Asian Shares Rise as Upbeat Brexit News Offsets IMF’s Prediction of Lower Global Growth

The major Asia Pacific stock indexes are trading mostly higher on Wednesday, boosted by upbeat news regarding Brexit from the previous day. Brexit hopes were boosted by news that the European Union and United Kingdom were close to a deal. However, gains may have been limited by a warning from the International Monetary Fund (IMF) on Tuesday that the U.S.-China trade war will cut 2019 global growth to its slowest pace since the 2008-2009 financial crisis.

At 07:09 GMT, Japan’s Nikkei 225 Index is trading 22472.92, up 265.71 or +1.20%. Hong Kong’s Hang Seng Index is at 26644.67, up 140.74 or +0.53% and South Korea’s KOSPI Index is trading 2082.83, up 14.66 or +0.71%.

In Australia, the S&P/ASX 200 Index is trading 6736.50, up 84.50 or +1.27% and in China, the Shanghai Index is at 2976.77, down 14.28 or -0.48%.

Brexit Traders Eye Imminent Draft Deal

Asian shares were supported on Wednesday after optimistic comments on Brexit from European negotiator Michel Barnier were backed up by reports that a draft legal text over the divorce was being drawn up.

“Our team(s) are working hard, and work has just started now today, this work has been intense over the weekend and yesterday, because even if the agreement will be difficult, more and more difficult, to be frank, it is still possible this week,” Barnier told reporters in Luxembourg on Tuesday morning.

He added that “any agreement must work for everyone,” saying it is “high time to turn good intentions into a legal text.”

By mid-afternoon (Tuesday), one report suggested that a draft deal was in the works according to two separate sources familiar with negotiations.

IMF Says Trade War Will Cut Global Growth

The U.S.-China trade war will cut 2019 global growth to its slowest pace since the 2008-2009 financial crisis, the International Monetary Fund (IMF) warned on Tuesday, adding that the outlook could darken considerably if trade tensions remain unsolved.

The IMF said its latest World Economic Outlook projections show 2019 GDP growth at 3.0%, down from 3.2% in a July forecast, largely due to increasing fallout from global trade friction.

The World Economic Outlook report spells out in sharp detail the economic difficulties caused by the U.S.-China tariffs, including direct costs, market turmoil, reduced investment and lower productivity due to supply chain disruptions.

Other News

South Korea’s central bank cut its interest rate for the second time in three months on Wednesday, as expected, following its first cut in July.

In Australia, the listing of lender Latitude Financial, what was to be the biggest Australian IPO of the year, has been canceled, according to Reuters. The IPO was canceled because a large proportion of demand for shares was coming from hedge funds rather than desired long-term investors.

In New Zealand, the Reserve Bank signaled more rate cuts, or even unconventional stimulus measures, may be needed to counter global headwinds, as figures on Wednesday showed the country’s annual inflation rate slowed in the third quarter.

Inflation fell to 1.5% in the year to end-September from 1.7% previously, Statistics New Zealand said, moving further away from the central bank’s target, but slightly ahead of a 1.4% rise predicted in a Reuters poll of economists.

AUD/USD, NZD/USD, USD/CNY – Asian Session Daily Forecast

AUD/USD

AUD/USD has lost ground for a third successive day. In Wednesday’s Asian session, the pair is trading at 0.6743, down 0.14% on the day.

Investors Eye Job, Confidence Data

There are no key Australian events on Wednesday, but the markets are waiting for key employment numbers on Thursday. Employment change is expected at 15.3 thousand in September, lower than August but still a decent reading. The unemployment rate is projected to remain steady at 5.3%.

As well, the NAB releases its quarterly business confidence report. Traders should be prepared for stronger movement from the pair on Thursday.

AUD/USD Technical Analysis

AUD/USD continues to move lower and tested support at 0.6760 on Tuesday. Currently, the pair is slightly below this level. If the downward movement continues, support at 0.6710 will be vulnerable. This line is protecting the round number of 67.00, which last saw action in early October.

AUD/USD 4-hour Chart

USD/CNY

USD/CNY is showing limited movement in early Wednesday trade. In the Asian session, the pair is trading at 7.0915, up 0.14% on the day.

USD/CNY Technical Analysis

USD/CNY has reversed directions after the recent rally by the yuan, in which the pair lost close to 1.0%. The pair tested support at 7.0592 on Monday, but this line has since stabilized, with the pair moving higher. Still, this line could be further tested during the week. Below, we find support at the 7.0400 line. On the upside, 7.1100 is relevant and could face pressure if the upward movement continues.

