Futures Fall Despite Solid EPS, Retail Sales Miss, Brexit Deal Remains Elusive

Futures Fall As Worries Creep  Back Into Focus

The U.S. equity market is indicated lower in early Wednesday trading despite signs 3rd quarter earnings are better than expected. The Dow Jones Industrial Average and S&P 500 are both indicated lower by 0.20% while the NASDAQ Composite is down about -0.30%. The move is driven by growing concern China will not follow through on its pledge to buy more U.S. agricultural products. If this is the case it is likely additional tariffs will be enforced later this year. China has pledged as part of the Phase I trade deal to buy up to $50 billion in U.S. products.

In earnings news, financial stocks Bank of America and Bank Of New York Mellon both reported better than expected EPS. Both companies reported strength in consumer segments that helped drive share prices higher. Shares of BAC are up more than 2.5% while BNY-Mellon is up about 1.5%. In economic news, Retail Sales were weaker than expected. September retail sales fell -0.3% versus an expected gain of 0.3%. The mitigating factor is an upward revision to the past month of 0.2%. Later in the session traders will have an eye out for the NAHB Index and the FOMC’s Beige Book.

Europe Mixed, Brexit Deal Is Still Elusive

European markets are flat and mixed at midday as traders fret over trade and the Brexit. On the trade front, China’s demands the U.S. remove the threat of more tariffs before signing the Phase I deal has thrown a wrench into the works. At this stage it is becoming less and less likely Phase I will come to fruition. In Brexit news, negotiations stalled on Wednesday despite a narrowing of differences. The Irish PM confirms the back-stop is yet to be resolved but there is hope. The two sides will begin a two-day summit tomorrow that will, hopefully, result in a deal.

The German DAX is in the lead at midday with a gain of 0.22% while the FTSE and CAC are both edging lower. In stock news, shares of UK tech giant Micro Focus is up 4.3% on its results as is seafood producer Mowi. At the other end of the rankings, IMCD and DBA Aviation are both down more than -4.0%.

Asia Mostly Higher On Brexit Hopes

Asian markets are mostly higher at the end of Wednesday’s session. The Nikkie and ASX are both up more than 1.0% while the Hang Seng and Kospi are up closer to 0.70%. The moves are driven by hope for a Brexit deal, however elusive it may seem right now. In Hong Kong, leader Carrie Lam is under intensifying pressure as she rejects HK’s bid for autonomy. The Shanghai composite is the only index to move lower, it posted a loss of -0.41%.

EUR/USD Daily Forecast – Euro Continues to Battle 50-Day Moving Average

Brexit Talks Stand to Drive Volatility to EUR/USD

Price action in the FX markets on Tuesday provided a glimpse of which currencies are likely to see a reaction based on how things progress with reaching a Brexit deal.

Since last week, the British pound has been firmly bid and was last seen trading near highs not seen since June against the dollar. But yesterday’s surge higher in GBP/USD accompanied a bullish reaction in EUR/USD which we’ve not seen before.

EUR/USD had declined below the 1.1000 handle and then rallied nearly 50 pips in 30 minutes on Brexit news. This suggests if Brexit talks are favorable, EUR/USD is likely to continue its recent upward trend.

So far the 50-day moving average has been holding the pair lower on a daily close basis. But the indicator is not likely to be much of a hurdle on positive Brexit news. We are likely to get some market-moving news later today as Brexit negotiations will stop before the EU summit which starts tomorrow.

EUR/USD Little Changed After CPI Data

The consumer price index in the Euro zone was reported to rise at the slowest pace in nearly three years. Meanwhile, core CPI, which strips away volatile items such as food, energy, alcohol, and tobacco, remained unchanged at 1% in the year to September. The exchange rate had a muted reaction to the report.

Technical Analysis

Two items have been capping rallies in EUR/USD. A horizontal level at 1.1059 and the 50-day moving average.

EURUSD Daily Chart

If we get some further positive Brexit news, I’d expect this area to be breached, putting in focus resistance at 1.1129. This is a level that was major support April and in May.

In the absence of news, I expect that sellers will try and drive the pair lower once again. Although we may see buyers step in ahead of yesterdays low just below 1.1000, this continues to be an important area for the pair.

Bottom Line

  • Headlines related to Brexit stand to move EUR/USD and today could be a volatile day for the pair.
  • Euro zone CPI data fell short of expectations but did not have an impact on the exchange rate.

Brexit and Economic Data Put the GBP and USD in Focus

Earlier in the Day:

It was a relatively busy day on the economic calendar through the Asian session this morning.

New Zealand 3rd quarter inflation figures provided the Kiwi Dollar with direction early in the session.

Outside of the stats, positive updates on Brexit and U.S corporate earnings failed to support risk sentiment early on.

For the Kiwi Dollar

The annual rate of inflation eased from 1.7% to 1.5% in the 3rd quarter, while coming in ahead of a forecast of 1.4%. Quarter-on-quarter, consumer prices rose by 0.7%, following a 0.6% rise in the 2nd quarter. Economists had forecast a 0.6% increase.

According to NZ Stats,

  • Higher prices for rents and cigarettes and tobacco supported the 1.5% increase in the CPI, year-on-year.
  • The increase was partially offset by falling prices for vegetables, petrol, and telecommunications equipment.
  • Quarter-on-quarter, the 0.7% rise in consumer prices came off the back of price rises for local authority rates and payments, vegetables, and meat and poultry.
  • Falling prices for fruit, petrol, and new cars were negatives for the quarter.

The Kiwi Dollar moved from $0.62858 to $0.063125 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.21% to $0.6281.

Elsewhere

At the time of writing, The Japanese Yen was up by 0.14% to ¥108.71 against the U.S Dollar, while the Aussie Dollar was down by 0.21% to $0.6739.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. Finalized Italian and Eurozone inflation figures for September are due out later this morning, along with the Eurozone’s August trade figures.

Barring material deviation from prelims, the Eurozone’s trade data will likely have the greatest influence on the EUR.

Outside of the numbers, Brexit will continue to have an impact throughout the day.

