Friday's FX: EUR/USD, GBP/USD, AUD/USD
SGT Markets | Sep 22, 2017 05:20AM ET
EUR/USD
Today eyes on German Manufacturing PMI and on ECB President Draghi's speech. Focus also on the upcoming German general elections.
Fed's projections point to three rate hikes in 2018, two in 2019 and one in 2020 and to shrinking balance sheet in October following schedule it laid out in July. Inflation to remain somewhat below 2 pct in near term, to stabilize around 2 pct goal over medium term. Job gains have remained solid, household spending expanding at moderate rate. Business spending has picked up in recent quarters. Near-term risks to the economy appear "roughly balanced" and if conditions were to weaken, would also consider balance sheet reinvestment. Fed vote in favor of policy was unanimous.
According to the latest news headlines hitting the wires, citing reliable sources, ECB policy makers disagree on whether to set a firm end-date for bond-buying program in October. Some elements of ECB decision could be put off until Dec. Concerns over euro strength is leading to uncertainty and divides within ECB council; Some ECB rate setters want to be able to extend or expand buys if needed.
During his last ECB Press Conference, President Draghi said that growth forecasts for the Eurozone will keep on the good pace though inflation is doing worse than expected. Growth projections were made considering EUR/USD @1.18 level (the current or higher levels are considered due to excessive volatility and this is considered to be slowing down CPI measures) and in October some clearer actions will be taken in order to push inflation upwards (possibly by monitoring EUR/USD and reducing overshooting in EUR currency levels).
Increasing wages (under solid Employment Change figures) and improving Trade Balance are the latest good news for the EUR.
The greenback regained strength after Paul Ryan (U.S. House of Representatives Speaker) said that a tax plan is set to be released next days and after Trump succeeded to raise the debt ceiling.
On the other hand, last U.S. industrial and manufacturing production unexpectedly fell in August and U.S. producer price inflation increased less than expected. In addition, the U.S. Commerce Department said last retail sales change was surprisingly negative.
Now 1.199 Resistance area still under pressure. It is possible that it will work and, as we wrote previously, if, on the other side, 1.1856 (very important Support area) will be clearly violated then we see room down to the next Support area (1.176).
Get The News You Want
Our special Fibo Retracement is confirming the following S/R levels against the Monthly and Weekly Trendlines obtained by connecting the relevant highs and lows back to 2012:
Weekly Trend: Overbought
1st Resistance: 1.1990
2nd Resistance: 1.2080
1st Support: 1.1856
2nd Support: 1.1756
GBP/USD
UK Retail Sales data on the upbeat. Eyes today on Prime Minister May speech.
Fed's projections point to three rate hikes in 2018, two in 2019 and one in 2020 and to shrinking balance sheet in October following schedule it laid out in July. Interest rate hikes schedule remains unchanged and if conditions were to weaken, would also consider balance sheet reinvestment.
Carney’s speech was about monetary policy that may have to "move in order to stand still" due to possibility that global equilibrium interest rates are rising. De-integration effects of Brexit are likely to be inflationary but any rate hikes are expected to be gradual and limited.
He added that any loss of trade openness with EU after Brexit is unlikely to be immediately compensated by ties with new partners.
Brexit slowing negotiations (the fourth round of Brexit negotiations is scheduled on these days and the volume of complaints coming from the financial services sector regarding the lack of progress is growing), terroristic attacks and upcoming German elections are undermining the volatile bullish stamina of the GBP.
As we previously wrote, 1.36 is a definitive very strong Resistance and it recently rejected GBP/USD down to 1.346 (important Support area). There are two scenarios: 1.346 tested back again will lead to a test in area 1.336; 1.365 test, on the upside, will lead up to 1.37 overbought area.
Our special Fibo Retracement is confirming the following S/R levels against the Monthly and Weekly Trendlines obtained by connecting the relevant highs and lows back to 2001:
Weekly Trend: Neutral
1st Resistance: 1.3610
2nd Resistance: 1.3670
1st Support: 1.3460
2nd Support: 1.3362
AUD/USD
North Korea remarks on a new nuclear test on the Pacific ocean can weigh on AUD.
Fed's projections point to three rate hikes in 2018, two in 2019 and one in 2020 and to shrinking balance sheet in October following schedule it laid out in July.
Australia reported its house price index for the second quarter jumped 1.9%, compared with a 1.1% gain seen. The Reserve Bank of Australia repeated that monetary policy is expected steady for "some time" in the minutes of its September rate review.
Australia reported improved job market and interestingly good home loans data for July, but Trade Balance and Retail Sales worse than expected and GDP on the downbeat too.
Last Australian Manufacturing Index was better than expected and private new capital expenditure for the second quarter jumped 0.8%, well above a 0.3% gain seen. Also Building Approvals and Construction Work Done better than expected.
On the other hand, last U.S. industrial and manufacturing production unexpectedly fell in August and U.S. producer price inflation increased less than expected. In addition, the U.S. Commerce Department said last retail sales change was surprisingly negative.
As we wrote previously, a re-test in area 0.798 would have led down to the main Support in area 0.792. Now we are in a consolidation stage, ranging between .798 and .79.
Our special Fibo Retracements are confirming the following S/R levels against the Monthly and Weekly Trendlines obtained by connecting the relevant highs and lows back to 2012:
Weekly Trend: Neutral
1st Resistance: 0.8034
2nd Resistance: 0.8130
1st Support: 0.7916
2nd Support: 0.7828
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.