Market Trading News and Research from 19 October 2021

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19.10.2021
08:26
NZD/USD Price Analysis: Move beyond 50% Fibo. sets the stage for further gains NZDUSD
  • NZD/USD gained strong traction for the fifth consecutive session on Tuesday.
  • Sustained break through the 0.7100 confluence hurdle favours bullish traders.
  • Overbought conditions warrant some caution before placing fresh bullish bets.

The NZD/USD pair continued scaling higher through the early European session and shot to over one-month tops, around the 0.7145-50 region in the last hour.

The safe-haven US dollar witnessed aggressive selling on Tuesday and sank to three-week lows amid the dominant risk-on flow. This, in turn, provided a strong boost to the perceived riskier kiwi and assisted the NZD/USD pair to gain strong follow-through traction for the fifth successive day.

The momentum confirmed a bullish breakout through the 0.7100 confluence, comprising the very important 200-day SMA and a descending trend-line extending from YTD tops touched in February. A subsequent move beyond the 50% Fibonacci level of the 0.7466-0.6805 downfall has set the stage for further gains.

Meanwhile, technical indicators on hourly charts are already flashing overbought conditions. Moreover, RSI on the daily chart has moved on the verge of breaking into the overstretched territory, warranting some consolidation or a modest pullback before the next leg up for the NZD/USD pair.

From current levels, September monthly swing highs, around the 0.7170 region, seems to act as immediate resistance. A sustained move beyond has the potential to push the NZD/USD pair towards the 0.7200 round-figure mark en-route the 61.8% Fibo. level, around the 0.7215-20 area.

On the flip side, any meaningful retracement slide could attract some dip-buying near the 0.7100 confluence hurdle breakpoint. This, in turn, should help limit the downside near the 0.7070-60 region, which coincides with the 38.2% Fibo. level and act as a strong base for the NZD/USD pair.

NZD/USD daily chart

fxsoriginal

Technical levels to watch

 

08:21
USD/CNH still faces some downside pressure – UOB

A deeper pullback is expected once USD/CNH clears 6.4240, commented FX Strategists at UO Group.

Key Quotes

24-hour view: “Yesterday, we held the view that USD ‘could retest the 6.4230 level before stabilization can be expected’. Our expectations did not materialize as USD dropped to 6.4254 before closing little changed at 6.4289 (-0.08%). Downward momentum is beginning to improve and USD could weaken to 6.4180 but it is left to be seen if it could maintain a foothold below this level (next support is at 6.4100). Resistance is at 6.4300 followed by 6.4350.”

Next 1-3 weeks: “Our view from last Thursday (14 Oct, spot at 6.4340) still stands. As highlighted, downward momentum is beginning to build but USD has to close below 6.4240 before a sustained decline can be expected (next support is at 6.4100). The chance for USD to close below 6.4240 is quite high as long as it does not move above the ‘strong resistance’ level at 6.4450 (level previously at 6.4540).”

08:14
GBP/USD: BoE's aggressive rate hike cycle not enough to lift the pund – MUFG GBPUSD

The UK rate market moved to price in more front loaded rate hikes from the Bank of England (BoE) following the hawkish comments from Governor Bailey over the weekend which has seen cable rise back to within touching distance of the 1.3800-level. Nonetheless, economists at MUFG Bank still expect GBP/USD to move downward into year-end due to slow growth and high inflation.

BoE setting up rate hike at next policy meeting

“The GBP is still not fully benefiting as much as expected from the ongoing sharp rise in UK yields. The UK rate market continued to adjust sharply higher yesterday to fully price in a rate hike by the BoE at their next policy meeting in November.”

“We have brought forward our forecast for the timing of the first BoE rate hike to November when we expect the first 15 point hike to be delivered which we expect to be followed by a 0.25 point hike in February.”

“The faster pace of tightening poses some upside risk to our pound forecasts in the near-term. However, we are still sticking to our view that the GBP is more likely to weaken heading into year-end given the more challenging backdrop of slowing global growth, higher inflation and tightening liquidity conditions which should be less supportive for risk assets and high beta currencies like the pound.”

“More front-loaded BoE tightening could also be viewed as more of a policy mistake if the UK economy slows more notably heading into year end triggering a weaker pound.” 

 

08:06
Gold Price Forecast: Further gains for XAU/USD may be limited – HSBC

Gold traded sharply higher, as US Treasury yields and the USD slipped after the US CPI release but further gains over the near term may be limited, in the view of analysts at HSBC. A gradually stronger USD, following the Fed’s path towards normalisation, may weigh mildly on the yellow metal.

Gold faces gradual withdrawal of monetary and fiscal support

“The latest US CPI data indicates that the inflation level remained elevated in September. While the CPI data, in addition to easing in US Treasury yields and the USD, may be supportive of gold, the degree to which gold rallied is a little hard to explain. As such, further gains over the near term may be hard to come by, short of a steeper decline in US Treasury yields or the USD.”

“Comments on inflation from groups like the International Monetary Fund (IMF) may lend support to gold as they appear to be becoming more frequent. However, the scare over inflation could aid gold if US Treasury yields do not rise. Should yields move higher to offset inflation, the impact on gold would likely be more negative.”

“Global monetary and fiscal policies are no longer outright supportive of gold in the US or globally. With the era of ultra-loose monetary policies coming to an end and fiscal stimulus being pulled back, gold investment is down.”

“We still believe the USD is gradually transitioning to a stronger path due to the slowdown in global growth and the Fed’s path towards normalisation. A gradually stronger USD could be mildly negative for gold.”

 

07:59
Fed: Trading scandal complicates Powell's renomination, downside risks for USD – MUFG

The US dollar has continued to weaken amidst fresh uncertainty over Fed policy. Disclosure documents reveal that the spectacle of Fed officials personally trading stocks extended to the chair himself. As Powell reappointment is a close call, this story could end tip the balance, potentially damaging the greenback, economists at MUFG Bank report.

Fed Chair Powell faces reappointment amid tumult

“The probability of Chair Powell being given a second term dropped yesterday on PredictIt.org to 65% from around 80% 24 hours earlier. At one point the probability dropped to an intra-day low just below 60%. It was triggered by an online report on Fed Chair Powell’s personal stock account dealings.”

“Chair Powell remains the clear favourite to remain Fed Chair after his term ends in February of next year, which is our base case scenario supporting our outlook for stronger US dollar heading into next year. However, the decision does not appear as much as a done deal as before which has increased uncertainty and downside risks for the US dollar.”

 

07:44
US Dollar Index drops to monthly lows near 93.60
  • DXT losses the grip further and re-visits the 93.60 area.
  • US 10-year yields ease to the 1.57% region on Tuesday.
  • Building Permits, Housing Starts, Fedspeak next on tap.

The greenback, when tracked by the US Dollar Index (DXY), added to recent losses and drops to new 3-week lows around 93.60.

US Dollar Index weaker on risk-on mood

The index extends the bearish move further and drops to the 93.60 region on turnaround Tuesday.

The continuation of the downtrend in the dollar comes in response to the move lower in US yields across the curve, with the front end slipping back to sub-0.40% levels, the belly hovering around 1.60% and the long end flirting with the 2.04%.

In addition, further improvement in the risk complex weighs on the buck, as the profit-taking mood surrounding the dollar appears still unabated.

In the US docket, housing data due later in the session will include Building Permits and Housing Starts for the month of September along with speeches by San Francisco Fed M.Daly (voter, centrist), FOMC’s Governors M.Bowman and C.Waller (permanent voters, centrists) and Atlanta Fed R.Bostic (voter, centrist).

What to look for around USD

The index keeps correcting lower following new 2021 highs past 94.50 on October 12, with initial support so far emerging around 93.60. Supportive Fedspeak, an anticipated start of the tapering process, higher yields and the rising probability that high inflation could linger for longer continue to prop up the sentiment around the buck for the time being and keep sustaining the case for the resumption of the uptrend in DXY in the relatively short-term horizon.

Key events in the US this week: Building Permits, Housing Starts (Tuesday) – Initial Claims, Philly Fed Index, CB Leading Index, Existing Home Sales (Thursday) – Flash Manufacturing PMI (Friday).

Eminent issues on the back boiler: Persistent uncertainty around Biden’s multi-billion Build Back Better plan. US-China trade conflict under the Biden’s administration. Tapering speculation vs. economic recovery. Debt ceiling debate. Geopolitical risks stemming from Afghanistan.