At the time of writing, the EUR was down by 0.02% to $1.1031.

For the Pound

It’s a relatively busy day ahead on the data front. September inflation figures are due out later this morning.

We can expect the Pound to show greatest sensitivity to the annual rate of inflation and the Input Producer Price Index figures.

Direction for the Pound will ultimately come from Brexit updates, however. With the EU Summit now just 4-days away, time is rapidly running out.

Positive updates from the EU and the Brexiteers delivered more upside for the Pound at the start of the week. Expect plenty of volatility and a reversal should negative updates begin to filter through, however.

At the time of writing, the Pound was down by 0.28% to $1.2751.

Across the Pond

It’s a relatively busy day ahead on the economic calendar. September retail sales figures are due out later today, along with August business inventory numbers.

Retail sales will have the greatest influence on the day. Consumer spending remains a key contributor and barometer to the U.S economy. Any unexpected slide in spending and expect the markets to balk as recession chatter continues to do the rounds.

On the geopolitical front, demand for the Dollar could rise should progress on Brexit negotiations hit a wall. Chatter from the Oval Office also needs monitoring throughout the day.

The Dollar Spot Index was up by 0.02% to 98.312 at the time of writing.

For the Loonie

It’s a busier day on the economic calendar, with September inflation figures due out later today. Expect the Loonie to react to today’s figures, with support likely to kick in should inflationary pressures build. The monthly movement in consumer prices will likely have the greatest impact.

With the BoC holding steady on the monetary policy front, inflation will need to hold steady at best.

The Loonie was down by 0.04% at C$1.3204, against the U.S Dollar, at the time of writing.

EUR/USD Price Forecast – Euro Rolls Over Again

The Euro fell during the trading session after initially trying to rally during the Tuesday session. The 50 day EMA has offered a bit of resistance, and it does look very much like a market that is trying to break down towards the lows again. The market has been very choppy but more importantly, it has been very negative.

EUR/USD Forecast Video 16.10.19

The 1.10 level of course will attract a lot of attention, as the round figure typically do. This is an area that has been crossed several times though, so the resiliency of the 1.10 level probably has lost some bigger. With that being the case, I do think that we continue to slice lower and test the lows yet again. The 61.8% Fibonacci retracement level is far above, so that typically means that we are going to go looking towards the 100% Fibonacci retracement level.

The Euro of course suffers at the hands of a potential recession, while the United States has been growing the entire time. With this, money continues to flow in the United States, and of course Brexit will have its way with the Euro and all things European related currently. All things being equal, this is a market that is simply continuing to grind back and forth, showing signs of choppiness but one thing that has been a longer-term factor is that sellers continue to return. With that, it’s very likely that we will see rallies faded, just as we have seen at the crucial 50 day EMA. The short-term ceiling above is the 1.11 level, so that should be paid attention to as well.

Please let us know what you think in the comments below

Futures Rise, Earnings Season Off To Shaky Start, Trade Concerns Dampen Investor Appetite

The U.S. Futures Are Rising In Early Trading

The U.S. indices are indicated higher in early trading as earnings season kicks off. Today’s news includes reports from more than a half-dozen important names and the results are mixed. The big banks are the main focus as JP Morgan, Goldman Sachs, Wells Fargo, and Citigroup all report. JP Morgan posted a nice beat on the top and bottom lines driven by strength in consumer lending. Citigroup, Goldman Sachs and Wells Fargo are all trading lower after reporting weaker than expected numbers.

In other news, United Health and Johnson & Johnson both beat expectations. Johnson & Johnson also reports strength in the consumer units while United Health upped its full-year guidance. Both stocks are moving higher by roughly 2.0%.

The Down Jones Industrial Average, S&P 500, and NASDAQ Composite are all up about 0.25% in early trading. The sentiment is buoyed by trade hopes but also tempered by caution. While China and the U.S. have signaled a Phase 1 deal is at hand there is still no deal in place. Until such time traders are cautioned to be prepared for negative headlines. On the economic front, the Empire State Manufacturing Survey rose modestly to 4 from last months 2.0 as production and employment edge higher.

European Markets Are Mixed, Hope For A Smooth Brexit Persist

European markets are mixed at midday on Tuesday after remarks from the EU’s Brexit team renewed hope. Michel Barnier said that despite the increasing difficulty it is still possible to reach a deal this week. The DAX and CAC are both up about 0.35% to 0.40% while the FTSE is down roughly -0.25%. Retail is in the lead with a gain of 0.90%.

In economic news, unemployment ticked higher in the UK. The 3rd quarter figure came in at 3.9%, a tenth higher than the previous. In stock news, shares of Hays are up 5.5% after it reported flat results. The good news is weakness in the UK was offset by strength in offshore markets. Share of Wirecard, however, are not so buoyant. The Financial Times did an expose on the company’s accounting practices and shares are down -17% because of it.

Asia Mixed, Trade Hopes Clash With Trade Fears

Asian markets are wildly mixed after Tuesday’s session. The Japanese Nikkei led the market with a gain of 1.9% after being closed Monday for holiday. Chinese indices are broadly lower following the release of inflation data. CPI rose 3% on a 69% increase in pork prices while PPI fell. The Shanghai Composite is down -0.56% on the news, the Hang Seng a more tepid -0.07%. Elsewhere in the region, the ASX and Kospi are both up mildly.

EUR/USD Mid-Session Technical Analysis for October 15, 2019

The Euro is trading lower against the U.S. Dollar shortly after the U.S. opening. Earlier in the session, the single-currency traded higher, helped by more positive vibes about a Brexit deal and as dimming optimism over a U.S.-China trade deal kept the greenback in a range.

In other news, the German ZEW headline numbers for October came in better-than-expected at -22.8 versus an estimate of -27.0 and the previously reported -22.5.

It’s another light day in the U.S. with FOMC member speakers George and Bullard on tap. Traders are likely to continue to focus on any new developments over U.S.-China trade relations. If conditions continue to sour then look for the U.S. Dollar to strengthen due to safe-haven buying.

