official Daily Market Analysis by Forextime.com

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Daily Fundamental ForexTime ( FXTM )

The week ahead: Draghi’s turn to drag the Euro?

Last week the greenback was the biggest loser among all major currencies. The dollar index slipped to a 10-month low, while the Euro, the Pound, the Lonnie, and the Aussie all posted new 2017 highs.

The dollar has been falling since the beginning of 2017 despite the two rate hikes which occurred in March and June, and the many hawkish comments from FOMC members. Part of the blame falls upon the delay of President Trump’s economic agenda. However, most recently it was the poor economic data that led investors to question the trajectory and speed of interest rates hikes.

Janet Yellen’s testimony to Congress on Wednesday and Thursday did not help the dollar either. She did not seem confident that inflation is on the right path and Friday’s flat consumer price index raised concerns that the Fed may be done with hiking rates this year. U.S. retail sales figures added salt to the wound after recording the biggest drop in more than a year in May falling by 0.3%. The sluggishness in consumer spending, wage growth and inflation will likely to worry Fed officials. Furthermore, if the weakness persists in the next couple of month, it will prove that the slowdown in the economy is not due to transitory factors but probably structural problems. Until data takes a U-turn, dollar bulls will remain reluctant to jump in and the dollar weakness may resume in Q3.

Next week investors will shift their focus to the European Central Bank and Bank of Japan. It has been almost three weeks since Mr. Draghi said, “Deflationary forces have been replaced by reflationary ones.” His confidence and bullish assessment of the euro zone recovery sent the Euro above 1.13 and despite the ECB officials attempts to dampen investors’ expectations over tightening policy the Euro still appreciated by more than 2.5% since June 27.

I think Mario Draghi will choose his words more carefully when the ECB meets on Thursday. The last thing he wants is a strong Euro and tightened financial conditions for now. Since no changes are expected on current monetary policy the tweaks in the statement and Draghi’s tone are all what matters to traders. It is a complicated process to start normalizing policy without disrupting markets and so while the ECB wants to prepare investors for gradual wind-down of asset purchases, policy makers are likely to hint that rate hikes will remain low for a prolonged period. However, I prefer buying the Euro on dips then selling on rallies with end year target around 1.18.

The dollar’s weakness drove Sterling to a 10-month high to trade above 1.31 for the first time this year. The pound also found support from BoE’s Ian McCafferty who said the central bank should consider unwinding its 435-billion-pound quantitative easing program earlier than planned and he’s looking to vote for a rate rise again in August. It seems that monetary policy is having more weight than the Brexit talks and if Tuesday’s inflation figures from the U.K. surprised to the upside, expect GBP to continue rallying. However, traders should also keep a close eye on Brexit negotiations which are going to resume on Monday. 

China’s GDP release on Monday will be monitored very closely by Aussie traders. Markets are expecting a 1.7% rise in Q2 from 1.3% in Q1. The RBA minutes are scheduled for release on Tuesday followed by the employment report on Thursday. It requires another set of positive reports to further widen the differentials in bond yields; however, without a shift in monetary policy stance the Aussie gains are likely to be limited. 

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Forextime Daily Market Analysis

Dollar gasps for air while Euro bulls take a breather

The Greenback received a thorough pummelling on Tuesday after reports of Republican legislators failing to pass a revised healthcare bill rekindled concerns over Trump’s ability to implement tax cuts and infrastructure spending. Sentiment was already turning increasingly bearish towards the Dollar following last week’s soft US inflation reading, with sellers swiftly exploiting the fresh setback to Trump’s domestic agenda, in order to attack prices further. With the Greenback displaying signs of sensitivity to monetary policy speculations and the probability of a 25-basis-point rate increase in December dropping to 43% according to CME FedWatch Tool, further downside could be on the cards.