USD/CNY 4-Hour Chart

NZD/USD

NZD/USD has posted slight losses on Wednesday.  In the Asian session, the pair is trading at 0.6285, down 0.14% on the day.

New Zealand CPI Beats Forecast

New Zealand CPI, which is released every quarter, was better than expected in the third quarter. Consumer inflation gained 0.7%, edging above the estimate of 0.6%. NZD/USD has responded to the release with marginal gains.

NZD/USD Technical Analysis

NZD/USD continues to test support at 0.6280, but is having difficulty consolidating below this stubborn line. Below, we find support at 0.6230. On the upside, 0.6357 has remained intact in resistance since mid-September.

NZD/USD 4-Hour Chart

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.

AUD/USD, NZD/USD, USD/CNY – Asian Session Daily Forecast

AUD/USD

AUD/USD is flat early in Tuesday trade. In the Asian session, the pair is trading at 0.6775, unchanged on the day.

RBA Open to Further Rate Cuts

The RBA minutes were decidedly dovish, as members hinted at further rate cuts. The bank noted that low rates may have overly inflated prices in the housing market and that it would carefully monitor the situation. The financial markets have priced in a rate cut in November at 59 percent, and the likelihood of another rate cut will make the Aussie less attractive to investors.

AUD/USD Technical Analysis

AUD/USD lost ground on Monday, but remains range-bound. The round number of 68.00 remains an immediate resistance line, but the pair is not showing much appetite to break above this line. Below, there is weak support at 0.6760. This line was tested on Monday. The next support level is at 0.6710. I do not expect the pair to show any sustained movement in either direction on Tuesday.

AUD/USD 4-Hour Chart

USD/CNY

USD/CNY is trading sideways early in Tuesday trade. In the Asian session, the pair is trading at 7.0741, up 0.09% on the day.

Chinese CPI Jumps to 3.0%

Chinese CPI climbed 3.0% in August, compared to 2.8% a month earlier. This marked the highest inflation rate since November 2013. The catalyst for the rise was a sharp increase in pork prices, which pushed up prices by 11.2% in September. China was scheduled to release New Loans, but this has been postponed to Wednesday. The indicator is expected to rise to 1350 billion yen ($190 million) in September.

USD/CNY Technical Analysis

The yuan rally, which started last week, has stalled on Tuesday. On Monday, the pair tested a major support line at 7.0592, but has retraced upwards on Tuesday. I expect this support line to fall during the week. Below, we find support at 7.0400. On the upside, 7.1100 has strengthened as USD/CNY has shown sustained downward movement.

USD/CNY 4-Hour Chart

NZD/USD

NZD/USD is showing limited movement on Tuesday.  In the Asian session, the pair is trading at 0.6297, down 0.11% on the day.

Next – New Zealand CPI

Traders should keep an eye on CPI, which is released every quarter. The forecast for Q3, which stands at 0.6%, unchanged from the second quarter. An unexpected reading could trigger some volatility from NZD/USD.

NZD/USD Technical Analysis

NZD/USD remains range-bound, with the pair showing little movement on Tuesday. There is immediate support at 0.6280, which has remained throughout October. Below, we find support at 0.6230. On the upside, 0.6357 has remained intact in resistance since mid-September.

NZD/USD 4-Hour Chart

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.

NZD/USD Forex Technical Analysis – Triangle Formation with .6341 Resistance, .6294 Support

The New Zealand Dollar is trading lower early Monday as traders positioned themselves ahead of Wednesday’s release of the September quarter inflation figures. Economists expect the consumer price index to have risen 0.6 percent in the latest quarter, taking the annual rate to 1.4 percent, down from 1.7 percent in the June quarter.

At 04:49 GMT, the NZD/USD is trading .6313, down 0.0025 or -0.40%.

On Friday, the NZD/USD surged to its highest level since September 18 after President Trump announced a partial trade deal between the United States and China.

NZDUSD
Daily NZD/USD

Daily Technical Analysis

The main trend is up according to the daily swing chart. The trend changed to up on Friday when buyers took out the previous main top at .6337. It was reaffirmed later in the session when .6349 was taken out.

A trade through .6354 will signal a resumption of the uptrend. A move through .6277 will change the main trend to down.

The short-term range is .6451 to .6204. Its retracement zone at .6328 to .6357 is resistance. This zone stopped the rally on Friday at .6354.

The minor range is .6204 to .6354. Its retracement zone at .6279 to .6261 is the next downside target.

Daily Technical Forecast

Based on the early price action and the current price at .6314, the direction of the NZD/USD the rest of the session is likely to be determined by trader reaction to the uptrending Gann angle at .6294.