US Dollar Index relevant levels

Now, the index is losing 0.31% at 93.65 and a break above 94.56 (2021 high Oct.12) would open the door to 94.74 (monthly high Sep.25 2020) and then 94.76 (200-week SMA). On the flip side, the next down barrier emerges at 93.58 (monthly low October 19) followed by 93.18 (55-day SMA) and finally 92.98 (weekly low Sep.23).

07:43
US 10-year Treasury yields to surge above 2% in the first half of 2022 – Charles Schwab

Treasury yields have risen across the curve since the end of September.  For bond investors, a difficult investing environment has just gotten more difficult. Economists at Charles Schwab continue to suggest keeping average duration low due to the expectation for yields to push higher. 

Rising bond yields is not a reason for bond investors to be blue

“We see the potential for 10-year Treasury yields to move up to 1.75% this year and above 2% in the first half of next year.”

“Over the next six to 12 months, we suggest investors look for opportunities to extend duration if yields move higher, as anticipated.”

“Over the long run, we don’t see rising bond yields as a reason for bond investors to be blue. Higher yields – in real terms – are good for income investors.”

 

07:37
Silver Price Analysis: XAG/USD breaks through a multi-month descending trend-line hurdle
  • Silver rallied to over one-month tops during the early European session on Tuesday.
  • The momentum seems strong enough to push the XAG/USD beyond the $24.00 mark.

Silver caught aggressive bids on Tuesday and shot to one-month tops, around the $23.70 region during the early European session.

From a technical perspective, the XAG/USD showed some resilience below the 200-period SMA on the 4-hour chart and managed to defend the $23.00 mark for the second consecutive session on Monday. The subsequent positive move validated the recent bullish breakout through an inverted head and shoulders neckline. This, in turn, supports prospects for a further near-term appreciating move.

Silver 4-hour chart

fxsoriginal

The constructive setup is reinforced by the fact that technical indicators on the daily chart have just started moving into the bullish territory and are still far from being in the overbought zone. Bulls might now be looking to build on the momentum further beyond a downward-sloping trend-line resistance, extending from July monthly swing highs, around the $26.75-80 region.

Silver daily chart

fxsoriginal

Nevertheless, the XAG/USD seems all set to extend its recent recovery move from YTD lows and aim to reclaim the $24.00 round-figure mark. This is followed by resistance near the $24.15-20 region, above which the momentum could further get extended towards the next relevant hurdle around the $24.75-80 region. The white metal could eventually climb to the key $25.00 psychological mark.

On the flip side, the $23.50 region now seems to protect the immediate downside. Any subsequent pullback might still be seen as a buying opportunity near the $23.00 mark, which should act as a strong near-term base for the XAG/USD and a key pivotal point for traders. A convincing break below might prompt some technical selling and accelerate the corrective fall towards the $22.75-70 region.

Technical levels to watch

 

07:34
GBP/AUD: Further declines will not go unchecked – DBS Bank

GBP/AUD has cratered from its late September 1.8961 highs. But any onward decline runs into a layer of robust support broadly in the 1.8304-1.8235 patch, Benjamin Wong, Strategists at DBS Bank, reports.

Prior overbought indicators are waning

“The bearish divergences spotted on the technical indicators oiled the decline. However, the same set of indicators are now hinting of a likely turnaround in the cross’ fortunes.”

“The 200-DMA at 1.8304 lurks just below recent 1.8417 lows, and in its proximity also rests the support offered by the 61.8% Fibonacci retracement of the 1.9154-1.7741 range grip that calibrates 1.8281. Both of these levels are buffered by 50-week and 200-week moving averages at 1.8235 and 1.8282, respectively. Hence, there is a layer of support coming into the 1.8304-1.8235 zone.”

“A further decline is also likely to be tempered by the congestion zone we saw going through in June. That approximates and has barricaded a 1.82-1.85 support range, but of interest to us is where it runs into the trend support arising from 1.7417 lows. That axes 1.8330, while itself the trendline support is in a cradle position with 200-dma at 1.8304.”

 

07:29
USD/IDR Price News: Rupiah hits daily highs near 14,050 on Bank Indonesia’s status-quo

Indonesia’s central bank, Bank Indonesia (BI), announced no changes to the benchmark 7-day reverse repo, leaving it at 3.50% during the October monetary policy meeting held this Tuesday.

The central bank governor Perry Warijyo said that “global economic recovery is expected lower than previously estimated due to rising cases of COVID-19, higher energy prices.”

Additional comments

Global recovery to continue in 2022 but disruption in global supply chain needs to be monitored.

Domestic economy shows continued improvement after COVID-19 curbs eased.

Domestic economic recovery supported by high exports, improving consumption after easing COVID-19 restrictions.

Keeps 2021 GDP growth outlook at 3.5% to 4.3%.

Q3 current account balance seen in surplus.

Continue to make sure rupiah reflects fundamentals.

07:28
Indonesia Bank Indonesia Rate meets forecasts (3.5%)
07:21
AUD/USD set to extend its impressive advance to the 200-DMA at 0.7567 – Commerzbank AUDUSD

AUD/USD is the top gainer of the day so far alongside the kiwi. The aussie is trading close to the September high at 0.7477. Above here, the pair would target the 200-day moving average at 0.7567, Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank ,reports.

AUD/USD maintains upside pressure

“AUD/USD held steady yesterday and remains well-placed to tackle the September peak at 0.7477. The 55-week ma lies at 0.7513 and the 200-day ma 0.7567.”

“Very near-term we would allow for a small retracement, but this is indicated to hold around 0.7350/25.” 

“Dips should find interim support at 0.7313 (20-day ma) and this guards the 29th September low at 0.7171.”

 

07:16
S&P 500 Index: Equity market optimism is justified – UBS

The S&P 500 rose 1.8% last week, its best weekly advance since July. Economists at UBS still believe the optimism in equity markets is justified, given robust economic growth and earnings.

Solid start to the US earnings season

“We expect a drag on earnings per share from supply chain problems of just 1% for 2021 – a modest hit relative to our projection for 45% profit growth for the year.”

We continue to believe the Fed will look through the current spike in inflation. US average inflation data suggests the Fed doesn’t need to act: On two, three, and five-year rolling averages, core PCE inflation remains well below 2%.”

“As the labor market continues to recover we expect yields to rise to 1.8% this year, a gradual increase that has historically been consistent with rising equities.”

“Although the third quarter earnings season won’t match the second, we still expect roughly 30% earnings growth in the third quarter, representing a 5% beat of consensus expectations.”

07:10
USD/CHF is about to slide below the 55-DMA, scope for a dive to the 0.9076 mark – Commerzbank USDCHF

The 55-day moving average (DMA) at 0.9208 is about to give way. Subsequently, Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, expects the USD/CHF pair to tick down towards the 2020-2021 uptrend at 0.9076.

Offered below 0.9313

“USD/CHF’s bounce from the 55-DMA at 0.9208 has proved tepid and downside risks remain. The 55-DMA is about to give way and this leaves the market vulnerable to a deeper corrective sell off to the 0.9138 200-DMA and potentially the 2020-2021 uptrend at 0.9076.”

“Rallies are expected to remain capped by the 0.9313 mid-October high. This guards 0.9357/69 (recent high).”

 

07:09
NZD/USD: More OCR hikes speak of a higher kiwi – ANZ NZDUSD

The Kiwi has recovered from yesterday’s dip. NZD/USD trades at fresh multi-week highs and is up nearly 1%. Rapidly rising expectations for more OCR hikes are set to underpin the New Zealand dollar, economists at ANZ Bank report.

The RBNZ is at the front of the pack in the global monetary tightening phase

“Given some of the themes ripping through global markets like stagflation, tapering and spiraling energy prices, more volatility is likely.”

“The rise in inflation will keep the RBNZ at the beginning of the pack in this hiking cycle, which should cement rather than question its commitment to low and stable inflation, and growing market expectations of more OCR hikes will likely help rather than hinder the NZD.”

“There is no talk of letting inflation run, and temporarily high inflation shouldn’t weigh on the NZD.”

 

07:03
AUD/USD Price Analysis: Bulls flirt with September swing highs, around 0.7470-75 area AUDUSD
  • AUD/USD gained strong positive traction on Tuesday amid a broad-based USD weakness.
  • Slightly overbought conditions on hourly charts warrant some caution for bullish traders.

The USD selling bias picked up pace heading into the European session and pushed the AUD/USD pair back closer to September monthly swing highs, around the 0.7470-75 region in the last hour.

