Lukman Otunuga
ForexTime (FXTM)
Global Market
The already vulnerable Sterling was dealt a sharp blow on Tuesday as CPI y/y for the UK printed below expectations at -0.1%. Inflation has failed to pick up in the UK and this combined with the chain of negative PMI data experienced in September will push back the BoE’s interest rate increase to 2016. The GBP may be exposed to further losses and the risk-off environment which has been a product of market instability will continue to leave the GBP vulnerable moving forward. Market participants will digest this weak inflation reading as a signal that the BoE will not be raising rates until at least the second half of next year and because of this, the GBP may continue to decline heavily against most of its counterparts.
An unappetizing trade balance from China illustrating a decline in imports has shaken investor confidence. With concerns over the health of the China economy renewed, a fresh wave of risk aversion rippled through the Asian session. The world’s second largest economy is still facing difficulties with trade growth and this may result in additional downwards pressures. Most Asian equities that had enjoyed an extended period of gains last week have ventured back into red territory with the Shanghai Composite meandering between gains and losses concluding +0.17% higher. Sentiment for the China markets remains bearish and if CPI y/y for China fails to meet expectations on Wednesday, this may lead to additional vulnerability. This vulnerability offers a compelling argument as to why further monetary policy from China may be impending in the near future.
Declining commodity prices complimented with the slowdown in Asia has punished the cultivation of Europe’s 2% inflation target. Tuesday’s unimpressive German ZEW Sentiment of 1.9 which has drawn closer to zero, indicates that the European economy may be under pressure. Additional Dollar weakness derived from the diminishing expectations of a 2015 US rate hike has resulted in the EUR appreciating against the USD which has mounted more pressures on the ECB. The unexpected weakness in inflation from Europe in August and September may act as a reason for the ECB to induce additional QE measures in the near future.
USDCAD
The USDCAD is technically bearish on the daily timeframe. Prices are trading below the 20 Daily SMA and the MACD has crossed to the downside. A breakdown below the 1.2900 support may open a path to the next relevant support at 1.2650.
EURGBP
The EURGBP remains technically bullish on the daily timeframe as long as prices can keep above the 0.7330 support. A breakout above the 0.7450 resistance may open a path to the next relevant resistance at 0.7600.
EURAUD
The EURAUD is technically bearish on the daily timeframe. Prices are trading below the daily 20 SMA and the MACD has crossed to the downside. Previous support may become resistance which should aid a decline to the next relevant support at 1.5250. A move back above 1.5800 suggests bearish weakness.
GBPAUD
The GBPAUD is technically bearish on the daily timeframe. A breach below the 2.0800 support may open a path to the next relevant support at 2.0500.
Disclaimer:This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.
Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 90% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Recommended Content
Editors’ Picks
AUD/USD dips below 0.6600 following RBA’s decision
The Australian Dollar registered losses of around 0.42% against the US Dollar on Tuesday, following the RBA's monetary policy decision to keep rates unchanged. However, it was perceived as a dovish decision. As Wednesday's Asian session began, the AUD/USD trades near 0.6591.
EUR/USD edges lower to near 1.0750 after hawkish remarks from a Fed official
EUR/USD extends its losses for the second successive session, trading around 1.0750 during the Asian session on Wednesday. The US Dollar gains ground due to the expectations of the Federal Reserve’s prolonging higher interest rates.
Gold wanes as US Dollar soars, unfazed by lower US yields
Gold price slipped during the North American session, dropping around 0.4% amid a strong US Dollar and falling US Treasury bond yields. A scarce economic docket in the United States would keep investors focused on Federal Reserve officials during the week after last Friday’s US employment report.
Solana FireDancer validator launches documentation website, SOL price holds 23% weekly gains
Solana network has been sensational since the fourth quarter (Q4) of 2023, making headlines with a series of successful meme coin launches that outperformed their peers.
Living vicariously through rate cut expectations
U.S. stock indexes made gains on Tuesday as concerns about an overheating U.S. economy ease, particularly with incoming economic reports showing data surprises at their most negative levels since February of last year.