At 11:09 GMT, the EUR/USD is trading 1.1012, down 0.0015 or -0.14%.

EURUSD
Daily EUR/USD

Daily Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since October 1.

The minor trend is up. A trade through 1.1063 will indicate the buying is getting stronger. A move through 1.0941 will change the minor trend to down, shifting momentum back to the downside.

The main range is 1.1164 to 1.0879. Its retracement zone at 1.1021 to 1.1055 is resistance. This zone stopped the rally at 1.1063 last Friday.

The minor range is 1.0879 to 1.1063. Its retracement zone at 1.0971 to 1.0949 is the next downside target.

Daily Technical Forecast

Based on the early price action and the current price at 1.1021, the direction of the EUR/USD the rest of the session on Tuesday is likely to be determined by trader reaction to the main 50% level at 1.1021.

Bearish Scenario

A sustained move under 1.1021 will indicate the presence of sellers. This could trigger a break into the uptrending Gann angle at 1.1001, followed by an uptrending Gann angle at 1.0979. If this angle fails to hold then look for the selling to possibly extend into 1.0971 to 1.0949.

Bullish Scenario

A sustained move over 1.1021 will signal the presence of buyers. If this move can create enough upside momentum then look for the rally to possibly extend into a resistance cluster at 1.1055.

EUR/USD Daily Forecast – Euro Consolidates Below 50 DMA

EUR/USD Rally Stalls

Last week EUR/USD rallied above an important technical resistance confluence that I’ve talked about in my last few daily forecasts. At this point, it will be important to asses whether the breakout is real, or just a trap for buyers.

One important aspect is assessing technical developments is the longer-term trend. For EUR/USD this is certainly to the downside even though price action has been choppy for the past year or so.

For that reason, additional confirmation would provide further conviction that the pair has indeed put in a bottom, or at least, a near-term one.

Currently, resistance from a horizontal level at 1.1059 has been holding the upside and daily closes have been held by the 50-day moving average. I suspect this will continue to be major resistance over the near-term.

A bit of a support confluence is developing in around 1.1000 as the 200 and 50 moving averages on a 4-hour chart have converged toward the level. Further, a rising trendline from October lows and the 20-day moving averages are also nearby. If the pair were to break below this area, I would assume that last week’s upside break was a bull trap.

Daily Technical Outlook

With a relatively light economic calendar in the session ahead, I suspect that the pair will continue to trade within the roughly 1.1000-1.1050 range.

EURUSD Daily Chart

There was some selling pressure around the European open and this might keep the pair well offered, at least until the North American session gets underway. In this context, I see important resistance at 1.1033.

EUR/USD briefly traded below yesterday’s low in early trading, likely taking stops from weak hands. If the pair remains under pressure, I think it will try and trigger further stops below Friday’s low of 1.1001. However, the psychological 1.1000 handle is likely to draw buyers. I see it as major support for the session ahead.

EURUSD 4-Hour Chart

On the other hand, if we reverse sentiment a bit and start to get bullish, I’m looking at 1.1059 to continue capping gains in the near-term.

Bottom Line

  • EUR/USD has been ranging with the 50-day moving averages holding the pair on a daily close basis.
  • I suspect the pair will continue holding in this range considering the light economic calendar.
  • Strong selling pressure at the European open suggests a slight bearish bias for the session ahead.

Brexit and Economic Data Keep the GBP and the EUR in Focus

Earlier in the Day:

It was a relatively busy day on the economic calendar through the Asian session this morning.

China’s September inflation figures provided direction ahead of finalized August industrial production figures out of Japan due out later this morning

In the early part of the day, the RBA also released its meeting minutes from last Tuesday’s meeting.

On the geopolitical front, sentiment towards the latest on the U.S – China trade talks and Brexit also influenced early on.

For the Aussie Dollar

Following last week’s rate cut, the RBA meeting minutes had limited influence on the Aussie Dollar. Salient points from the October Minutes included:

  • Risks to the global growth outlook remained tilted to the downside.
  • Businesses scaled back investment plans as a result of the technology and trade disputes between the U.S and China.
  • Further monetary policy easing was delivered to support employment and income growth and greater confidence that inflation would be consistent with the medium-term target.
  • Members noted that the unemployment and inflation outcomes were likely to fall short of forecasts in the near-term.
  • Subdued wage growth also suggested that spare capacity remained in the economy.
  • In spite of strong employment growth, however, the spare capacity remained, with employment growth expected to slow.
  • While lower interest rates could affect confidence, it would also support household cash flows and spending.
  • It was also noted that members were prepared to ease monetary policy further if needed.

The Aussie Dollar moved from $0.67694 to $0.067703 upon release of the minutes that preceded China’s inflation figures.

From China

The annual rate of inflation picked up from 2.8% to 3.0%, coming in ahead of a forecast of 2.9%. Month-on-month, consumer prices rose by 0.9%, coming in ahead of a forecasted and August 0.7%.

Wholesale fell further in September, however, with wholesale prices falling by -1.2% compared with September 2018. While in line with forecasts, the pace of deflation picked up from August’s 0.8%.

The Aussie Dollar moved from $0.67865 to $0.67849 upon release of the figures. At the time of writing, the Aussie Dollar was flat at $0.6775.

Elsewhere

At the time of writing, The Japanese Yen was up by 0.09% to ¥108.30 against the U.S Dollar, while the Kiwi Dollar was up by 0.11% to $0.6306.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. Germany and the Eurozone’s ZEW economic condition figures are due out later this morning.

French finalized September inflation figures and Germany’s ZEW current conditions figures will likely have a muted impact on the EUR.

Outside of the numbers, we can expect direction to also come from Brexit as the Brexit clock ticks away.

At the time of writing, the EUR was up by 0.04% to $1.1031.

For the Pound

It’s a busy day ahead on the data front. August earnings and unemployment figures are due out along with September’s claimant count numbers.

We can expect the Pound to show greatest sensitivity to the wage growth and claimant count figures. Any unexpected rise in the unemployment rate, coupled with larger than anticipated increase in claimant counts would weigh heavily, however.