Bullish Scenario

A sustained move over .6294 will indicate the presence of buyers. If this can create enough upside momentum then look for the rally to possibly extend into the short-term 50% level at .6328, followed by the downtrending Gann angle at .6341.

Overtaking .6341 could extend the rally into the minor top at .6354, followed by the short-term Fibonacci level at .6357.

Bearish Scenario

A sustained move under .6294 will indicate the selling is getting stronger. This could trigger a further break into the minor 50% level at .6279, followed closely by the main bottom at .6277.

Taking out .6277 will change the main trend to down. This could trigger a quick drop into the minor Fibonacci level at .6261.

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.

AUD/USD and NZD/USD Fundamental Weekly Forecast – Aussie Unemployment Rate Should Set Tone

The Australian and New Zealand Dollars finished higher last week as traders reacted to the positive news of a partial trade deal between the United States and China. The development helped change the trend on the daily chart, but the weekly trend is still pointing decisively lower. The price action suggests the moves were likely fueled by low-level short-covering by traders who bet on trade relations worsening, given the plethora of negative press for weeks ahead of last week’s renewed negotiations.

Last week, the Australian Dollar settled at .6793, up 0.0027 or +0.40% and the New Zealand Dollar finished at .6339, up 0.0024 or +0.38%.

Australian Dollar

Last week’s data out of Australia was weak and the currency was actually headed lower until late Thursday when speculation of a trade deal started to hit the newswires.

The week started with the AIG Construction Index coming in lower than expected. This was followed by an extremely weak Westpac Consumer Sentiment report and a report on Home Loans that missed the estimate.

The drop in the Westpac Consumer Sentiment report was particularly disturbing because the data was compiled after the Reserve Bank of Australia’s (RBA) three rate cuts. The report indicates Australian consumers have turned bearish on the RBA’s attempts to revitalize the economy as fears about the near-term economic outlook sapped their confidence.

The Westpac Bank index of consumer sentiment plunged to 5.5% in October, after slipping 1.7% in September. The index was down 8.6% from a year earlier, and at 92.8 indicated pessimists far outnumbered optimists. This was also the lowest level for the index since July 2015.

Typically, an interest rate cut boosts confidence particularly around consumers’ expectations for and assessments of their own finances,” said Westpac Chief Economist Bill Evans.

“In this survey these components of the index fell by 3.7% and 4.9% respectively. This may be because, despite the rate cut, assessments for the economy overall plunged by 6% (the twelve month outlook) and 9.1% (the five year outlook),” he added.

“Consumers are looking behind the reason for the rate cut and, arguably, the absolute level of rates and getting nervous.”

Weekly Forecast

Shorts covered last week after the U.S. and China reached the first phase of a substantial trade deal that delays tariff hikes that were to start on October 15. Phase one of the trade deal will be written over the next three weeks. Phase two of the deal will “start almost immediately” after the first one is signed, Trump said.

Even though the Aussie and Kiwi were boosted by the news, I don’t think it was particularly bullish because the older tariffs remain in place, and a decision had not been made over additional U.S. tariffs scheduled for December.

In other words, there is nothing in the first phase of the deal that suggests a global economic recovery is just around the corner. Furthermore, the short-covering we are witnessing will probably cap out once traders price in the suspension of the new tariffs that were to take place early this week.

This week, Australian Dollar traders will get an opportunity to react to the RBA Monetary Policy Meeting Minutes, Employment Change and the Unemployment Rate. If the Unemployment Rate then expect traders to begin pricing in another RBA rate cut before the end of the year.

In New Zealand, the key report is quarterly Consumer Inflation, it is expected to have risen 0.6%.

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.

NZD/USD Forex Technical Analysis – Strengthens Over .6357, Weakens Under .6327

The New Zealand Dollar is trading at its highest level since September 18 late Friday as optimism over a possible trade deal between the United States and China is encouraging short-sellers to cover positions while attracting some light speculative buying.

The catalyst behind the rally is a positive comment from President Trump, which suggested the 15-month-long-trade war may be moving closer to an end.

“Good things are happening at China Trade Talk Meeting,” Trump said in a tweet. “Warmer feelings than in recent past, more like the Old Days. I will be meeting with the Vice Premier today. All would like to see something significant today!”

Trump’s meeting with Chinese Vice Premier Liu He is scheduled for 18:45 GMT. Traders should prepare for volatility at that time in case there is an official announcement on what transpired at the meeting.

At 17:31 GMT, the NZD/USD is trading .6342, up 0.0022 or +0.34%.

