The Calm Before The Storm
Vantage | Oct 12, 2015 01:09AM ET
A whole string of bank holidays to start the week with Japan off (again!) in observance of Health-Sports Day, while the US and Canada are also off for Columbus Day and Thanksgiving respectively. The most notable to Forex markets is of course the US holiday, but just remember that today sees US bond markets closed while stock markets remain open. Forex markets will likely see reduced liquidity to start the week with the possibility of erratic price action on the back of it.
The International Monetary Fund’s annual meeting kicked off over the weekend in Lima, Peru with a backdrop of rising concern over global economic health. The major headline to come out of the weekend was from the deputy governor of the People’s Bank of China, Yi Gang who noted that a persistent weakening of the Chinese Yuan would be inconsistent with the fundamentals of the Chinese economy. He went on to reinstate that China is committed to making the planned nature of the currency more market based.
While stating that they will look to continue unwinding their firm grip around management of the Yuan, Yi Gang also did his best to talk up the fundamental base in China as good news that will prevent the Renminbi from depreciating too much.
Speaking at the CFA Society Milwaukee, the weekend headlines also included the following from Chicago Federal Reserve Bank President Charles Evans:
“We think that just delaying the fed funds rate liftoff currently until about the middle of 2016 and then a gradual path would be consistent with us getting inflation back up to 2% within a reasonable period of time.”
“I would like it to move up more quickly than that, but at the moment we are thinking that that’s what appropriate policy would be.”
Normally you would assume that the Chinese are giving lip service and you can bank on guidance from the US Federal Reserve. As I said on Friday however, the Fed is suffering from a crisis of credibility and in this case I’d be more inclined to take the most steed from the Chinese comments out of Peru!
Enjoy your relatively slow start to the week, it’s just the calm before the storm.
On the Calendar Monday:
Amazing!
“Japanese banks will be closed in observance of Health-Sports Day”
JPY Bank Holiday
CAD Bank Holiday
USD Bank Holiday
USD FOMC Member Lockhart Speaks
Chart of the Day:
EUR/JPY is a Forex cross that I haven’t had on my watch list for a while now, but it’s time to bring it back for a look.
EUR/JPY Daily:
The daily chart has coiled into a triangle, with the most recent touch of trend line resistance coinciding with a horizontal SR zone that has been tested all over the place in the past.
Get The News You Want
These are the sorts of setups that you have to be careful fading because zooming into the hourly chart, you can see that buyers had huge momentum behind them to end the week. Now price has come into a higher time frame sell zone, I’ll be keeping an eye on the lower time frame charts for signs of momentum failing into any sort of short term confluence of resistance, but not going to pull the trigger at first sight.
Risk Disclosure: In addition to the website disclaimer below, the material on this page prepared by Australian Forex broker Vantage FX shall not be liable for any loss or damage, consequential or otherwise, which may arise from the use or reliance on the service and its content, inaccurate information or typos. No representation is being made that any results discussed within the report will be achieved, and past performance is not indicative of future performance.
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.