Daily Insight: Central Banks Continue To Drive Markets
Matt Simpson | Oct 23, 2014 02:57AM ET
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Central banks continue to drive markets at the moment over the fundamentals. With ECB hinting at the purchase of corporate bonds whilst the FED also toying with the idea of delaying the end of their own QE, traders will continue to place bets on the likelihood of Central Bank action based on any market data available.
EUR: Out of the German and Eurozone Serves and Manufacturing PMI's, the more below 50 we get the greater the chances of stronger stimulus from ECB. Germany's Manufacturing peaked in Jan '14 and dipped into contraction last month, with further weakness expected ahead.
GBP: Retail sales are expected to have softened so any upside surprise here may help GBPUSD remain above 1.60
USD: With unemployment claims at a 14-year low and expected to be even lower then there is a clear bullish expectation from tonight's release. So any softness in this release will be a disappointment and may see further USD downside.
CAD: With BoC firmly stuck in neutral we do not expect any violent reactions from tonight's speech or rate 'decision', to remain fixed at 1%.
TECHNICAL ANALYSIS:
BRENT: Oil continues to slip
The decline on Oil has been impressive, to say the least. Looking at D1 (not pictured) you'll see that an 8 period MA has continued to cap as resistance to show how bearish the move has been. The 87 high was the recent test of this MA so I doubt we'll get a substantial pullback before losses resume.
Intraday trading already appears to be targeting the 82.47 lows so as long as we remain below 84.40 then we can consider selling into any rallies on much smaller timeframes (M5, M15 etc.).
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If we do break back above 84.40 then we can consider bearish setups below 85.60 on H1 or H4 to target 82.47 and 80
Silver: Preparing for another drop
Remaining within a clear downtrend and the 21eMA continues to cap as resistance, current price action also suggests another leg down is pending.
The Rikshaw Man Doji on higher volume below 17.82 was the 1st clue which was followed by several smaller candles inside the range of the Doji, suggesting a hesitancy to buy at these lows.
However one slight concern is yesterday's Bearish Engulfing on lower volume. Whilst the candle itself is within line of the trend the lower volume suggests we may be treated to a retracement within yesterday’s range. If so this could provide a better reward/risk ratio to target 16.67, 16.30 and 16.00.
EURUSD: Break of Bearish Channel targets 1.25 lows
The downside break didn't mess around, which favours a shallow pullback if we see one. The chances are will see a rebound from current levels due to several technical support levels highlighted.
Areas to consider selling into (fading) could be the daily pivot, or Daily R1 to target the 1.250 lows.
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