NZDUSD
Daily NZD/USD

Daily Technical Analysis

The main trend is up according to the daily swing chart. The main trend changed to up earlier today on a trade through .6337. The main trend will change to down on a move through .6277.

The short-term range is .6451 to .6204. The market is currently trading inside its retracement zone at .6327 to .6357. This zone is controlling the near-term direction of the Forex pair.

Daily Technical Forecast

Based on the early price action and the current price at .6342, the direction of the NZD/USD the rest of the session on Friday is likely to be determined by trader reaction to the downtrending Gann angle at .6346.

Bearish Scenario

A sustained move under .6346 will indicate the presence of sellers. The first target is the short-term 50% level at .6327. This is a potential trigger point for an acceleration into the uptrending Gann angle at .6284. This is followed by the main bottom at .6277.

Bullish Scenario

A sustained move over .6346 will signal the presence of buyers. The first two targets are the short-term Fibonacci level at .6357 and the uptrending Gann angle at .6364.

Crossing to the strong side of the angle at .6364 will indicate the buying is getting stronger. This could trigger a rally into the downtrending Gann angle at .6399.

AUD/USD and NZD/USD Fundamental Daily Forecast – Strengthen on Hopes of Progress in US-China Talks

The Australian and New Zealand Dollars are trading higher during the U.S. session on Friday on hopes of progress in U.S.-China talks. The currencies are also being driven by a stronger Chinese Yuan, which hit a three-week high in the Asian trading session of 7.0890 per dollar.

The currencies were supported early in the session after top U.S. and Chinese negotiators wrapped up their first day of trade talks on Thursday, prompting U.S. President Trump to say, “very, very good negotiation with China”.

At 15:46 GMT, the AUD/USD is trading .6806, up 0.0045 or +0.67%. The NZD/USD is at .6348, up 0.0028 or +0.45%.

The Aussie and the Kiwi were driven even higher early in the U.S. session after President Donald Trump struck an optimistic tone on the trade talks with China on Friday as the two countries try to end a 15-month-long trade war that is taking a toll on the global economy.

“Good things are happening at China Trade Talk Meeting,” Trump said in a tweet. “Warmer feelings that in recent past, more like the Old Days. I will be meeting with the Vice Premier today. All would like to see something significant happen!”

The AUD/USD and NZD/USD hit their session highs following his tweet.

Trump’s meeting with Chinese Vice Premier Liu He is scheduled for 18:45 GMT. The face-to-face meeting with the head of the Chinese trade delegation is also seen as a positive sign.

Trump also said Friday a trade deal between the U.S. and China doesn’t require approval from the Congress, making a possible deal “fast and clean.”

“One of the great things about the China Deal is the fact that, for various reasons, we do not have to go through the very long and politically complex Congressional Approval Process. When the deal is fully negotiated, I sign it myself on behalf of our Country. Fast and Clean!” Trump said in a tweet.

Daily Forecast

Prices could surge further later in the session if the two countries could agree to at least a partial agreement on issues such as currency and agriculture buying. This would leave more controversial issues such as protections against Chinese theft of U.S. intellectual property, for later negotiations. According to CNBC, multiple reports suggest a delay in the tariff hike could also be agreed upon.

A state-run Chinese newspaper said in an editorial Friday that “a partial deal is a more feasible objective.” China also set a clear timetable for opening its finance industries, adding to a slew of positive developments overnight.

Late Thursday, China’s securities regulator announced a timetable to remove a requirement that foreign financial companies must have a Chinese investor. Additionally, the New York Times also reported the two sides could announce a deal that would avoid raising tariffs on Chinese goods.

AUD/USD, NZD/USD, USD/CNY – Asian Session Daily Forecast

AUD/USD

AUD/USD has posted slight gains in Friday trade. In the Asian session, the pair is trading at 0.6772, up 0.14% on the day.

Aussie at 3-Week Highs, More to Come?

AUD/USD gained ground on Thursday and has added further gains on Friday. The pair is now at its highest level since September 25. The gains follow weak U.S. inflation data on Thursday, so I would frame it as a case of U.S. dollar weakness rather than Aussie strength. As such, I do not expect any significant upward movement before the end of the trading week.

AUD/USD Technical Analysis

AUD/USD tested resistance at 0.6760 on Thursday and remains just slightly above this line on Friday. The pair has been range-bound between 0.6720 and 0.6760 since September 25 – if the Aussie can consolidate above 0.6760, it could make an upward move towards major resistance at the round number of 0.6800. Above, we find resistance at 0.6840.