As the US economic calendar is fairly thin today, with only US building permits and housing starts in focus, price action is likely to dictate where the Dollar Index trades. Technical traders could be tempted to utilize the technical bounce on the daily time frame to drive the Index lower. A solid breakdown and daily close below 94.60 may encourage a further selloff towards 94.00.

Euro bulls wait for Draghi

Thursday’s main risk event for the Euro will be the European Central Bank meeting, which is widely expected to conclude with monetary policy left unchanged in July. Investors will closely scrutinize the meeting and press conference for clues on whether the central bank may announce plans to reduce its bond-buying program in September. With ECB President Mario Draghi’s optimistic speech in Sintra sparking speculations of QE tapering and also playing a role in the current Euro rally, he may choose his words carefully on Thursday. Although the economic conditions in Europe continue to stabilize, inflation is still far from the 2% target and it will be interesting to hear Draghi’s thoughts on this. While the improving macro-fundamentals and absence of political risk in Europe have heavily supported the Euro, bulls may need further inspiration in the form of QE tapering expectations. It becomes a question of whether Draghi will offer the bulls what they crave or will end up clipping their wings.

From a technical standpoint, the EURUSD is heavily bullish on the daily charts. The breakout and daily close above 1.1500 could encourage a further incline higher towards 1.1615.

Commodity Spotlight – WTI Crude

WTI Crude Oil edged slightly lower on Tuesday after API reported US inventories increased by 1.63 million barrels last week. Although prices ventured towards $46.55 during Wednesday’s trading session this had nothing to do with a change of bias, but rather profit taking, as sentiment remained bearish. Recent reports of Ecuador publicly admitting that it will not meet OPEC’s cut commitments, presents a threat to the production cut deal, with fears of a domino effect exposing oil prices to further downside risks. The bias towards oil remains bearish and further downside may be expected as the supply overhang erodes investor attraction towards the commodity. Much attention will be directed towards the pending report from the US Energy Information Administration (EIA) this afternoon, which could compound to oils woes if there is a build in crude inventories.

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[Guest andengireng]

 

 

EURUSD July 21 2017 is still moving in a bullish bias for today. Based on technical analysis, as trading strategy today you can wait for confirmation of buy signal if correction occurs to the reference area at the range 1.15815, with potential rebound up to the range 1.16584.

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Daily Fundamental ForexTime ( FXTM )

FOMC disappoints US bulls

It's been another round of FOMC today and the USD bulls have been left disappointed again by Yellen as the hawkish comments they had hoped for were not forthcoming at all. The FED is looking to unwind its balance sheet in the near future, but market expectations are that a rate hike is sometime off - most likely in December at the present rate. Additionally, the FED believes inflation to be rising to the magic 2% mark, but that it may slack off as food prices and fuel have been stagnating over the past few months. So it looks like the FED wants to raise rates in the future, and has strong business demand and a robust labour market, but is missing the last magical ingredient which is inflation. If we see stronger readings in the near future then we could see expectations increase that a potential rate rise could take us off the current 1.25% and help drive the USD bulls again.

When it comes to markets that benefit from the USD weakness look no further than the EURUSD which has been steadily climbing the charts for some time now. I spoke a while back about how well it has been doing in recent times in its bullish channel, and the fact opportunities still remain. Well today's push through resistance at 1.1719 are very positive and the market will be looking to see if this candle can close above. At present it's slightly above and we could see it look to treat that resistance level as support. If we do see that hold above 1.1719 I would look for the potential of a further move higher to 1.1915 which is likely to be a key level for traders to target. I would also pay attention to the 20 day moving average, which has been looking very strong for bullish support as of late as well.

Another big benefactor of the USD weakness has been commodity currencies and in particular the AUDUSD cross which has been rising high for some time. Yesterdays inflation reading was in line with the trimmed reading forecasts so there was a slight dip, but this has been shrugged off in trading today. The market will now be looking at Australian export and import forecasts due out shortly to see if they can beat estimates and send the AUD higher. A boost in import prices would certainly help the case for further inflation which has been Australia's weakness thus far; but also more so a global problem.