The resource-linked Australian dollar remained well supported by the recent widespread rally in commodity prices. This, along with the emergence of aggressive US dollar selling, assisted the AUD/USD pair to gain strong positive traction during the first half of the trading action on Tuesday.

The greenback was weighed down by the overnight pullback in the US Treasury bond yields and dismal US Industrial Production data, which fell by the most in seven months. Apart from this, a positive risk tone further undermined the safe-haven USD and benefitted the perceived riskier aussie.

Meanwhile, technical indicators on hourly charts are already flashing overbought conditions. Moreover, RSI (14) on the daily chart have moved on the verge of breaking about the 70 mark. This, in turn, warrants some caution for bulls and before positioning for any further appreciating move.

That said, some follow-through buying should pave the way for an extension of the recent strong positive move witnessed over the past four weeks or so. The momentum, however, could pause at higher levels and struggle to lift the AUD/USD pair further beyond the key 0.7500 psychological mark.

On the flip side, any meaningful pullback now seems to find decent support near the 0.7435 region. This is followed by the 0.7400 round-figure mark and the overnight swing lows, around the 0.7380-75 region, which should act as a strong near-term base for the AUD/USD pair.

The latter coincides with a short-term ascending trend-line support, which if broken will negate the positive bias and prompt some technical selling. The AUD/USD pair might then accelerate the fall towards the 0.7320-15 strong resistance breakpoint turned support en-route the 0.7300 mark.

AUD/USD daily chart

fxsoriginal

Technical levels to watch

 

07:00
AUD/USD to move downward as market is too aggressive pricing RBA rate hike – Danske Bank AUDUSD

The Reserve Bank of Australia (RBA) has been among the central banks where market pricing has diverged to a clearly more hawkish path compared to the official forward guidance. The aussie was little affected by the RBA’s October meeting Minutes, heading higher. However, economists at Danske Bank expect the AUD/USD pair to edge lower.

No rate hikes until 2024

“In its October minutes, RBA dovishly stated that while wage pressures were emerging in certain parts of the world, this was not the case in Australia.”

“It continues to signal no rate hikes until 2024, even though market prices in the first hike already by H2 2022”

“We continue to see market pricing as too aggressive, and expect to see lower AUD/USD also on the back of Chinese-driven weakness in key Australian export commodity prices and broad USD strength.”

 

06:56
BOE: Rate hike expected in November, scope for two more next year – Standard Chartered

Governor Andrew Bailey’s comments over the weekend made clear that a hike to Bank Rate is coming soon. Subsequently, economists at Standard Chartered expect a 15bps hike in November. They also see two further 25bps hikes in February and May, taking base rate to 0.75% by end-2022.

Hawks speak loudest

“We bring forward our expectation of a 15bps rate hike to 4 November (from February 2022 prior), taking the base rate to 0.25% by end-2021 (0.10% previously).”

“We do think there is now scope for two more 25bps rate hikes next year (likely in February and May), taking the base rate to 0.75% by end2022 (0.50% previously); but this is still well below what the market is pricing in (base rate at 1.25% by end-2022.” 

“Despite inflation likely exceeding 4% by year-end, we think the BoE will be constrained from moving further or faster than our forecasts. The two metrics the MPC will be following closely remain underlying wage growth and inflation expectations – these will provide the strongest indication of any adjustment in thinking.”

 

06:54
ECB’s Villeroy: No reason that ECB should increase rates between now and end of next year

There is no reason that the European Central Bank (ECB) should increase rates between now and the end of next year, the central bank Governing Council member and Bank of France Head Francois Villeroy de Galhau said on Tuesday.

Further comments

“There is still big difference in terms of rising energy prices and overall total inflation.”

“Total overall inflation should get back to below 2 percent by end of next year.”

“We remain very vigilant on inflation.”

Market reaction

The above comments are weighing slightly on the euro, as EUR/USD eases back below 1.1650.

At the time of writing, EUR/USD is trading at 1.1645, now gaining 0.34% on the day.

06:52
Forex Today: Dollar loses ground as risk flows dominate markets

Here is what you need to know on Tuesday, October 19:

As risk flows return to markets early Tuesday, the greenback continues to weaken against its rivals with the US Dollar Index dropping to fresh three-week lows near 93.60. Moreover, the benchmark 10-year US Treasury bond yield is down more than 1%, putting additional weight on the USD’s shoulders. September Housing Starts and Building Permits will be featured in the US economic docket. Christopher J. Waller and Michelle Bowman, members of the Board of Governors of the Fed, will be delivering speeches as well. Nevertheless, investors will remain focused on the US T-bond yields and the overall risk perception.

Supported by strong gains seen in the Consumer Discretionary, Technology and Communication Services sectors, the S&P 500 rose 0.35% on Monday and the tech-heavy Nasdaq added 0.85%. The Nikkei 225 and the Shanghai Composite indexes rose 0.75% and 0.68%, respectively, on Tuesday, mirroring the improving market mood.

Gold started the week on the back foot and spent the majority of the day moving sideways above $1,760. However, falling the US T-bond yields seem to be helping XAU/USD gain traction on Tuesday. At the time of press, the pair was up more than 0.7% at $1,778.

EUR/USD managed to hold above 1.1600 during the Asian trading hours and started to push higher. Currently, the pair is trading at its highest level since late September around 1.1650. August Construction Output data from the Eurozone will be published later in the session but the dollar's valuation is likely to continue to drive the pair's action.

GBP/USD is edging higher toward 1.3800 on Tuesday. The UK and the EU will be discussing the Northern Ireland Protocol later in the week and the UK’s Office for National Statistics will release the September Consumer Price Index data on Wednesday, which could have a significant impact on the Bank of England’s rate hike expectations.

Risk-sensitive AUD/USD and NZD/USD are the top gainers of the day so far. Both of these pairs were trading at fresh multi-week highs and were up nearly 1% in the early European session. 

USD/JPY reached its highest level in three years at 114.47 on Monday but reversed its direction pressured by the falling US T-bond yields. However, the risk-positive market atmosphere is not allowing JPY to continue to gather strength, causing USD/JPY to stay in a consolidation phase around 114.00.

Cryptocurrencies: Bitcoin trades above $60,000 and continues to close in on the all-time high it set near $65,000 back in April. Ethereum keeps the bullish bias in the near term but needs to clear $4,000 in order to target a new record top.
 

06:42
ECB’s Villeroy: Should get back to pre-pandemic levels of activity by year-end

The European Central Bank (ECB) Governing Council member and Bank of France Head Francois Villeroy de Galhau said that the French economy should get back to pre-pandemic levels of activity by year-end.

Additional quotes

“Reaffirms earlier French economic growth forecast.”

“French auto sector underperforming but other areas of the economy are doing well.”

“Some French companies highlighting difficulties in hiring staff.”

Market reaction

At the time of writing, EUR/USD is sitting close to three-week highs of 1.1659, adding 0.38% on the day.

06:39
China’s Policy Adviser: PBOC should cut RRR

Yao Jingyuan, a special researcher at the Counselor’s Office of the State Council said on Tuesday, the People’s Bank of China (PBOC) has room to lower the Reserve Requirement Ratio (RRR) and, therefore, should cut the ratio to support the economic growth.

Key quotes

The reserve requirement ratio “can be lowered by 1 percentage point in the fourth quarter.”

“We don’t need to worry about whether releasing more money will push inflation higher because we still have room.”

“Consumer inflation is likely to be 1% for the full year.”

“A 1 percentage-point cut would unleash 1 trillion yuan ($156 billion) of liquidity. Based on on-the-ground investigations, the liquidity condition of companies remains generally quite tight.”

Related reads

  • PBOC’s Yi: China can ‘contain’ the risk from Evergrande
  • PBOC unlikely to alter the RRR this year – Goldman Sachs
06:39
EUR/USD set to grind higher towards the 1.1746 mark – Commerzbank EURUSD

EUR/USD has eroded its accelerated downtrend. Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, expects the pair to head towards the 1.1746 four-month downtrend.

Accelerated downtrend eroded

“EUR/USD has broken higher through the accelerated downtrend as suspected.”

“The intraday Elliott wave counts remain positive and we would allow for a deeper retracement to 1.1746 four-month downtrend.”

“Dips lower are indicated to hold around 1.1565. Below 1.1522 (last week's low) lies the 50% retracement of the move from 2020 and the March 2020 high at 1.1492/95.”

“Key support is the previous downtrend (from 2008) which is now located at 1.1395.”