AUD/USD 4-Hour Chart

USD/CNY

The Chinese yuan is enjoying its best week since late September, with gains of 0.50%. In Friday’s Asian session, USD/CNY is trading at 7.1057, down 0.13%. The pair took advantage of soft U.S. inflation numbers, as the dollar was broadly lower as a result. China was scheduled to release New Loans on Friday, but this has been postponed to Monday, so we could see some movement in Monday’s Asian session. The indicator is expected to rise to 1350 billion yen ($190 million) in September.

USD/CNY Technical Analysis

There was an important development on Thursday as USD/CNY tested support at 7.11, which had remained intact since late September. The main trend is down, so I would not be surprised if the pair consolidates below this line and avoids a retracement. If this occurs, the pair has room to move towards support at 7.0590.

USD/CNY 4-Hour Chart

NZD/USD

NZD/USD posted gains on Thursday, coming close to the October high. The pair has leveled off on Friday. in Asian session, the pair is trading at 0.6321, up 0.04% on the day.

NZ Manufacturing Index Contracts

There was disappointing news on the manufacturing front, as the NZ Manufacturing Index posted a third successive contraction. The September reading of 48.4 was unchanged from the previous month. NZD/USD managed to post gains on Thursday, courtesy of soft U.S. inflation numbers.

NZD/USD Technical Analysis

NZD/USD has put a bit of distance between the pair and support at 0.6280. Still, the pair didn’t show any clear direction this week, and Friday is shaping up as a quiet day for the pair. This means that resistance at 0.6357 remains safe for now.

NZD/USD 4-Hour Chart

Trade Talks and Brexit Negotiations to Remain the Key Drivers

Earlier in the Day:

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

The Kiwi Dollar was in action, with September’s Business PMI and electronic card retail sales providing direction early on.

On the geopolitical risk front,  it was risk-on as the markets responded to positive updates from the U.S – China trade talks. There were also positive updates on Brexit negotiations, adding to the positive sentiment early in the day.

For the Kiwi Dollar

The Business PMI held steady at 48.4 September, falling short of a forecast of 49.0, according to the latest PMI Survey.

Electronic card retail sales rose by 0.4%, month-on-month, in September, following a 1.2% rise in August. Economists had forecast a 0.5% increase.

According to NZ Stats,

  • A 0.8% jump in spending on groceries and liquor provided support in September.
  • Spending on durables, including electronics, hardware, furniture and appliances and in the hospitality industries also supported. Both sectors saw a 0.4% rise in spending.
  • Weighing in September was a 4% fall in spending on clothes and shoes.

The Kiwi Dollar moved from $0.63181 to $0.63194 upon release of the figures. At the time of writing, the Kiwi Dollar up by 0.05% to $0.6323.

Elsewhere

At the time of writing, The Japanese Yen was up by 0.01% to ¥107.97 against the U.S Dollar, with the Aussie Dollar was up by 0.16% to $0.6772.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. with German, French and Spanish finalized September inflation figures due out.

Barring a deviation from prelim figures, the stats will unlikely have a material impact on the EUR.

On the geopolitical front, it’s France’s imposed deadline for Britain to deliver a viable alternative to the Irish backstop. We can expect movement across the majors as news filters through. There is also the U.S – China trade war to factor in.

At the time of writing, the EUR was up by 0.09% to $1.1015.

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 market focus on the day will be on Brexit as Boris Johnson’s time runs out on delivering proposals to the EU. We expect the Pound to be particularly sensitive to any updates over the course of the day.

At the time of writing, the Pound was down by 0.02% to $1.2440.

Across the Pond

It’s a relatively busy day ahead on the economic calendar. Key stats include U.S import and export price figures along with prelim consumer sentiment and expectation figures for October.

On the data front, we expect the Michigan consumer sentiment figures to have the greatest influence late in the day.

On the geopolitical front, it’s Friday, which has proven to be one of Trump’s favored day for tweeting. Following positive updates on Thursday, there could be further pick up in risk appetite should talks progress favorably.

The Dollar Spot Index was down by 0.02% to 98.686 at the time of writing.

For the Loonie

It’s a  relatively busy day on the economic calendar. Economic data includes September employment change figures and the September unemployment rate.

With economic data having been on the lighter side in the week, expect the Loonie to respond to the numbers.

Ahead of the stats, market sentiment towards the economic outlook and impact on crude oil prices will also provide direction.

The Loonie was down by 0.02% at C$1.3294, against the U.S Dollar, at the time of writing.

AUD/USD, NZD/USD, USD/CNY – Asian Session Daily Forecast

AUD/USD

AUD/USD has posted gains in Thursday trade. In the Asian session, the pair is trading at 0.6744, up 0.37% on the day.