While we expect the stats to influence, Brexit will continue to be the key driver. A further pullback from Friday’s recent high should be expected should little progress be made on a deal.

At the time of writing, the Pound was up by 0.06% to $1.2616.

Across the Pond

It’s a relatively quiet day ahead on the economic calendar. October’s NY Empire State Manufacturing Index figures are due out later today.

With tariffs still in place, any further deterioration in manufacturing sector conditions would be negative.

Chatter from the Oval Office would require monitoring, however. There’s also Brexit to factor in, with any negative news considered Dollar positive.

The Dollar Spot Index was down by 0.04% to 98.417 at the time of writing.

For the Loonie

It’s a quiet day on the economic calendar. There are no material stats out of Canada to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of crude oil prices later in the day.

The Loonie was up by 0.02% at C$1.3232, against the U.S Dollar, at the time of writing.

EUR/USD Price Forecast – Euro Flat

The Euro has done very little during the trading session on Monday, as the market is sitting at the 50 day EMA. This is obviously an area that is going to cause some issues, as market participants are looking at both the technical analysis and wondering exactly what just happened in the United States during the talks with the Chinese. Essentially, nothing was settled so it’s difficult to imagine a scenario where it is suddenly a huge “risk on” type of situation.

EUR USD Forecast Video 15.10.19

The Chinese have stated that they wish to talk more before signing the first phase of the agreement, signaling that nothing has changed. Ultimately, that will continue to cause major issues in risk appetite around the world and obviously have an influence on the US dollar as it should strengthen while money flows into the bond markets. On the other hand, this pair also has to deal with the Brexit situation which seems to be a little less optimistic than previously reported. Because of this, it’s likely that we will continue to see a lot of choppy behavior when it comes to this pair, as much like the US/China situation, it comes down to the next rumor or headline that crosses Twitter as to where this pair goes.

Ultimately, we are in a downtrend and that’s probably the easiest way to look at this chart. The 1.11 level above is significant resistance, and although this market has rallied quite nicely over the last couple of sessions, it should be pointed out that the daily candlesticks continue to form long wicks to the upside, and that is something that should not be ignored.

Please let us know what you think in the comments below

EUR/USD Mid-Session Technical Analysis for October 14, 2019

The dollar rose against the Euro on Monday as safe-haven buyers returned after traders turned cautious about the progress being made toward an end to the U.S.-China trade dispute.

On Friday, the Euro was boosted by optimism that a trade deal could be reached when President Trump announced the two economic powerhouses had agreed to a ‘Phase One’ trade deal.

However, reports from China and Bloomberg News said China wants another round of talks with the U.S. before signing what President Donald Trump called a “very substantial phase one deal.” Bloomberg News first reported the news and said in its report that China also wants the U.S. to scrap a tariff hike scheduled for December.

With uncertainty over the deal being raised, investors turned to the safe-haven dollar for protection, leading to the weaker EUR/Usd.

At 13:25 GMT, the EUR/USD is trading 1.1023, down 0.0013 or -0.12%.

EURUSD
Daily EUR/USD

Daily Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. The main trend will change to up on a trade through 1.1110. A move through 1.0879 will change the main trend to down.

The minor trend is up. This is generating the upside momentum. A trade through Friday’s high at 1.1063 will signal a resumption of the minor trend. A trade through 1.0941 will change the minor trend to down and shift momentum back to the downside.

The main range is 1.1164 to 1.0879. Its retracement zone at 1.1022 to 1.1055 is currently being tested. This zone is potential resistance. It is also controlling the near-term direction of the EUR/USD.

The short-term range is 1.1110 to 1.0879. Its 50% level or pivot at 1.0995 is potential support.

Daily Technical Forecast

Based on the early price action and the current price at 1.1023, the direction of the EUR/USD the rest of the session on Monday is likely to be determined by trader reaction to the Fibonacci level at 1.1022.

Bullish Scenario

A sustained move over 1.1022 will indicate the presence of buyers. If this creates enough upside momentum then look for a potential rally into a resistance cluster at 1.1055 to 1.1059.

Overtaking 1.1059 will indicate the buying is getting stronger with the next target angle coming in at 1.1077.

Bearish Scenario

A sustained move under 1.1022 will signal the presence of sellers. This could trigger a break into the 50% level at 1.0995, followed by an uptrending Gann angle at 1.0969.

Futures Fall As Uncertainty Grips The Market, Brexit Deal Elusive, China Trade Data Falls

The U.S. Futures Are Down In Early Trading

The U.S. futures are down in early trading despite positive developments on trade. The Dow Jones Industrial Average, NASDAQ Composite, and S&P 500 are all down about -0.55% in early trading. Tech is in the lead. The trade deal, announced on Friday, is an interim stop-gap measure intended to produce a three-phase solution. The first phase includes China increasing its purchases of agricultural products, a pledge the country has made several times in the past. In exchange, the U.S. will postpone or delay tariffs scheduled to take effect later this week.

While both sides have hailed the deal as good there is still no actual document and details are sketchy. China’s Vice Premier Liu He says he will be back to Washington this month to hammer out those details before President Xi will sign any deal. China is expected to purchase up to $50 billion in U.S. agriculture products with those purchases ramping up over the next few weeks. The timeline to end the trade war is now 15 months. Secretary of the Treasury Mnuchin says the October tariffs will go into effect in December if China reneges on its agreements.

In business news, this week begins the peak of 3rd quarter earnings. We are expecting reports from the big banks this week, they are expected to post EPS declines. In economic news, we are expecting several key reads from the Federal Reserve. Also on tap, Retail Sales, the Beige Book, Housing Starts, and the Index of Leading Indicators.

European Indices Are Down With A Case Of Uncertainty

EU indices are down at midday due to a growing case of uncertainty. The trade-deal that is not yet a deal remains a key point of uncertainty as does the Brexit. Brexit negotiators were unable to reach a deal over the weekend raising doubts a solution to the Irish-Backstop can be found. The Queen is expected to deliver her speech to open Parliament today. In it, she will outline the governments plans for Brexit.

