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USDJPY without momentum, EURCHF 120 pips away from its 2017 high

Market Recap

USDTRY         ▲ 2.42%         3.70
GBPUSD        ▲ 0.58%         1.3142
EURUSD        ▲ 0.08%         1.1740
DJIA               ▼ -0.06%        22761
AUDUSD        ▼ -0.18%        0.7753
EURGBP        ▼ -0.52%        0.89
 

Prices as of previous day instrument closing.

  • US indicesclosed the first session of the week with light losses. The Nasdaq Composite lost 10.45 points or -0.16% at 6,579.31 while the S&P500 lost 4.6 points or -0.18% and closed at 2,544.33. Indices performance tomorrow and on Thursday will be linked to third quarter earning release of financial companies like BlackRock,Citi and JP Morgan Chase.

  • GBP rose yesterday after the selloff of the last week. The US dollar was not week across the board as it gained against the AUD, JAPY,NZD and CAD thus was the strength of the British Pound that lifted the pair. If better than expected data will be released today the Bank of England could see a November rate hike more likely than a rate hike on February. The Japanese Yen started a trading range of 120 pips   the 27th of September. General elections in Japan will be held on the 22nd of October and considering the narrow trading range is likely to see a breakout before elections day.  EURCHF it may test its 2017 top and EM currencies weakness could continue as both idiosyncratic and systematic are weighting in their performance against the greenback.

  • XAUUSD and XAGUSD rose for the second consecutive session and Crude Oil WTI tried to retrace the selloff of last Friday. Feeder Cattle Futures could make a 2017 top and Natural Gas closed at 2.83, -1.05%.

Chart of the day

DXY

The US dollar Index could test 93. At this level there is the 38.2% Fibonacci retracement of its recent uptrend. There are also the 21 and 55 daily MA.  Bullish wave expected above 94.4

Economic Calendar and Today Session (CET Time)

Tuesday October 10, 2017  ForecastPrevious
10:30 GBManufacturing Production (Aug; YoY)1.9%1.9%
10:30GBIndustrial Production (Aug; YoY)0.9%0.4%
10:30GBTrade Balance (Aug)-2.800B-2.872B
14:00GBNIESR GDP estimate (Sep) 0.4%
14:15CAHousing Starts (Sep)212.0K223.2K
16:00USFed’s Kashkari speaks at Regional Economic Conference  
20:00CABOC’s Wilkins speaks at IMF panel  

UK Manufacturing rose for the first time this year in July and is estimated to rise 0.2% month-over-month, while industrial production is forecasted to rise 0.9% year-over-year. With uncertainties surrounding Brexit and a weak sterling failing to lift the trade balance, it is crucial to see whether the UK economy can pick up. At 14:00 CET, The National Institute of Economic and Social Research will release the estimate of the UK’s GDP growth in the three months to September.

Canada’s housing starts rose 0.6% in September, a third consecutive increase. It is forecasted to pull back a little to 212,000 units. Ontario home builders don’t look concerned about the housing market as they set for the strongest year since 2003.

Later today, speeches of Fed’s Kashkari and BOC’s Wilkins are scheduled at 16:00 and 20:00 CET respectively.

In the FX market catalyst events could be the FED Minutes tomorrow and Mario Draghi speech on Thursday. Today EURUSD could trade in a range while investors would pay more attention to the British Pound. The Canadian dollar, that lost more than 500 pips since its September low 1.2059, could see an increase of intraday volatility as the Housing Starts data would check the health of the real estate market, which has seen prices overperforming US prices since 2005.

Technical Analysis

EURUSD (Daily timeframe)

EURUSD

The pair bounced from its August low and is up for the third consecutive session. It could test its 21 and 55 daily MA, both in area 1.1849 and then the dynamic resistance in area 1.19. Below 1.1664 EURUSD could slide to 1.148.

USDJPY (Daily timeframe)

USDJPY

USDJPY made a breakout of the supply line that linked lower highs but then it developed a trading range of 120 pips. Above 113.4, last week high, would be possible to test 114.50. Below 111.8  a fake breakout could materialize and the pair could slide to 110.65.

GBPUSD (Daily timeframe)

GBPUSD

GBPUSD rose above its 55 daily MA. It could test its 21 MA at 1.3362 and then to 1.3470. Below 1.30 Cable can drop to test the lower side of the channel, near 1.27.

USDCAD (Daily timeframe)

USDCAD

USDCAD rose above its 55 MA and could test the medium term supply line near 1.2650. A breakout could lift the pair to 1.3. Below 1.24 the pair can slide to its September low 1.2062.

EURCHF (Daily timeframe)

EURCHF

EURCHF could test its 2017 top at 1.1623 and above this level it could try to reach area 1.20, the pre SNB level that in 2015 triggered a selloff of non CHF currencies against the Swiss franc. 1.20 could be reached as EURCHF retraced more than 61.8% of the selloff of the 15th January 2015. Beneath 1.1470 EURCHF could test 1.14

Author

ALB Team

ALB Team

ALB Forex Trading

ALB Research Department is the research department of ALB Forex Trading Ltd.

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