Aussie Inflation Indicator Jumps

Australian inflation expectations jumped 3.6% in September, up sharply from 3.1% in the previous release. This marked a 6-month high and boosted the Aussie in early trading on Thursday. Traders should keep a close eye on U.S. consumer inflation reports, which will be released later on Thursday. The markets are expecting soft numbers, which could weigh on the Australian currency.

AUD/USD Technical Analysis

AUD/USD has posted gains on Thursday, reversing the downward trend which began late last week. There is immediate resistance at 0.6760. We could see the Aussie push past this stubborn resistance line during the week, but for now, the pair remains range-bound. Below, there is support at 0.6710.

AUDUSD 4-Hour Chart

USD/CNY

The Chinese yuan continues to gain ground. In Thursday’s Asian session, USD/CNY is trading at 7.1129, down 0.26% on the day. Today’s key event is U.S. consumer inflation reports. Any unexpected readings could cause volatility for the pair. On Friday, China releases New Loans, which is expected to rise to 1350 billion yen ($190 million) in September.

USD/CNY Technical Analysis

The main trend is down and the pair has tested major support at 7.1100, for the first time since late September. If the yuan can break through this line, it could gather steam and move towards the next support line 7.0590. On the upside, 7.1700 has strengthened as the pair moves lower.

USD/CNY 4-Hour Chart

NZD/USD

NZD/USD has posted considerable gains on Thursday. In the Asian session, the pair is trading at 0.6318, up 0.49% on the day.

Ahead – U.S. CPI, NZ Manufacturing Index

There are two fundamental indicators on Thursday which could affect the movement of NZD/USD. The U.S. releases consumer inflation reports, with soft gains expected. The headline release is projected to remain steady at 0.1%, while the core reading is expected to dip to 0.2%, down from 0.3% in the previous release. Later, New Zealand releases the Business NZ Manufacturing Index. The index has posted back-to-back contractions, as the manufacturing sector continues to sputter due to weak global demand and the U.S.-China trade war. Another contraction could send the New Zealand dollar to lower ground.

NZD/USD Technical Analysis

NZD/USD tested support at 0.6280 on Wednesday, but has reversed directions on Thursday. I continue to keep an eye on a Fibonacci level at 0.6357. This resistance line has held since mid-September, and a break above this level would mark a major breakthrough for the greenback. Above, we find resistance at 0.6430. On the downside, 0.6280 is providing support.

NZD/USD 4-Hour Chart

It’s All Eyes on Washington as Trade Talks Resume Later Today

Earlier in the Day:

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

The Aussie Dollar was in action, with October consumer confidence and August home loan figures providing direction early on.

On the geopolitical risk front, news of China being supportive of a trade agreement failed to spur demand for riskier assets. Trade tensions have been on the rise and China’s support of an agreement comes with a caveat that no further tariffs are introduced.

With talks set to resume later today, some caution was to be expected…

For the Aussie Dollar

The Westpac Consumer Sentiment Index fell by 5.5% to 92.8 in October, reversing a 1.7% rise in September.

According to the Westpac report,

  • The slide came in spite of the RBA’s latest rate cut, which will be of concern when considering the reliance on consumer spending.
  • Global events, including deteriorating U.S – China trade relations, contributed to the weakest confidence since July 2015.
  • Looking at the numbers:
    • The sub-index for family finances vs a year ago fell by 4.9%, with finances for next 12-months down by 3.7%.
    • Economic conditions next 12-months slid by 6.0%, while economic conditions next 5-years slumped by 9.1%. The next 12-months sub-index was down 15.1% year-on-year, while the next 5-years was down by 6.4%.
    • The time to buy a major household item sub-index fell by 4.2% following last month’s 2.8% decline.
    • On the labor market front, the Unemployment Expectations Index fell by 1.3%, while up by 7.3% year-on-year.
    • The Time to buy a dwelling index fell by 5.4%, whilst rising by 13.7% over the year. By contrast, the House Price Expectations Index rose by 5.9%.

The Aussie Dollar moved from $0.67150 to $0.67141 upon release of the figures that preceded the home loan numbers.

Home loans rose by 1.8% in August, following on from a 5% jump in July, according to the ABS. Economists had forecast a rise of 3.6%.

The Aussie Dollar moved from $0.67172 to $0.67165 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.10% to $0.6718.

Elsewhere

At the time of writing, The Japanese Yen was up by 0.16% to ¥107.31 against the U.S Dollar, while the Kiwi Dollar down by 0.0.06% to $0.6289.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar, with German trade data due out of the Eurozone in the day ahead.