The French CAC is leading decliners in early trading with a loss of -0.75% while the DAX and FTSE are both trailing with losses close to -0.50%. In stock news, shares of biopharma company Chr. Hansen rebound 3.8% after last week’s massive selloff.

Asian Markets Rebound Despite Trade Uncertainty

Asian markets are broadly higher after Monday’s session as trade hope fuels optimism. The Shanghai Composite and Korean Kospi both advanced more than 1.1% while the Hong Kong Hang Seng and Australian ASX gained 0.80% and 0.50%. Japan was closed for a holiday. In South Korea chipmakers Samsung and SK Hynix led the advance.

EUR/USD Daily Forecast – Euro Holds Gains Above 1.10

EUR/USD Price Action Signals Reversal Potential

After grinding lower in a downtrend since early 2018, EUR/USD is showing signs of making a bottom, or at least an interim one. The pair broke higher from a major confluence of resistance last week as the dollar fell under pressure.

The pair might have a slow start to the week as some of the US markets are closed today in observance of Columbus Day. This could trigger unusual volatility in the session ahead. Volatility is likely to pick up on Thursday as inflation data will be released from the Euro area and retail sales figures from the US.

The exchange rate has not had much of an impact on news late last week that China and the US have reached a partial trade deal. The news has brought the return of risk appetite with equity markets rallying around the world. A notable advance was seen in the German DAX on Friday as it rallied to fresh two-month highs and broke above a declining trend line which originates from the July peak.

Technical Analysis

EUR/USD rallied for a second consecutive week and broke above an area of resistance that includes three important technical indicators. First is the 1.1000 psychological handle which has generally been respected as of late. Second is a declining trend channel which has contained price action since late June.

EURUSD Daily Chart

Lastly, the pair has broken above its 20-day moving average. This particular indicator has been crossed a few times since August. However, none of the prior attempts resulted in a sustained break. In this context, the indicator is an important area to watch in assessing bearish reversal potential. The moving average currently resides at 1.0983.

The rally on Friday was blocked by horizontal resistance at 1.1059. This level  remains a hurdle in the near-term. The 50-day moving average is near the level to create a bit of a confluence.

EURUSD 4-Hour Chart

Support for the session ahead comes in around 1.1010 as a rising trend line is in play. This trend line originates from the low printed at the start of the month.

Bottom Line

  • EUR/USD might fall into a range in the session ahead with some markets closed in observance of Columbus Day.
  • Resistance at 1.1059 remains a major hurdle in the near-term.
  • Volatility is likely to pick up later in the week as Euro CPI and US retail sales will be reported on Thursday.

A Light Economic Calendar Puts the GBP and Brexit in the Limelight

Earlier in the Day:

It was a relatively quiet day on the economic calendar through the Asian session this morning.

China’s September trade figures provided direction at the start of the week.

On the geopolitical front, the Asian equity markets responded to the positive updates on Brexit and trade negotiations.

In the FX markets, however, the mood was less bullish. Existing punitive tariffs remain that suggest more doom and gloom before any pickup in economic activity.

From China

The U.S Dollar trade surplus widened from $34.84bn to $39.65bn in September. Economists had forecast a narrowing to $33.30bn.

  • Year-on-year, exports fell by 3.2%, which was worse than a forecasted 3.0% fall. In August, exports had fallen by 1.0%.
  • Imports fell by 8.5%, year-on-year, in September, which was worse than a forecasted fall of 5.2%. Imports had fallen by 5.6% in August.

The Aussie Dollar moved from $0.67760 to $0.67861 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.15% to $0.6784.

While the trade surplus widened, a slide in imports suggests waning demand that could spell trouble in the months ahead.

Elsewhere

At the time of writing, The Japanese Yen was down by 0.03% to ¥108.32 against the U.S Dollar, while the Kiwi Dollar was down by 0.49% to $0.6306.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. The Eurozone’s August industrial production figures are due out of the Eurozone.

Following an unexpected pickup Germany, forecasts are EUR positive.

Outside of the numbers, we can expect direction to also come from Brexit and any chatter on trade.

At the time of writing, the EUR was down by 0.13% to $1.1028.

For the Pound

It’s a quiet day ahead on the data front. There are no material stats due out of the UK to provide the Pound with direction.

The lack of stats will leave the Pound in the hands of Brexit chatter throughout the day. The EU Summit is now within sight and Boris Johnson has just days to finalize a deal with the EU.

Expect Pound sensitivity to Brexit chatter to remain heightened at the start of the week.

At the time of writing, the Pound was down by 0.59% to $1.2593. A lack of progress from the weekend weighed on the Pound early on.

Across the Pond

It’s also a quiet day ahead on the economic calendar. There are no material stats to provide the Greenback with direction on the day.

The lack of stats will leave geopolitics in focus. Any further easing in geopolitical risk would be considered Dollar negative.

The Dollar Spot Index was up by 0.14% to 98.436 at the time of writing. Support kicked in early as trade talks failed to lead to a removal of existing tariffs.

For the Loonie

It’s a quiet day on the economic calendar. There are no material stats out of Canada to provide the Loonie with direction.

We can expect market risk sentiment through the day to influence. Trade data out of China and no suggestion of the removal of existing tariffs were negatives early on.

The Loonie was down by 0.05% at C$1.3209, against the U.S Dollar, at the time of writing.

The Week Ahead – Brexit, Earnings, Stats and the IMF and EU Summit in Focus

On the Macro

For the Dollar:

It’s a busier week ahead on the economic calendar.

NY Empire State Manufacturing figures for October get the week going on Tuesday. The focus will then shift to September retail sales figures due out on Wednesday.

With a heavy reliance on consumer spending, the numbers will need to be in line with forecasts to provide Dollar support.

On a busy Thursday, September building permit and housing start figures are due out along with October’s Philly FED Manufacturing numbers.

September industrial production and the weekly jobless claims figures are also due out.

With no material stats due out on Friday, Wednesday’s retail sales and Thursday’s Philly FED numbers will have the greatest impact.

