall.jpg)
Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday.
Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.