 

06:26
EUR/USD Price Analysis: Has room to rise towards 1.1715 amid bullish technical set up EURUSD
  • EUR/USD is breaking higher from a three-week-old descending triangle on the daily chart.
  • Tuesday’s close is critical to unleashing additional upside towards the 50-DMA at 1.1715.
  • Daily RSI pierces through the midline, recaptures 50.00 and backs more gains.

EUR/USD is consolidating around 1.1650, having staged an impressive bounce from the daily lows of 1.1610, as the pullback in the US dollar amid the risk-on mood underpinned the pair.

The major extends its recovery from 15-month lows of 1.1524 into the fifth straight day on Tuesday, as the bulls remain in complete control.

EUR/USD’s daily chart shows that the price has broken higher from a three-week-old descending triangle formation, although the bulls need a daily closing above the falling trendline resistance at 1.1602 to confirm an upside breakout from the pattern.

The 14-day Relative Strength Index (RSI) has pierced through the midline, now back onto the positive territory, suggesting that there is more room to the upside.

The triangle confirmation will trigger a fresh advance towards the downward-sloping 50-Daily Moving Average (DMA) at 1.1715.

Ahead of that the 1.1700 round number could be a tough nut to crack for the EUR bulls.

EUR/USD: Daily chart

Meanwhile, any retracement will meet the 21-DMA support at 1.1622, below which the triangle resistance now support at 1.1602 would be tested once again.

Further south, Monday’s low of 1.1571 could be threatened if the selling pressure intensifies.

EUR/USD: Additional levels to consider

 

06:14
USD/JPY faces some consolidation near term – UOB USDJPY

USD/JPY could move into a consolidative phase in the near term ahead of a probable move to 115.00, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that ‘deeply overbought conditions coupled with some early signs of slowing momentum suggest that USD is unlikely to strengthen much further’ and we expected USD to ‘trade sideways between 113.90 and 114.50’. USD subsequently traded between 114.00 and 114.44. The underlying tone has improved somewhat and USD could edge higher from here. That said, the major resistance at 114.55 is unlikely to come into the picture. Support is at 114.00 followed 113.85.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (18 Oct, spot at 114.20). As highlighted, USD is still strong but overbought conditions could lead to consolidation first. The next resistance is at 114.55 followed by 115.00. The current USD strength is deemed intact as long as 113.50 (no change in ‘strong support’ level from yesterday) is not breached.”

06:11
Natural Gas Futures: Further decline loses traction

Open interest in natural gas futures markets went down by around 8.7K contracts at the beginning of the week, reaching the second daily drop in a row considering advanced prints from CME Group. In the same line, volume resumed the recent downside and dropped by around 11.5K contracts.

Natural Gas looks supported around $4.70

Natural gas prices extended the corrective downside and broke below the $5.00 mark per MMBtu on Monday. The strong pullback came in tandem with diminishing open interest and volume, removing momentum from further downside and instead allowing for a rebound in the very near term. Prices of the commodity, in the meantime, remain supported by the $4.70 region per MMBtu.

06:08
Gold Price Forecast: XAU/USD's recovery to face a bumpy road ahead

Gold price managed to defend the critical rising trendline support at $1765, despite a brief dip below it, as the bulls found fresh bids at the horizontal 21-Daily Moving Average (DMA) at $1760. Although XAU/USD rebounds towards the key $1795 barrier, downside risks remain intact, according to FXStreet’s Dhwani Mehta.

Bullish potential appears limited due to impending bear cross

“The broader market sentiment and the yields’ price action will be closely watched for placing fresh bets on gold price.”

“On the road to recovery, XAU/USD is likely to face immediate resistance at the horizontal 50-DMA at $1778. A sustained move above the latter could call for a retest of the 100 and 200-DMAs confluence zone at $1795. However, an impending bear cross, with the 100-DMA set to cut the 200-DMA from above, warrants caution for gold bulls.”

“If the 21-DMA support at $1760 gives way convincingly, then the previous week’s demand area at $1750-$1745 would be back into play. Further south, the multi-week lows of $1722 could be on the sellers’ radars.”

 

06:06
USD/JPY Price Analysis: RSI divergence halts upside momentum near 114.45 USDJPY
  • USD/JPY stalls the previous three sessions’ gains on Tuesday in the European session.
  • The formation of the evening star on Monday indicates the upcoming downside momentum.
  • The Momentum oscillator holds onto the overbought zone warrants caution for the pair.

USD/JPY intensifies the selling downside momentum as the European trading hours begin. The pair remained under pressure since it touched November, 2018 highs on Friday. At the time of writing, USD/JPY is trading at 114.12, down 0.17% so far.

USD/JPY daily chart

On the daily chart, the USD/JPY pair has been riding higher after testing the low of 109.12 on September 22. The pair rallied toward a four-year high near 114.50. The divergence in the Relative Strength Index (RSI) forces bulls to take a step back. If the price sustains below the Intraday’s low it would test the 113.50 horizontal support level.

A break below the 23.6% Fibonacci retracement, which extends from the low of the mentioned level at 113.12, will bring the possibility of the 112.50 horizontal level followed by the psychological 112.00 mark.

Alternatively, on the reverse side, a daily close above 114.50 would bring November, 2017 high at 114.73 back in action, allowing bulls to dominate the trade again.

USD/JPY additional levels


 

06:01
NZD/USD faces the next resistance at 0.7130 – UOB NZDUSD

Further upside in NZD/USD is expected to face the next hurdle at the 0.7130 level in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “NZD traded between 0.7050 and 0.7105 yesterday, narrower than our expected sideway-trading range of 0.7040/0.7110. Upward momentum has firmed somewhat but the bias for NZD is on the upside. However, any advance is unlikely to challenge the major resistance at 0.7130 (minor resistance is at 0.7110). Support is at 0.7075 followed by 0.7060.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (18 Oct, spot at 0.7080). As highlighted, while NZD is still strong, the recent rapid rise is overbought and the pace of any further advance is likely to be slower. The next resistance is at 0.7130. The upside risk is deemed intact as long as NZD does not move below 0.7020 (‘strong support’ was at 0.7000 yesterday).”

06:01
Switzerland Imports (MoM) up to 17050M in September from previous 15055M
06:01
Switzerland Exports (MoM) increased to 22102M in September from previous 20111M
06:00
Switzerland Trade Balance: 5052M (September) vs previous 5055M
05:58
Crude Oil Futures: Further gains not ruled out

According to flash data from CME Group for crude oil futures markets, traders scaled back their open interest positions by around 7.7K contracts on Monday, reversing the previous daily build. Volume, instead, went up by around 201K contracts after four consecutive daily pullbacks.

WTI focused on $84.00 and above

After hitting fresh 2021 highs at the beginning of the week, prices of the WTI ended up in the negative territory amidst shrinking open interest. That said, a sustainable retracement appears out of favour for the time being while the commodity re-targets the $84.00 mark per barrel and above in the near term.

05:45
FX option expiries for October 19 NY cut

FX option expiries for October 19 NY cut at 10:00 Eastern Time, via DTCC, can be found below.

- EUR/USD: EUR amounts        

  • 1.1545-55 876m
  • 1.1600 559m
  • 1.1670 428m

- GBP/USD: GBP amounts        

  • 1.3525 738m
  • 1.3685 774m

- USD/JPY: USD amounts                     

  • 113.50 370m
  • 114.00 300m

- USD/CHF: USD amounts        

  • 0.9270 757m

- AUD/USD: AUD amounts

  • 0.7350 664m

- USD/CAD: USD amounts       

  • 1.2550 751m
05:42
GBP/USD now sets sails to 1.3800 and above – UOB GBPUSD

In opinion of FX Strategists at UOB Group, Cable could edge higher and re-visit 1.3800 ahead of 1.3850 in the short-term horizon.

Key Quotes

24-hour view: “Yesterday, we highlighted that ‘the rapid advance appears to be running ahead of itself and GBP is unlikely to strengthen much further’ and we expected GBP to ‘trade between 1.3710 and 1.3780’. Our view was not wrong even though GBP traded within a narrower range than expected (1.3710/1.3765). The underlying tone has improved somewhat but while GBP could edge higher, it is unlikely to break the resistance at 1.3770. Support is at 1.3710 followed by 1.3690.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (18 Oct, spot at 1.3765). As highlighted, GBP is likely to advance further to 1.3800. Further extension to 1.3850 is not ruled out but the odds are not high for now. Only a break of the ‘strong support’ at 1.3655 (no change in level from yesterday) would indicate that GBP is not ready to head higher to 1.3800.”