Outside of the stats, trade war chatter will continue to be a factor, as will any further talk of impeachment.

The Dollar Spot Index ended the week down by 0.55% to $98.301.

For the EUR:

It’s also a relatively quiet week ahead on the economic data front.

Industrial production figures on Monday and German and Eurozone economic sentiment figures on Tuesday will influence early in the week.

The Eurozone’s September inflation and industrial production figures due out on Wednesday will also provide direction.

We would expect finalized inflation figures out of France and Italy to have a muted impact on the EUR, however.

With no material stats due out in the latter part of the week, geopolitical risk will remain in focus.

Any talk of U.S tariffs on EU goods and chatter on Brexit ahead of the 19th October EU Summit will also need considering.

The EUR/USD ended the week up by 0.58% to $1.1042.

For the Pound:

It’s another busy week ahead on the economic calendar.

Key stats include employment figures due out on Tuesday, inflation figures on Wednesday and retail sales numbers on Thursday.

On the data front, claimant counts, inflation and retail sales figures will be the key drivers in the week.

On the Brexit front, there would be more upside for the Pound should Johnson finalize a deal ahead of next weekend’s EU Summit.

The GBP/USD ended the week up by 2.73% to $1.2668.

For the Loonie:

It’s a relatively busy week ahead on the data front.

Key stats include September inflation figures due out on Wednesday and August manufacturing sales numbers due out on Thursday.

On the data front, we would expect the inflation figures to be the key driver in the week.

From elsewhere, trade data, industrial production and 3rd quarter GDP numbers out of China will also influence.

The Loonie ended the week up by 0.83% to C$1.3203 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s another relatively quiet week ahead.

Key stats are limited to September’s employment numbers due out on Thursday.

On the monetary policy front, the RBA minutes are due out on Tuesday and could pressure the Aussie Dollar should there be suggestions of more rate cuts to come.

From elsewhere, economic data out of China on Monday and Friday will also influence.

The Aussie Dollar ended the week up by 0.34% to $0.6794.

For the Japanese Yen:

It’s a relatively quiet week ahead on the economic calendar.

Key stats are finalized industrial production figures due out on Tuesday and inflation and trade data on Friday.

We would expect the stats to have a relatively muted impact on the Yen, however.

Geopolitics and economic data out of the U.S and China will likely have the greatest impact in the week.

The Japanese Yen ended the week down by 1.26% to ¥108.29 against the U.S Dollar.

For the Kiwi Dollar:

Stats are on the quieter side in the week ahead.

Economic data is limited to 3rd quarter inflation figures that are due out on Wednesday. We can expect the Kiwi to be particularly sensitive to the numbers.

From elsewhere, stats from China will also influence in the week.

The Kiwi Dollar ended the week up by 0.27% to $0.6337.

Out of China:

It’s a busy week on the economic data front. Economic data includes trade data due out on Monday and inflation figures on Tuesday.

The focus will then shift to a busy Friday. Stats on Friday include fixed asset investment, industrial production and 3rd quarter GDP numbers.

We expect trade data, industrial production, and the GDP numbers to have the greatest impact on market risk sentiment.

The impact of any weak numbers could be buffered, however, by any further positive chatter on trade.

The Yuan ended the week up by 0.83% to CNY7.0892 against the Greenback.

Geo-Politics

Impeachment: With the U.S and China making progress on trade, impeachment chatter could return in the week ahead.

Trade Wars: 15th October U.S tariffs on Chinese goods have been postponed as progress was made last week. For real progress to be made, however, the U.S would need to remove existing tariffs that continue to hurt the Chinese economy. Expect more chatter in the week, which will influence risk sentiment.

UK Politics: Brexit talks continue, with a deal now needed to support further the Pound ahead of the EU Summit. Any suggestions that the latest proposal is inadequate and expect the Pound to slide.

The Rest

Earnings:  It’s a big week ahead, with U.S banks Citi, Goldman, JPMorgan, and Wells Fargo announcing.

EU Summit: It is make or break for Boris Johnson and the Brexiteers. Will there finally be an agreement for the British PM to take back to parliament?

IMF Annual Meeting: Chatter on the global economy and what can be done to drive growth will influence. Will there be any agreements to ramp up fiscal spending to offset the effects of the ongoing U.S – China trade war?

The Weekly Wrap – Progress on Brexit and Trade Delivered in the Week

The Stats

It was a quieter week on the economic calendar in the week ending 11th October.

A total of 44 stats were monitored throughout the week, following 74 stats from the week prior.

Of the 44 stats, 17 came in ahead forecasts, with 22 economic indicators coming up short of forecast. 5 stats were in line with forecasts in the week.

Looking at the numbers, 19 of the stats reflected an upward trend from previous figures. Of the remaining 25, 20 stats reflected a deterioration from previous.

While the economic data was skewed to the negative, the Dollar struggled in the week, as demand for the dollar eased off the back of positive updates from trade talks and Brexit.

The U.S Dollar Index (“DXY”) fell by 0.55% to end the week at $98.301.

Out of the U.S

It was a relatively quiet week on the economic data front. Wholesale inflation figures on Tuesday and September inflation figures on Thursday provided direction early in the week.

wholesale and consumer prices were on the softer side in September, pinning back the greenback.

On Friday, positive Michigan’s consumer expectations and sentiment figures failed to support the Greenback.

Off less influence in the week, were JOLTs job openings, initial jobless claims and import and export price index figures.

Outside of the stats, the FOMC meeting minutes revealed some debate on when to end the current rate path. Rising concerns over the economic outlook suggested that more cuts could be on the way.

The reality was, however, that just 7 of 17 FOMC members foresaw a further rate cut before the year-end.

Downside for the Dollar ultimately came from an easing in geopolitical risk, with most of the damage coming at the end of the week.

In the equity markets, a Friday rebound pulled the majors into the green for the week. The Dow and S&P500 ended the week up by 0.91% and 0.62% respectively, with the NASDAQ up 0.93%.

Out of the UK

It was a busy week on the economic calendar.

