Market Recap
|
Instrument |
% |
Close Price |
|
CRUDE OIL |
1.28% |
57.90 |
|
USDCAD |
0.40% |
1.2518 |
|
USDJPY |
0.33% |
112.19 |
|
EURUSD |
-0.20% |
1.1796 |
|
AUDUSD |
-0.45% |
0.7851 |
|
XAUUSD |
-0.62% |
1295.79 |
Prices as of previous day instrument closing.
-
US indices closed in positive territory on Monday and made another record close as well. The DJIA rose 85.24 points or +0.37% at 22,956 while the Nasdaq Composite gained 18.2 points or +0.28% to 6,624.04. S&P500 rose 4.47 points or +0.18% to 2,557.64. Risk appetite is still very high as Q3 corporate earnings, after weak data from financial companies last week, are matching investors expectations.
-
The USD rose against GBP,CAD and Swiss Franc. During the Asian session the Reserve Bank of Australia released the Minutes of the 3rd of October meeting. The GDP growth in June confirmed that previous quarter weakness was temporary and there are expectations of strengths in employment. Members agreed that is important to continue to assess the various risks in household balance sheets. Further appreciation of AUD could decrease growth and bring inflation above forecasts.
-
XAUUSD could not keep area 1,300 $/oz and other precious metals as well went in profit taking. Palladium slid below 1,000 $/oz and closed at 075.05 $/oz while XAGUSD lost 1.09% at 17.22 $/oz. XPT dropped 1.56% and closed at 931.03 $/oz.
Charts of the day:
US dollar Index
The US dollar Index retraced 50% of the bearish wave started the 6th of this month. Above the 61.8% Fibonacci retracement at 93.86 the gauge could gain speed and test the multiple top in area 94.26. In case of a breakout of this resistance is very likely that EURUSD would trade below this month low 1.1673.
The Bloomberg Cumulative FX carry trade Index
The Bloomberg Cumulative FX carry trade Index shows that the total return went above the most recent high but shorting the USD and going long on a basket of emerging market currencies could became a difficult strategy for pull and push factors as well. When the FED hikes rates there is an outflow from emerging markets a risk premium imbalances usually arise. There are also local risk factors in EM currencies that are having significant weight for leveraged positions as volatility went up.
.
Economic Calendar and Today Session (CET Time)
|
Tuesday October 17, 2017 |
Forecast |
Previous |
||
|
10:00 |
EZ |
ECB’s Constancio speaks at a conference on financial stability in Lisbon |
|
|
|
10:30 |
GB |
Consumer Price Index – Core (Sep; YoY) |
2.7% |
2.7% |
|
10:30 |
GB |
Producer Price Index Output (Sep; YoY) |
3.3% |
3.4% |
|
10:30 |
GB |
Retail Price Index (Sep; YoY) |
4.0% |
3.9% |
|
11:00 |
EZ |
Consumer Price Index – Core (Sep; YoY; Final) |
1.5% |
1.5% |
|
11:00 |
DE |
ZEW Survey: Current Situation (Oct) |
88.5 |
87.9 |
|
11:00 |
DE |
ZEW Survey: Economic Expectations (Oct) |
20.0 |
17.0 |
|
11:30 |
EZ |
ECB’s Praet is speaking at “More than ever, Europe matters” conference in Brussels |
|
|
|
12:15 |
GB |
BOE’s Carney testifies before the Treasury Committee in London |
|
|
|
14:30 |
US |
Import Price Index (Sep; MoM) |
0.6% |
0.6% |
|
15:15 |
US |
Industrial Production (Sep; MoM) |
0.3% |
-0.9% |
|
19:00 |
US |
Fed’s Harker speaks on Equitable Transit in Scranton |
|
|
As the Bank of England is expected to hike rates early November, it is key to closely watch the CPI figure at 10:30 CET. With the headline CPI figure forecasted at 3% and being well-above the 2% target, further risk to the upside is possible. PPI and RPI are also set to be released at 10:30. Tomorrow, investors should also follow the unemployment rate and average earnings. Should these readings turn out positive for the UK, it will almost certainly confirm the path for a rate hike on the 2nd of November.
More inflation data is coming from the Eurozone as Eurostat will release the final reading for September. Downside risk is plausible in the forecasted 1.5% core figure. The other release is Germany’s Economic Sentiment index. After a significant 7 points jump in September, the current economic expectations are forecasted to gain another 3 points. Meanwhile in Spain, investors are awaiting next moves in the political crisis which could affect the euro and the Spanish stock market.
Several central bankers are speaking throughout the day. Constancio and Praet from the ECB are delivering speeches at 10:00 and 11:30 CET respectively. In the afternoon, BOE’s Governor Carney testifies before the Treasury Committee in London at 12:15. Fed’s Harker speaks at 19:00 on Equitable Transit. Other things to watch for the US are the import price index and industrial production figures. The import price index (14:30 CET) is expected to remain unchanged at 0.6% month-over-month, while industrial production (15:15 CET) is forecasted to have risen 0.3% in September. The earnings season also continues with Goldman Sachs and Johnson & Johnson being the noteworthy companies to release their Q3 results. US stocks are likely to open higher should their earnings beat estimates.
Technical Analysis
EURUSD (Daily timeframe)
The pair is losing ground for the third consecutive session and it may test the support in area 1.665. Below this level the rate could slide to 1.1425, the 38.2% Fibonacci retracement of the bullish wave started on January. A breakout of the supply line generated last month could lift EURUSD to 1.2092, its 2017 top.
USDCAD (Daily timeframe)
USDCAD is making lower highs and could make soon a breakout of the medium term supply line. Above 1.26 the pair could rise to 1.2929 and above this level, that is a 50% retracement of the bearish wave started on May, it could reach the psychological level 1.3. Below 1.23 the pair it may test its 2017 low at 1.2062.
USDZAR (Daily timeframe)
The South African Rand found support on its 200 MA daily and could test area 14. Above this level carry trade reversal could increase. If the pair would slide below 12.65 it may test thus year low at 12.31.
USDMXN (Daily timeframe)
USDMXN went above its 200 MA and could test 20 soon. Above 20.28,the 61.8% Fibonacci retracement, the rate would could make a multiple top near its 2017 highs. Only below 18.3 the pair could see a bearish wave that could bring USDMXN to test its 2017 lows.
The information provided in this document is marketing communication and does not contain investment advice. ALB Forex Trading Ltd. will not accept any liability for any loss or damage which may arise from the use of such information. There is a high level of risk involved with trading leveraged products such as forex and CFDs. You should not risk more than you can afford to lose. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. It is the responsibility of the Client to ensure that the Client can accept the Services and/or enter into the Transactions in the country in which the Client is resident. If the risks involved seem unclear to you, please seek independent advice. ALB Forex Trading Ltd. is authorised and regulated by the Malta Financial Service Authority (License No: IS/79767). Our registered address is 48, Casa Roma, Sir Augustus Bartolo Street, XBX 1099. Ta`Xbiex, Malta. Tel: +356 2371 6000.
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