05:38
Gold Futures: Near-term rebound in the offing

CME Group’s preliminary readings for gold futures markets noted open interest shrank for the second session in a row on Monday, this time by nearly 3K contracts. Volume, followed suit and dropped by around 51.2K contracts.

Gold re-targets $1,800 near-term

Monday’s downtick in gold prices met support around $1,760 amidst shrinking open interest and volume. That said, further losses appear unlikely, and a rebound could gather traction with the next target at the key $1,800 mark per ounce troy.

05:30
EUR/USD: Door open to extra gains – UOB EURUSD

FX Strategists at UOB Group still remain of the view that EUR/USD could extend the upside momentum in the next weeks.

Key Quotes

24-hour view: “We expected EUR to ‘trade sideways between 1.1575 and 1.1620’ yesterday. EUR subsequently traded within a range of 1.1570/1.1622 before closing little changed at 1.1609. Upward momentum has improved a tad and the bias for today is on the upside. That said, a break of the major resistance at 1.1640 appears unlikely. Support is at 1.1595 followed by 1.1580.”

Next 1-3 weeks: “Our latest narrative from last Thursday (14 Oct, spot at 1.1595) still stands. As highlighted, EUR is likely trade with an upward bias towards 1.1640. Further advance is not ruled out but 1.1640 may not be easy to crack. The upward bias is deemed intact as long as EUR does not move below 1.1540 (no change in ‘strong support’ level). Looking ahead, the next resistance above 1.1640 is at 1.1680.”

05:22
GBP/USD advances toward 1.3780 amid USD pullback, hawkish BOE GBPUSD
  • GBP/USD records fresh daily gains on Tuesday in the early European trading hours.
  • Lower US Treasury yields undermine the demand for the US dollar.
  • Sterling enjoys increasing bet of BOE rate hike expectation and Brexit optimism led gains.

 GBP/USD shrugs of the previous session’s dull performance and trades higher on Tuesday. The pair jumped nearly 50-pips after opening lower as the trading session began. At the time of writing, GBP/USD is trading at 1.3771, up 0.32% for the day.

The move is primarily sponsored by the selling pressure in the greenback. A number of factors assisted the recent pullback in the buck. A weaker US data along with global rate hike expectations weigh on the prospects of the US dollar. The US Industrial Production fell 1.3% in September due to supply-chain constraints and Hurricane Ida. The US benchmark 10-year bond yields retreat toward 1.57% as investors digested Fed’s tapering.

On the other hand, the British pound gained following the hawkish comments from the Bank of England (BOE) Governor Andrew Bailey. He was quoted as saying that the Bank of England (BOE) is set to raise interest rates as inflation risks arise. Nevertheless, BOE’s members Silvana Tenreyro and Catherine Mann retreated their view on inflation as “transitory”.

Meantime, UK’s Prime Minister Borris Johnson promised to fix a solution to Brexit’s Northern Ireland Protocol. This, in turn, uplift the British pound in recent trades.

As for now, traders keep their focus on the US Building Permits, Housing Starts to gauge market sentiment.

GBP/USD additional levels


 

04:17
USD/CAD struggles near multi-month lows, depressed below mid-1.2300s USDCAD
  • USD/CAD edged lower on Tuesday and dropped back closer to multi-month lows.
  • A combination of factors weighed on the USD and exerted pressure on the major.
  • The recent run-up in oil underpinned the loonie and contributed to the selling bias.

The USD/CAD pair extended its steady intraday descent through the Asian session and dropped back closer to over three-month lows touched last Friday. The pair was last seen trading just below mid-1.2300s, down over 0.20% for the day.

Having struggled to preserve the overnight recovery gains to levels beyond the 1.2400 mark, the USD/CAD pair met with some fresh supply on Tuesday and was pressured by a combination of factors. The recent strong bullish run in crude oil prices continued underpinning the commodity-linked loonie. This, along with the emergence of fresh selling around the US dollar, exerted some downward pressure on the major.

The markets now seem to have fully priced in the prospects for an imminent Fed taper announcement later this year. Apart from this, Monday's weaker US data – showing that Industrial Production fell by the most in seven months in September – and a modest pullback in the US Treasury bond yields acted as a headwind for the USD. Bulls even shrugged off a softer risk tone, which tends to benefit the safe-haven greenback.

Meanwhile, fears about a faster-than-expected rise in inflation have been fueling speculations about a Fed rate hike move in 2022. This might help limit any deeper USD losses and extend some support to the USD/CAD pair amid slightly oversold conditions on short-term charts. This, in turn, warrants some caution for bearish traders and before positioning for an extension of a near one-month-old downward trajectory.

In the absence of any major market-moving economic releases from the US, traders on Tuesday will take cues from a scheduled speech by Fed Governor Michelle Bowman later during the US session. This, along with the US bond yields and the broader market risk sentiment, might influence the USD. Apart from this, oil price dynamics should provide some impetus to the USD/CAD pair and allow traders to grab some short-term opportunities.

Technical levels to watch

 

04:03
GBP/JPY Price Analysis: Clings to gains above 157.00
  • GBP/JPY remains firm on Tuesday towards the initial European session.
  • Bulls negate the previous day’s sluggish momentum.
  • The momentum oscillator holds onto the overbought zone, throws caution for aggressive bids.

The GBP/JPY cross-currency pair edges higher on Tuesday. The pair remains pressured below 157.40.  At the time of writing, GBP/JPY is trading at 157.11, up 0.11% for the day.

GBP/JPY daily chart

On the daily chart, the GBP/JPY cross currency pair had been trading in a broad trading range of 149.00 and 154.00 for six months, before breaking the range on October 11. The pair peaked near to a fresh four-year high of 157.41 in just a span of five days on Friday. 

If the price breaks above the intraday’s high it could again test 157.41. The  Moving Average Convergence and Divergence (MACD) trades in the overbought zone. Any uptick in the MACD would bring the June 2016 high of 160.67 nearer to the GBP/JPY bulls.

Alternatively, on the reverse side of the trade, the downside target appears at 156.00 and the 155.00 horizontal support zone. Next, the GBP/JPY bears would seek Thursday’s low around 154.65.  

GBP/JPY additional levels


 

03:41
EUR/USD jumps to three-week highs near 1.1650 amid falling dollar, yields EURUSD
  • EUR/USD catches fresh bids in early Asia after finding support near 1.1610.
  • The pair cheers risk-on mood-led decline in the USD, Treasury yields pullback.
  • Focus on ECB and Fedspeak as poor US data tempers hawkish Fed’s expectations.

Fresh bids emerged near 1.1610 in early Asia, triggering a fresh upswing in EUR/USD towards 1.1650, as the US dollar runs into fresh supply amid the risk-on market mood.

The Asian markets cheer the Wall Street tech advance amid prospects of robust corporate earnings reports, which cooled off concerns over rising inflationary risks and thier impact on the economic recovery.

The retreat in the US Treasury yields and a pause in the yield curve flattening, in the face of disappointing American Industrial Production data, add legs to the recovery momentum in the main currency pair.

However, the divergent monetary policy outlooks between the Fed and the European Central Bank (ECB) could likely pose a downside risk to EUR/USD’s further upside. The Fed is well on track to withdraw the pandemic stimulus as early as November while the ECB calls for keeping a high degree of flexibility in the post-crisis stimulus measures.

 “I think flexibility should remain -- we certainly have to discuss how to adjust our purchase programs,” ECB policymaker Ignazio Visco said on Monday.

In the day ahead, the pair will remain at the mercy of the US dollar price action and the risk trends amid a data-light economic calendar. The speeches from the ECB and Fed policymakers will hog the limelight.

EUR/USD: Technical levels to consider

 

03:32
AUD/USD refreshes multi-week tops, just below mid-0.7400s AUDUSD
  • AUD/USD caught some fresh bids on Tuesday amid a broad-based USD weakness.
  • Monday’s disappointing US data, Retreating US bond yields undermined the USD.
  • A softer risk tone might cap any meaningful upside for the perceived riskier aussie.

The emergence of fresh selling around the USD pushed the AUD/USD pair to near six-week tops, closer to mid-0.7400s during the Asian session.

Following the previous day's two-way price moves, the AUD/USD pair caught some fresh bids on Tuesday and now seems all set to prolong a near three-week-old bullish trajectory. The US dollar was pressured by retreating US Treasury bond yields and the overnight data, showing that US Industrial Production fell by the most in seven months in September. This, in turn, was seen as a key factor that provided a goodish lift to the major.