Key stats included GDP, industrial and manufacturing production and trade data on Thursday.

While production was on the slide, quarter-on-quarter GDP numbers continued to show the UK economy dodging a recession. The numbers were ultimately Pound positive.

Of less influence in the week were housing sector figures, labor productivity, and retail sales numbers.

While the stats were supportive of the Pound, the upside ultimately came from Brexit news.

Progress towards a possible trade deal, ahead of next week’s EU Summit, drove demand for the Pound.

The Pound ended the week up by 2.73% to $1.2668.

For the FTSE100, a stronger Pound failed to pressure the 100, with the index rising by 1.28%.

Out of the Eurozone

It was particularly quiet week on the economic data front.

Germany’s factory orders and trade data provided little support in the week, with factory orders falling again and the trade deficit narrowing.

On the positive, however, was an unexpected rise in industrial production.

At the end of the week, finalized September inflation figures out of Germany and Spain had a muted impact on the EUR.

On the monetary policy front, the ECB monetary policy meeting minutes also left the EUR unscathed.

The upside in the week ultimately came from positive updates on Brexit and progress on the U.S – China trade talks.

For the week, the EUR rose by 0.58% to $1.1042.

For the European major indexes, the DAX30 rallied by 4.15%, with the EuroStoxx600 and CAC40 up by 3.23% and 3.00% respectively.

Elsewhere

It was another positive week for the Aussie and Kiwi Dollars.

The Aussie Dollar rose by 0.34% to $0.6794, while the Kiwi Dollar gained 0.27% to $0.6337.

For the Aussie Dollar

It was a quiet week for the Aussie Dollar.

Economic data was limited to September’s business confidence and October consumer sentiment figures.

Both business and consumer confidence figures disappointed in the week, pinning back the Aussie Dollar.

Of less influence were home loan figures that continued to reflect improved housing sector conditions.

In spite of the negative bias on the stats, a Friday rally in the Aussie Dollar delivered the gains for the week. Positive updates on trade talks delivered the upside on the day.

For the Kiwi Dollar

The stats were, once more, skewed to the negative in the week.

September’s Business PMI held steady at 48.4, coming up short of a forecast of 49.0. Electronic card retail sales also came up short of forecasts, whilst up by 0.4% in September.

While the stats were skewed to the negative on Friday, a 0.27% gain on the day gave the Kiwi Dollar the upside for the week.

For the Loonie

Through the 1st half of the week, housing sector figures impressed, proving some support.

Employment figures on Friday were the key driver, however, with the unemployment rate falling from 5.7% to 5.5%. A 53k rise in employment, following an 81.1k increase in August, delivered on the day.

Positive updates from trade talks also delivered provided support late in the week, with WTI and Brent gaining 3.58% and 3.54% respectively.

The Loonie ended the week up by 0.83% to C$1.3203 against the Greenback.

For the Japanese Yen

It was a relatively quiet week on the data front. Stats were limited to August household spending figures that came in worse than forecasts.

While the stats were Yen negative, the downside from the Yen came from an easing in geopolitical risk.

Safe-haven demand waned as progress on Brexit negotiations and trade talks spurred demand for riskier assets.

For the week, the Japanese Yen fell by 1.26% to ¥108.29.

Out of China

It was a quiet week on the economic data front.

September’s service sector PMI, which reported slower sector growth, tested risk sentiment on Monday.

A lack of stats through the remainder of the week left updates from the U.S – China trade talks to influence risk sentiment.

The Yuan rose by 0.83% to CNY7.0892 against the Greenback.

EUR/USD Weekly Price Forecast – Euro Has Strong Week

The EUR/USD pair has shot higher during the week after initially dropping as traders continue to weigh upon the idea of a Brexit deal. At this point, the market is likely to continue to see headline driven noise, something that will certainly cause quite a bit of nausea for traders out there. That being said, this is still a very negative trend, so although this candlestick, and the previous one for that matter, both look rather bullish, the reality is that the bearish pressure is still very much above us.

EUR USD Forecast Video 14.10.19

The Euro is also a bit of a risk barometer, and people feel little better at the moment as the US/China trade talks have been supposedly going fairly well but we don’t have any concrete evidence yet. Ultimately, this is a market that looks likely to see a lot of noise, and the next couple of weeks could very well be positive. However, the 1.12 level above looks to be very resistive. If we were to break above that, then it could change the overall attitude for a longer-term move, but at this point I’m not looking for that to happen. Overall, this is a market that is probably just simply bouncing from an extremely low level. That being said, if we get some type of negative headline out there, we could turn right back around rather quickly. I also would point out that the 1.12 level above could offer resistance based upon the fact that it was the 61.8% Fibonacci retracement level.

Please let us know what you think in the comments below

EUR/USD Price Forecast – Euro Breaks Out Again

The Euro has broken the trend line again during the trading session on Friday, breaking above the 50 day EMA again. Ultimately, this is a good sign and it looks as if the Euro is ready to go higher. That being said, the 1.10 level should offer a bit of support now, and if it does not then the market is probably going to continue the overall downtrend. There seems to be a lot of skittish trading out there right now, which of course makes quite a bit of sense considering that the Brexit situation seems to be moving forward a little bit and that of course will help the European Union, not just the United Kingdom.

EUR/USD Video 14.10.19

Beyond that, there’s also potential good news coming out of the US/China talks, and while a bit counterintuitive, there is a lot of talk about how China’s strengthening will only help the European Union as well, because the EU is its largest customer. I don’t know if I buy into that but the reality is the markets seem to think that so at the end of the day that’s all that matters. The 1.1075 level above should continue to offer a bit of resistance, but if the market breaks above the 1.11 handle it’s likely that we will get a run to the upside. Otherwise, expect a lot of choppy and sideways action going forward. Quite frankly though, it’s only going to take a bad headline or two to send things around to the downside again.