Following factory orders and industrial production figures from earlier in the week, the data would need to impress to support the EUR.

On the geopolitical front, Brexit will also be a factor along with any chatter on trade, as trade talks resume later today.

At the time of writing, the EUR was up by 0.10% to $1.0982.

For the Pound

It’s a busy day ahead on the data front. Economic data includes August industrial and manufacturing production, GDP numbers and trade data.

We would expect the manufacturing production and GDP figures to have the greatest influence on the day.

On the geopolitical front, Brexit will continue to be a key driver, however. With EU Summit just over a week away, we can expect the Pound to be particularly responsive to any updates from the EU or Westminster.

From earlier in the day, the UK’s RICS House Price Balance for September had a muted impact on the Pound.

According to the latest survey, the RICS House Price Balance Index rose from -4% to -2% in September.

At the time of writing, the Pound was up by 0.06% to $1.2213.

Across the Pond

It’s a relatively busy day ahead on the economic calendar, with inflation and initial jobless claims figures due out of the U.S later today.

While we can expect the Dollar to respond to the numbers, market sentiment towards the U.S and global economy and geopolitical risk will remain the key drivers.

Any pickup in inflationary pressure is unlikely to shift sentiment towards monetary policy near-term. FED members have become concerned over a likely softening in inflationary pressures. Consumer prices are forecast to rise by 0.2% in September, softer than a 0.3% rise in August.

Jobless claims figures will take a backseat on the day, barring an unexpected rise in claims. The Dollar would need initial weekly claims to hold at sub-230k levels to avoid a sell-off.

The Dollar Spot Index was down by 0.07% to 99.052 at the time of writing, with the overnight FOMC meeting minutes weighing early on.

For the Loonie

It’s a quiet day on the economic calendar. Economic data is limited to August house price figures. Barring particularly dire numbers, we would expect the numbers to have a muted impact on the Loonie.

On the day, the OPEC meeting’s influence on crude oil prices and sentiment towards the global economy will provide direction.

Economic data from the Eurozone and the U.S suggest that a further cut in OPEC output and supply is required.

The Loonie would need the hope of a near-term end to the U.S – China trade war and a cut in the supply crude oil to find support.

The Loonie was down by 0.07% at C$1.3342, against the U.S Dollar, at the time of writing.

NZD/USD One Small Step Away From a Major Buy Signal

There is no trading signal here yet, but once it will be triggered, we should receive a sweet long-term deal, with a target of hundreds of pips. This setup is present on the NZDUSD and for a legitimate signal we just need several pips.

Formation, which you can see marked with a yellow color is an inverse head and shoulders pattern. This is a strong bullish pattern, announcing a movement to the upside. One thing is missing here though – breakout of the blue neckline. Today, NZDUSD tried to jump above this resistance but without a success.

Apparently, we will have to wait a bit more. Another positive sign here is the breakout of the red down trendline, which was connecting lower highs since the end of July. Last but not least is the blue horizontal support. It is absolutely crucial here and shows us, that iH&S pattern did not emerge in a random place. The blue support comes from the long-term lows from 2015 – in theory, that is a sweet spot for a reversal, the best one on this pair.

To sum things up, as for now, we have to wait. In theory, the proper buy signal, will be triggered, when the price will break the blue neckline. Positive sentiment will be denied, once the price will come back below the red line but as for now, it is rather unlikely.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

NZD/USD Bullish Head and Shoulders Should Provide a Breakout to the North

Dear Traders,

The NZD/USD is showing a bullish pattern as we might see a spike to the upside at the close above the trend line.

4h close above 1.6320 with a bullish candlestick will provide a possible move to the upside. We can clearly see a bullish SHS pattern AKA Inverted Head ad Shoulders. A strong 4h close above should target 0.6348, 0.6374 and 0.6385. Only a break below 0.6238 will negate this bullish scenario. However, pay attention to any bullish impulse that should form the bullish candlestick above 0.6320 as the beginning of intraday uptrend that should last during the US and Tokyo session.

The analysis has been done with the CAMMACD.MTF template.

For more daily technical and wave analysis and updates, sign-up up to our ecs.LIVE channel.

Many green pips,
Nenad Kerkez aka Tarantula FX
Elite CurrenSea

AUD/USD and NZD/USD Fundamental Daily Forecast – Aussie Firms Despite Plunge in Consumer Confidence

The Australian and New Zealand Dollars are trading higher on Wednesday, mostly in reaction to a weaker U.S. Dollar. Traders are ignoring the negative headlines over U.S.-China trade relations and weaker-than-expected economic data out of Australia. Instead, we’re looking at some aggressive short-covering and position-squaring ahead of the start of trade talks between the two economic powerhouses on October 10.