This comes on the back of the recent widespread rally in commodity prices, which was seen as another factor that continued underpinning the resources-linked Australian dollar. That said, a combination of factors might hold bullish traders from placing aggressive bets and keep a lid on any runaway rally for the AUD/USD pair. A softer risk tone might act as a headwind for the perceived riskier aussie amid hawkish Fed expectations.

Fears that a faster-than-expected rise in inflation could derail the global economic recovery weighed on investors' sentiment. The concerns were further fueled by Monday's disappointing Chinese data, showing that the economic growth decelerated sharply from 7.9% to 4.9% during the third quarter. Moreover, growing acceptance for an early policy tightening by the Fed could help limit the USD losses and cap the AUD/USD pair.

The FOMC meeting minutes released last Wednesday reaffirmed that the Fed remains on track to begin rolling back its massive pandemic-era stimulus by the end of this year. The markets might have also started pricing in the possibility of an interest rate hike in 2022 to counter growing inflation risks. Nevertheless, the AUD/USD pair still seems poised to retest September monthly swing highs, around the 0.7475-80 region.

In the absence of any major market-moving economic releases from the US, trades on Tuesday will take cues from a scheduled speech by Fed Governor Michelle Bowman. This, along with the US bond yields and the broader market risk sentiment, might influence the USD price dynamics and produce some trading opportunities around the AUD/USD pair.

Technical levels to watch

 

03:27
WTI consolidates above $81.50 amid softer USD, supply squeeze
  • Western Texas Intermediate (WTI) pares part of its initial losses on Tuesday.
  • Demand worries and OPEC’s failure to add more supply weigh on crude oil.
  • US Dollar Index records fresh daily low around 93.73, US yields retreat too.

Western Texas Intermediate (WTI) consolidates gains on Tuesday in the Asian session. After recording a fresh 7-year high, WTI closed lower in the previous session. At the time of writing, WTI is trading at $81.62, up 0.04% for the day.

Crude oil prices fail to sustain the upside momentum after the US and China data highlighted the risk of the global growth recovery, ultimately affecting the demand scenario. China’s Gross Domestic Product (GDP) expanded by 4.9% in Q3 on yearly basis amid significant headwinds from power shortages and the coronavirus outbreak, which hindered the supply chain. China’s daily crude oil production rate fell again in the previous month to the lowest level since May 2020. 

In addition to that, the US Factory Output dropped 1.3% in September, the most in the seven months, resulting from the impact of Hurricane Ida.

Furthermore, OPEC and its allies have been struggling to add crude back to the market as oil cuts fell slightly to 115% in Septembember.  Angola and Nigeria failed to add more production due to lack of investment and exploration.

As for now, the US dollar dynamics and the demand-supply constraint continue to influence WTI prices.

WTI additional levels


 

03:00
NZD/USD jumps to fresh one-month tops, around 0.7125 region NZDUSD
  • NZD/USD gained strong follow-through traction for the fifth consecutive session on Tuesday.
  • Retreating US bond yields prompted fresh USD selling and provided a goodish lift to the pair.
  • A softer risk tone did little to hinder the momentum beyond the 0.7100 confluence barrier.

The NZD/USD pair surged past the 0.7100 round figure during the Asian session and shot to one-month tops, around the 0.7125 region in the last hour.

The pair built on its recent strong rally from the vicinity of the 0.6900 mark and gained strong follow-through traction for the fifth consecutive session on Tuesday. Following the previous day's two-way price moves, the US dollar met with some fresh supply amid a further pullback in the US Treasury bond yields. This, in turn, was seen as a key factor that provided a goodish lift to the NZD/USD pair.

Bulls seemed rather unaffected by a generally softer tone around the equity markets, which tends to undermine the perceived riskier kiwi. Fears that a faster-than-expected rise in inflation could derail the global economic recovery weighed on investors' sentiment. The concerns were further fueled by Monday's disappointing Chinese data, showing that the economic growth decelerated sharply from 7.9% to 4.9% during the third quarter.

Nevertheless, the NZD/USD pair finally broke through a confluence barrier, comprising of the very important 200-day SMA and a downward sloping trend-line extending from YTD tops touched in February. This could be seen as a fresh trigger for bullish traders and might have already set the stage for a further near-term appreciating move.

That said, prospects for an early policy tightening by the Fed might help limit any deeper USD losses and cap the upside for the NZD/USD pair. Investors seem convinced that the Fed will begin tapering its bond purchases in 2021 and have been pricing in the possibility of a rate hike in 2022 to counter growing inflation risks.

This, in turn, warrants some caution for aggressive bullish traders amid absent relevant market-moving economic releases on Tuesday. Traders now look forward to a scheduled speech by Fed Governor Michelle Bowman. This, along with the US bond yields and the broader market risk sentiment, might influence the USD and provide some impetus to the NZD/USD pair.

Technical levels to watch

 

02:30
Commodities. Daily history for Monday, October 18, 2021
Raw materials Closed Change, %
Brent 84.05 -1.64
Silver 23.173 -0.61
Gold 1764.368 -0.15
Palladium 2004.98 -3.43
02:24
Japan PM Kishida: Regrettable North Korea has fired missiles successively since last month

Japanese Prime Minister Fumio Kishida confirmed in a statement on Tuesday, “North Korea fired two ballistic missiles.”

He added: “Regrettable North Korea has fired missiles successively since last month.”

Read: N. Korea fires unidentified projectile towards East Sea

Market reaction

The futures tied to the S&P 500 index are trading almost unchanged on the day near 4,485, unfazed by the North Korea headlines.

Meanwhile, USD/JPY is easing to 114.20, at the time of writing, down 0.09% on a daily basis.

  • USD/JPY consolidates near multi-month highs around 114.30

02:24
Gold Price Forecast: XAU/USD moves back above $1,770 level, upside potential seems limited
  • Gold gained some positive traction on Tuesday and snapped two days of the losing streak.
  • Retreating US bone yields undermined the USD and extended some support to the metal.
  • Hawkish Fed/BoE might cap gains and warrants some caution for aggressive bullish traders.

Gold edged higher during the Asian session on Tuesday and moved back above the $1,770 level in the last hour. The XAU/USD, for now, seems to have snapped two days of the losing streak and was supported by a combination of factors. The uptick was sponsored by the emergence of fresh selling around the US dollar, which tends to benefit dollar-denominated commodities, including gold. Following the previous day's good two-way price moves, the USD met with some fresh supply amid a modest pullback in the US Treasury bond yields. This, in turn, was seen as a key factor that acted as a tailwind for the dollar-denominated commodity.

Apart from this, a generally softer tone around the equity markets extended additional support to the safe-haven precious metal. Worries that the recent widespread rally in commodity prices will stoke inflation and derail the global economic recovery continued weighing on investors' sentiment. The market concerns were further fueled by Monday's disappointing Chinese macro data, showing that the economic growth decelerated sharply from 7.9% to 4.9% during the third quarter. That said, hawkish signals by major central banks might hold traders from placing aggressive bullish bets around the non-yielding gold and cap gains.

Market participants seem convinced that the Fed will begin rolling back its massive pandemic-era stimulus by the end of this year. Investors have also started pricing in the possibility of an interest rate hike in 2022 amid fears about a faster than expected rise in inflation. Adding to this, the Bank of England Governor Andrew Bailey sent a fresh signal that the British central bank is gearing up to raise interest rates to counter growing inflation risks. Growing market acceptance about the prospects for a policy tightening by the Fed/BoE warrants some caution before positioning for any further appreciating move for gold.

There isn't any major market-moving economic data due for release on Tuesday, leaving gold at the mercy of the broader market risk sentiment and bond yields. That said, scheduled speeches by BoE MPC Member Catherine Mann and Governor Andrew Bailey might provide some impetus to gold. Later during the US session, comments by Fed Governor Michelle Bowman will influence the USD price dynamics and produce some meaningful trading opportunities around gold.

Technical outlook

From a technical perspective, last week's sharp rejection slide from the 100/200-day SMA confluence near the $1,800 mark stalled near the $1,760 static support. This makes it prudent to wait for some follow-through selling before confirming that the recent move up has run out of steam and placing fresh bearish bets. The next relevant support is pegged near the $1,750 region, below which gold prices could accelerate the fall towards September monthly swing lows, around the $1,722-21 zone.