Please let us know what you think in the comments below

U.S. Futures Strongly Higher, Hopes For Brexit Deal Stoked , China Announces Financial Reforms

The U.S. Futures Are Ripping Higher

The U.S. equities futures are ripping higher in early trading following positive news regarding trade. The Dow Jones Industrial Average, S&P 500, and NASDAQ Composite are all up more than 1.0% in early Friday trading. The spark that ignited this move is positive news on trade, news that suggests a temporary deal may be reached sometime today. Yesterday, a Tweet from Donald Trump that the talks were going “really well” was compounded today by another source who says the talks went “probably better than expected”.

Chinese Vice Premier Liu He is expected to meet with Donald Trump in the Oval Office later today. During the previous negotiations session, such a meeting preceded important concession from both sides. In stock news, shares of FAANG stocks are up more than 1.0% while the financials are close behind. Investors are also closely watching earnings. Next week the big banks are slated to report and open peak earnings season.

Europe Higher, Brexit Deal In Sight

European markets are also moving higher in early trading. The DAX is up about 2.0% while the CAC trails with a gain of 1.0% and the FTSE lags at 0.60% In Brexit news, Irish PM Leo Varadkar said a deal might be clenched by the deadline after a meeting with UK PM Boris Johnson. The two are trying to work out a solution to the Irish-Backstop, it appears they have hit on a promising possibility. JP Morgan, in the wake of this news, raised their odds of a smooth Brexit from 5% to 50%.

In stock news, tech is in the lead at midday with a gain greater than 3.0%. At the other end of the spectrum, shares of ad-company Publicis are down -13% after cutting full-year guidance. Energy is also a strong performer in the early part of today’s session. Brent and WTI are both up nearly 2.0% after Iran reported one of its tankers was struck by missiles. The tanker was traveling close to Saudi shores, the Saudis have not made a comment but it is possible they are retaliating for damage done last month.

Asian Markets Move Higher

Asian markets closed higher on rising trade hopes. The Hong Kong Hang Seng led the day in Friday’s session with a gain of 2.34%. The move was boosted by a 4.5% increase in CNOOC, China’s national oil company. The Nikkei is in the runner-up position with a gain of 1.15% while most others in the region advanced 0.80% to 0.90%. In China, China’s financial regulator has laid out a timeline reducing and removing requirements for foreign financial institutions.

EUR/USD Mid-Session Technical Analysis for October 11, 2019

The Euro is trading at a three-week high against the U.S. Dollar on Friday on optimism the U.S. and China will reach at least a partial trade agreement by the end of the session. The Euro isn’t getting stronger per se, it’s the U.S. Dollar that’s getting weaker. Hopes for a trade deal are reducing the greenback’s appeal as a safe-haven asset.

At 11:59 GMT, the EUR/USD is trading 1.1055, up 0.0049 or +0.45%.

Top U.S. and Chinese negotiators wrapped up their first day of trade talks on Thursday, with U.S. President Donald Trump welcoming what he called a “very, very good negotiation with China”.

EURUSD
Daily EURUSD

Daily Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher.

A trade through 1.1110 will change the main trend to up. A move through 1.0879 will signal a resumption of the downtrend.

The minor trend is up. This is helping to generate the upside momentum. The next upside target is the minor top at 1.1076. A trade through 1.0941 will change the minor trend to down.

The main range is 1.1164 to 1.0879. Its retracement zone at 1.1022 to 1.1055 is currently being tested. This zone is controlling the near-term direction of the EUR/USD.

The minor range is 1.1110 to 1.0879. Its retracement zone at 1.1022 to 1.0995 is support.

Daily Technical Forecast

Based on the earlier price action and the current price at 1.1055, the direction of the EUR/USD the rest of the session on Friday is likely to be determined by trader reaction to a downtrending Gann angle at 1.1060 and an uptrending Gann angle at 1.1039.

Bullish Scenario

Holding above the uptrending Gann angle at 1.1039 will indicate the presence of buyers. However, buyers need to take out the downtrending Gann angle at 1.1060 to extend the rally.

If this creates enough upside momentum then look for a rally into the next downtrending Gann angle at 1.1079, followed by the main top at 1.1110.

Bearish Scenario

The inability to overcome the downtrending Gann angle 1.1060 will signal the presence of sellers. Taking out the uptrending Gann angle at 1.1039 will indicate the selling pressure is getting stronger. This could trigger a break into the 1.1022. This is a potential trigger point for an acceleration into the 50% level at 1.0995.

EUR/USD Daily Forecast – Euro Rally Slows Following Break Above 1.10

EUR/USD Retests Breakout Point

There was a fairly significant technical break in EUR/USD yesterday as the pair broke above an important resistance confluence. Momentum has faded a bit since then, although the pair continues to offer a bullish signal while above this area.

A positive development in the US-China trade war on Thursday triggered a rally in risk although it did not have a very significant impact on the dollar. The US dollar index (DXY) fell to a two-week low yesterday and has since fallen into a narrow range. Meanwhile, the S&P 500 gained 1% on Thursday and is seeing a strong bid in pre-market trading today.

Investor optimism was lifted after comments from US President Trump indicated that the world’s two largest economies were moving closer to a deal. Talks will resume today and we could see further volatility in the markets. The economic calendar is quite light today so the markets will tend to be entirely focused on the trade war.

Technical Analysis

Yesterday’s bullish break was quite significant as several technical barriers were breached. First, the 1.1000 level itself is quite important considering its psychological properties. Further, the 20-day moving average falls near the level to create a confluence. Lastly, the upper bound of a trend channel is also within close proximity of the horizontal level and moving average. The channel had held EUR/USD lower since late June.

EURUSD 4-Hour Chart

The pair topped around 1.1030 yesterday and has since declined to retest the breakout area that buyers have been defending. If we manage to get back below it, especially on a daily close basis, it would negate the breakout.

On the other hand, EUR/USD could be signaling a bullish reversal considering yesterday’s technical development. For this reason, how the pair trades today, and closes for the week, will be important for the near to medium-term outlook.

Bottom Line

  • After the bullish break yesterday, EUR/USD bulls are defending the breakout area on a dip.
  • Trade negotiations will continue and news on developments stand to drive volatility to the pair.