At 09:02 GMT, the AUD/USD is trading .6741, up 0.0014 or +0.20% and the NZD/USD is at .6317, up 0.0019 or +0.30%.

Needless to say, it’s been a tough week with the narrative shifting several times. Some days, uncertainty is making the U.S. Dollar a more attractive asset, other days the greenback has weakened. The moves are likely being fueled by light volume as many of the major players remain on the sidelines ahead of the trade talks. With the outcome of the trade talks a 50/50 deal or worse, big money doesn’t seem to want to pick a side in the market.

Trade Tensions Still Major Concern

Despite the early strength in the Aussie and Kiwi, investors are still uncertain over the outcome of the trade talks. The headlines are causing the uncertainty with the U.S. expanding its black list of companies in China, and the world’s largest economy threatening retaliation. There is even a report from China that its trade delegation may cut short trade talks on Friday. While not triggering a break in the Aussie and Kiwi, the news may be keeping a lid on prices.

Aussie Traders Shrug Off Bearish Consumer Confidence

Australian consumer confidence tumbled to a four-year low even after three rate cuts by the Reserve Bank of Australia (RBA) and a healthy tax refund.

The Westpac Consumer Sentiment Index fell more than 5 percent in October to 92.8 points, its lowest reading since July 2015. The survey was taken the first week of October when the RBA cut rates a third time since June.

Westpac chief economist Bill Evans said the result would concern RBA officials.

“Typically, an interest rate cut boosts confidence particularly around consumers’ expectations for and assessments of their own finances,” Mr. Evans said.

“Issues that may also be unnerving consumers include the debate around the lack of response of fiscal policy to the deteriorating outlook; the banks’ partial pass through to the standard variable mortgage rate of the recent official rate cut; and the realization amongst Australians that wages growth is likely to remain stuck at a modest 2 percent a year or less for the foreseeable future,” Mr. Evans said.

Daily Forecast

Traders will be focused on the Fed minutes from its mid-September policy meeting. Traders are hoping the minutes offer clues as to whether further policy easing is yet to come.

On Tuesday, Fed Chair Jerome Powell said in a speech that the central bank is “not on a preset course” when it comes to future monetary policy. He also added that the Next FOMC meeting is still several weeks away, “and we will be carefully monitoring incoming information.”

A Light Economic Calendar Puts Geopolitics in the Driving Seat

Earlier in the Day:

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

There were no material stats due out of Asia to provide the majors with the direction in the early part of the day.

A lack of stats left the majors in the hands of market risk sentiment and geopolitical risk.

On the geopolitical risk front, negative sentiment towards the resumption of U.S – China trade talks tested risk sentiment early on

For the Majors

The Japanese Yen was down by 0.07% to ¥107.16 against the U.S Dollar, while the Aussie Dollar was up by 0.18% to $0.6740. At the time of writing, the Kiwi Dollar up by 0.24% to $0.6313.

The Day Ahead:

For the EUR

It’s a particularly quiet day ahead on the economic calendar. With no material stats due out of the Eurozone in the day ahead.

A lack of stats will leave the EUR in the hands of Brexit chatter and market risk sentiment throughout the day.

Following softer nonfarm payroll numbers on Friday, JOLT job openings could spook the markets should quit rates slide in August.

At the time of writing, the EUR was up by 0.05% to $1.0962.

For the Pound

It’s also particularly quiet day ahead on the data front, with no material stats due out of the UK to provide the Pound with direction.

The lack of stats will leave Brexit and UK politics to provide direction on the day. Barring particularly good news on the deal front, any upside for the Pound would be limited.

At the time of writing, the Pound was down by 0.03% to $1.2215.

Across the Pond

It’s a relatively quiet day ahead on the economic calendar, August’s JOLTs job opening figures due out of the U.S later today.

Whilst the headline number will influence, following last week’s NFP numbers, expect quit rates to have a greater impact on the day.

A fall in openings, with a steady quit rate, would reflect stable labor market conditions that would support the Greenback.

On the geopolitical front, it’s all about the trade talks with China. Expect updates from Washington and Beijing to drive the Dollar.

The Dollar Spot Index was down by 0.03% to 99.103 at the time of writing.

For the Loonie

It’s a quiet day on the economic calendar. There are no material stats due out later today, leaving the Loonie in the hands of the weekly EIA numbers and sentiment towards the global economy.

The Loonie was up by 0.06% at C$1.3317, against the U.S Dollar, at the time of writing.