On the flip side, immediate resistance is pegged near the $1,780-82 region, which if cleared decisively should allow bulls to make a fresh attempt to conquer the $1,800 mark. Some follow-through buying has the potential to lift the XAU/USD back towards the $1,832-34 heavy supply zone. The $1,810 area, followed by the $1,818 region could act as an intermediate hurdle on the way up.

Gold daily chart

fxsoriginal

02:18
BOE to hike interest rates in November meeting – Goldman Sachs

The Goldman Sachs economist predicts three rate hikes at alternate meetings from next month, taking BOE’s benchmark rate to 0.75% by May, before a move to 1% by the end of next year, per Bloomberg.

Key quotes

"I continue to believe that higher inflation will be temporary because it is in the nature of the underlying causes.”

“But the energy story particularly means that it will last longer and it will, of course, get into the annual numbers for longer as a consequence of that.”

“And that, of course, raises for central banks the fear and concern of embedded inflation expectations.”

“As I've said before, monetary policy cannot solve supply-side problems, but it will have to act and must do so if we see a risk particularly to medium-term inflation and to medium-term inflation expectations, and that is why we at the BOE have signaled - and this is another such signal - that we will have to act.”

“But of course, that action comes in our monetary policy meetings."

  • UK 2-year gilt yield jumps to highest level since May 2019 at 0.74%

01:54
USD/INR Price Analysis: Bulls advance and eye fresh daily highs
  • USD/INR bulls move in for the kill and eye a fresh daily high. 
  • USD/INR stalled at firm support and bulls stay in control. 

As per the prior analysis,  ''USD/INR Price News: Rupee firms at critical daily resistance, eyes 75 the figure,'' the price has continued to deteriorate as forecasted as follows, but has now moved higher in what would be expected to lead to a fresh daily higher high:

USD/INR prior daily analysis

The price of USD/INR met the daily support zone and was in the process of consolidation. It was stated that if the price fails to move higher from here, there would be an argument for a long term consolidation with 74.50 eyed as a downside target. 

USD/INR daily chart

However, the price has indeed moved higher and this is a bullish development from critical support that will be monitored for prospects of a higher daily high for the forthcoming days, if not next week. 

01:37
GBP/USD Price Analysis: Upside needs validation above the descending trendline near 1.3780 GBPUSD
  • GBP/USD edges higher on Tuesday in the Asian trading hours.
  • The pair faces strong resistance near the 1.3770-1.3780 zone below the bearish slopping line.
  • MACD signals upside momentum with the underlying bullish sentiment.

GBP/USD trades on a higher note on Tuesday. The pair opened lower but swiftly recovered to claim 1.3750, where it currently hovers.

GBP/USD daily chart

On the daily chart, the GBP/USD pair has been in the continuous downward trend since the high made on July 30 at 1.3983. The descending trendline from the mentioned level act as a strong barrier for GBP/USD. The spot trades above the 50-day Simple Moving Average (SMA) at 1.3716 makes bulls hopeful of some recovery. 

If the pair sustains above the intraday high along with the break of the bearish slopping line that would mean GBP/USD bulls can test the psychological 1.3800 mark. A successful break of the 100-day SMA at 1.3812 could pave way for the 1.3850 horizontal resistance level.

 The Moving Average Convergence Divergence (MACD) indicator holds onto the oversold zone. Any uptick in the MACD could bring some upside momentum for the spot. The bulls would approach the psychological 1.3900 level in that case. 

Alternatively, a daily close below the 50-day SMA at 1.3714 would result in the continuation of the prevailing trend, with the first downside target at Friday’s low of 1.3667, followed by the 1.3555 horizontal support zone.

Next, the bears would not mind to takeout the 1.3500 horizontal support level.

GBP/USD additional levels

 

01:25
N. Korea fires unidentified projectile towards East Sea

In another demonstration of military might, N. Korea fires yet another unidentified projectile towards East Sea.

More to come...

01:22
USD/CNY fix: 6.4307 vs the estimated 6.4275

In recent trade today, the People’s Bank of China (PBOC) set the yuan (CNY) at 6.4307 vs the estimated 6.4275 and the prior 6.4300.

About the fix

China maintains strict control of the yuan’s rate on the mainland.

The onshore yuan (CNY) differs from the offshore one (CNH) in trading restrictions, this last one is not as tightly controlled.

Each morning, the People’s Bank of China (PBOC) sets a so-called daily midpoint fix, based on the yuan’s previous day closing level and quotations taken from the inter-bank dealer.

 

01:06
AUD/USD defends 0.7420 amid USD retreats, RBA minutes AUDUSD
  • AUD/USD prints gain on Tuesday in the initial Asian session.
  • The US Dollar Index breaks 94.00 amid risk-on sentiment.
  • RBA minutes, higher commodity prices, and risk-on mood aid aussie gains.

AUD/USD is picking up the bid, following the release of the Reserve Bank of Australia (RBA) minutes. The pair opens lower and touched an intraday high of 0.7248 before testing the low of 0.7406. At the time of writing, AUD/USD is trading at 0.7421, up 0.12% for the day.

The Reserve Bank of Australia (RBA) in its latest monetary policy meeting minutes showed that the central bank remained optimistic about the economic growth. The economy is expected to recover by  December 2021 and to the pre-pandemic level in the second half of 2022. The board members acknowledged that the delta variant interrupted the economic recovery. Despite higher growth projects, the central bank retreated its no interest hike rate stance until the inflation is stable within the 2-3% target band.

In addition to that, China’s growth concerns weighed on the sentiment. Chinese Q3 Gross Domestic Product (GDP) fell 4.9% on a YoY basis, falling below the market consensus of 5.2%. Nevertheless, higher commodity prices provide some support as AUD held six-week highs on the back of higher commodity prices. It is worth noting that the S&P 500 Futures is trading at 4,477, up 0.02% for the day.

The US Dollar Index (DXY), which tracks the performance of the greenback against its six major rivals fell briefly below 94.00.

As for now, traders await US Housing Start, and Building Permits to gauge the market sentiment. 

AUD/USD additional levels

 

00:33
RBA’s October meeting Minutes reiterate that inflation target of 2-3% will not be until 2024

The RBA’s October meeting Minutes have stated that the inflation target of 2-3% that is required before the central bank will lift the cash rate will not be until 2024. AUD/USD is giving back short term gains.

RBA Minutes

Delta variant of covid-19 had interrupted the recovery of the Australian economy

In the central scenario, the economy would return to growth in the December quarter and to its pre-delta path in the second half of 2022.

Economic recovery was likely to be slower than in late 2020/early 2021.

Members agreed that, while less accommodative monetary policy would, all else equal, see lower housing prices and credit growth, it would result in fewer jobs and lower wages growth.

AUD/USD technical analysis

Earlier, the bulls took out the resistance on the retest and now bears need another break of 0.7410/0.7400 of face stringer bullish momentum from trendline support: 

Further bullish AUD reading: AUD/NZD Price Analysis: Traders, don't get caught out!

About the Minutes

The minutes of the Reserve Bank of Australia meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. Generally speaking, if the RBA is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the AUD.

00:30
Schedule for today, Tuesday, October 19, 2021
Time Country Event Period Previous value Forecast
01:30 (GMT) Australia RBA Meeting's Minutes    
06:00 (GMT) Switzerland Trade Balance September 4.5  
09:00 (GMT) Eurozone Construction Output, y/y August 3.3%  
12:05 (GMT) United Kingdom BOE Gov Bailey Speaks    
12:30 (GMT) U.S. Housing Starts September 1.615 1.62
12:30 (GMT) U.S. Building Permits September 1.721 1.68
15:00 (GMT) U.S. FOMC Member Daly Speaks    
17:15 (GMT) U.S. FOMC Member Bowman Speaks    
18:50 (GMT) U.S. FOMC Member Bostic Speaks    
23:50 (GMT) Japan Trade Balance Total, bln September -635.4 -519.2
00:27
USD/CHF stays below 0.9250 amid higher US Treasury yields USDCHF
  • USD/CHF edges lower, erasing the previous session’s gains.
  • Higher US Treasury yields underpin the demand for the US dollar.
  • Fed tapering and higher inflationary concerns influence traders' decisions.

 USD/CHF accumulated mild losses on Tuesday in the early Asian session. After testing the high near 0.9280 in the US session, the pair traded lower to close below 0.9250. At the time of writing, USD/CHF is trading at 0.9233, down 0.05% for the day.

The US benchmark 10-year Treasury yields trade at 1.59% with 0.88% gains. The greenback follows the US bond yields and remains steady near 94.00. Investors reacted to the prospects of higher interest rates by selling across the board global government bonds. Higher energy prices along with the existing supply-chain bottlenecks and labor shortages check traders nerves. 

On the other hand, the Swiss franc loses momentum as traders turn to the riskier asset in the anticipation of higher returns.  It is worth noting that, S&P 500 Futures is trading at 4,478, up 0.01% for the day.

As for now, traders are looking for the US Housing Starts, and Building Permits data to take fresh trading insight.

USD/CHF additional levels

 

00:18
RBA Minutes top of the hour, how might they affact AUD/USD? AUDUSD

The RBA’s October meeting Minutes will provide additional colour around emerging risks as well as their baseline views. 

However, the focus for markets and the AUD will remain on global front ends and offshore equities. With that being said, the Aussie has ridden on the coattails of New Zealand's surprise inflation data yesterday that came in much hotter than expected and highest in a decade. The Consumers Price Index rose 2.2 per cent in the September 2021 quarter, the biggest quarterly movement since a 2.3 per cent rise in the December 2010 quarter. Nonetheless, analysts at ANZ Bank are not so sure that this can be expected of the Australian economy just yet:

''We are not anticipating Australia’s inflation to be anywhere near as strong as New Zealand’s,'' the analysts said. ''If trimmed mean inflation surprises on the upside, then the composition of the price increases will matter. If most of the strength was driven by tradable prices rather than non-tradable, the RBA will likely be more willing to look through it rather than take it as an indication that we are starting to see evidence of more widespread sustained inflation.''

The RBA reiterated its dovish stance in the Oct statement that it does not expect to hike the cash rate before 2024 and the Minutes today should not surprise.  Instead, more focus will be on the Governor's panel participation on "Central Bank Independence, Mandates and Policies" on Thurs/Fri which likely makes for a mundane event around the Minutes today as traders hold off for bigger fish and more meat on the bone.

How might the Minutes impact AUD?

The event is unlikely to move the dial too much, but surprises can happen. Nevertheless, AUD/USD is at the mercy of external factors more so as the markets have priced in the RBA for the meanwhile. For instance, in yesterday's preview ahead of the Chinese data, it was explained that AUD/USD is technically on the verge of a run to test the daily chart's 61.8% Fibonacci that meets territory near 0.7300: 

From an hourly point of view, it was illustrated as follows:

However, the price action did not quite follow as forecasted. We did see the drop sometime after the data, albeit the bulls took out the resistance on the retest and now bears need another break of 0.7410/0.7400 of face stringer bullish momentum from trendline support: 

Further bullish AUD reading: AUD/NZD Price Analysis: Traders, don't get caught out!

About the Minutes

The minutes of the Reserve Bank of Australia meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. Generally speaking, if the RBA is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the AUD.

00:15
Currencies. Daily history for Monday, October 18, 2021
Pare Closed Change, %
AUDUSD 0.74105 -0.08
EURJPY 132.685 0.18
EURUSD 1.16079 0.08
GBPJPY 156.913 -0.09
GBPUSD 1.37261 -0.18
NZDUSD 0.70796 -0.08
USDCAD 1.23693 0.1
USDCHF 0.92377 0.12
USDJPY 114.306 0.1

FOREIGN EXCHANGE MARKET NEWS

CURRENCY MARKET DEFINITION
The concept of currency market has several definitions:

  • Currency market is the sphere of economic relations that are manifested in the purchase and sale of currency values (foreign currency, securities in foreign currency), as well as operations related to the investment of capital in foreign currency;
  • Currency market is a financial center where currency purchase and sale transactions based on supply and demand for them are concentrated;
  • Curency market is a whole of authorized banks, investment companies, brokerages, exchanges, and foreign banks that perform foreign exchange operations.
  • Currency market is a whole of communications systems that link banks in different countries that conduct international currency transactions.

Simply put, currency market is the market where currency transactions are made, that is, the currency of one country is exchanged for the currency of another country at a certain exchange rate. The exchange rate is the relative price of currencies of two countries or the currency of one country expressed in another country's monetary units.

Currency market is part of the global financial market, where many operations related to the global movement of capital take place.

TYPES OF MARKETS. RUSSIAN AND INTERNATIONAL CURRENCY MARKETS
There are international and domestic currency markets.

Domestic currency market — is a market within a single country.

The international currency market — is a global market that covers currency markets of all countries in the world. It does not have a specific site where trading is carried out. All operations within it are carried out through a system of cable and satellite channels that link the world's regional currency markets. Regional markets today include the Asian (with centers in Tokyo, Hong Kong, Singapore, and Melbourne), the European (London, Frankfurt am Main, and Zurich), and the American (New York, Chicago, and Los Angeles) markets.

Currency trading on the international currency market is carried out on the basis of market exchange rates, which are set on the basis of supply and demand in the market and under the influence of various macroeconomic data. Forex is the international currency market.

Currency markets can also be divided into exchange and over-the-counter markets. Exchange currency market is an organized market where trading is carried out through an exchange—a special company that sets trading rules and provides all the conditions for organizing trading under these rules.

Over-the-counter currency market — is a market where there are no certain trading rules, and purchase and sale operations are not linked to a specific place of trade, as opposed to the case of an exchange.

As a rule, an over-the-counter currency market is organized by special companies that provide services for the purchase and sale of currencies, which may or may not be members of the currency exchange. Trading operations in this market are now carried out mainly via the Internet.

The over-the-counter currency market is much larger than the exchange market in terms of trading volume. The Forex international over-the-counter currency market is considered the most liquid in the world. It operates around the clock in all financial centers of the world (from New York to Tokyo).

CURRENCY MARKET FUNCTIONS
Currency market— is the most important platform for ensuring the normal course of all global economic processes.

The main macroeconomic functions of the currency market are:

  • creating conditions for the subjects of foreign exchange relations to make timely international current and capital payments and thereby promoting the development of foreign trade;
  • providing conditions and mechanisms for the implementation of monetary and economic policy of the state;
  • diversifying foreign exchange reserves;
  • forming the exchange rate under the influence of supply and demand;

NEWS IMPACT
Various currencies are the main trading tool in the currency market. Exchange rates are formed under the influence of supply and demand in the market.

In addition to that, currency rates are influenced by many fundamental factors related to the global economic situation, events in national economies, and political decisions.

News about these factors can be found in various sources:

  • Reports showing a country´s level of economic development.

The more stable an economy is developing, the more stable its currency is. Accordingly, it is possible to predict how the currency will behave in the near future, based on statistical data published in official sources of countries with a certain regularity.
This data includes:

  • GDP
  • unemployment;
  • return on equity;
  • consumer price index;
  • industrial price index;
  • propensity to consume;
  • salaries outside of the agricultural sector;
  • residential construction, etc.

Interest rate level, set by national authorities regulating credit policy, is an equally important indicator. In the European Union, this is ECB–the European Central Bank, in the US, this is the Federal Reserve System, in Japan—the Bank of Japan, in the UK—the Bank of England, in Switzerland—the Swiss national Bank, etc.

The interest rate level is determined at meetings of the national central bank. Then, the decision on the rate is published in official sources. If the central bank of a country reduces the interest rate, the money supply in the country increases, and the national currency depreciates against other world currencies. If the interest rate increases, the national currency will strengthen.

  • Speeches of country leaders, leading economists and analysts.

A speech or even a separate statement by a country's leader can reverse a trend. Speeches on these topics may change the currency exchange rate:

  • analysis of the situation on the currency market;
  • changes in monetary or economic policy;
  • adoption of a budget policy;
  • forecasts of the economic situation, etc.

All this news is published in various sources. Major international news is more or less easy to find in Russian, but news related to the domestic economic policy and the economy of foreign countries is much less common in the Russian press. Mostly, such news is published by the national media and in the language of the country where the news is published.

It is very difficult for one person to follow all the news at once, and they are likely to miss some important event that can turn the whole situation on the market upside down. Guided by our main principle—to create the best trading conditions for our customers—we try to select the most important news from all over the world and publish them on our website.

The TeleTRADE Department of Analytics monitors news on most national and international news sources on a daily basis and identifies those that can potentially affect exchange rates. These are the main news items that are included in our news feed.

In addition, all our clients have free access to the Dow Jones news feed. This is a joint project of Dow Jones Newswires, the world's largest news agency, and the leading Russian news agency Prime-TASS. The news feed is created specifically for currency traders and those who are interested in getting information about the world's currency markets.

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