AUDUSD has been trending in a bullish manner for some time and there is still plenty of room for it to move upwards. At present its struggling to break through the 80 cent mark which is a psychological level, but it looks poised to make the move if it ever will. If we do see a push through here I would expect to see a battle between the bears and bulls, and if we do see the bulls take control then a potential run to 0.8154 at the 50.0 fib level. 

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Daily Fundamental ForexTime ( FXTM )

European currencies dominate trading

European currencies have dominated in today's trading as the EURUSD was crowned king of volatility amongst the major pairs, when North American traders came into the fray, while at the same time the GBPUSD continued to take a beating in the currency markets. It's somewhat remarkable to have two currencies intertwined yet going in opposite directions based on the current political events, but for traders it's just another day in the field.

The EURUSD continues to be a big favourite of mine and despite the pullback we saw on Friday it has failed to stimulate the USD bulls to come back into the marketplace. Currently, the Trump effect has faded and despite some outlets of media saying otherwise there seems to be movements to try and investigate further the Russian influence in the US elections. All of this is weighing down on the markets  which believed that a Trump administration would be pro-business. Additionally, the FED continues to send mixed messages unless we see inflation lifting and has even cut back growth forecasts going into 2018 and 2019. US PPI and CPI will be a major focus this week and I would expect the markets to look gleefully on those figures in the long run, but at present the focus is very much on dollar selling based of the current market information and the EURUSD has been one of the largest benefactors.

Chart wise the EURUSD is still in its bullish trend. Fridays sell-off was on the back of some positive fundamental news, but it has not managed to carry through into the new week thus far. Support was quick to hold any downward momentum at 1.1719 and continues to look like a strong level, this was further reinforced by the 20 day moving average warding off the dollars bulls in the EURUSD. So far however momentum has stalled as trading has been light with the Monday opening, and it's held up at resistance at 1.1799, but not before testing it today. There is potential to slide further down, but also plenty of potential to climb higher on the back of the US political mess. If we do see a strong push through resistance I would anticipate further climbing to 1.1915 in the current market environment.

The GBPUSD has been the other mover today after recently looking stronger against the USD, it has struggled to gain any momentum in the last three trading days and looks to be sliding back down the charts again. Support levels will be key here and 1.2972 is looking like a key level to be focused on as well as 1.2843 to see if this is really a strong sell off. If we do see a big jump in the charts for the GBPUSD you can be sure that resistance at 1.3224 will be the target, and we could potentially see a double top if the bears look to strike there again. 

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[Guest andengireng]

 

 

 

The movement of USDCHF August 10 2017 is still in bearish pressure, the price is stuck in the range of 0.96600 which becomes the closest Support today. Technical analysis of forex today note the Resistance in the area of  0.96900 to find confirmation of Sell signal with the target price back down to the range 0.96116.

 

 

 

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Daily Fundamental ForexTime ( FXTM )

RBA poised to act in current market

The Australian dollar continues to be in a bit of a freefall as traders rally on the back of a resurging USD as well as a risk-off attitude when it comes to commodity currencies as of late. One of the major developments though around the Australian economy has been the rise in household debt which is being fed by low interest rates in Australia. Now the Reserve Bank of Australia (RBA) is getting a bit worried and today's wage growth figures are likely to be quite major, on the basis that if the figures are showing sluggish growth then the RBA may be forced to act in the market. If the RBA does act it will be in the form of a rate rise and this would certainly be a double edged sword for the AUDUSD. It could be the case that it does help reduce debt levels, but fixed interest rate traders would look to jump back on board the AUDUSD train in a hurry, and a weak result today with wage growth could actually trigger a jump for the pair.

On the charts the AUDUSD has cruised lower recently as the bears take hold, and it's looking very much like a classic retracement on the charts. So far it has pushed through the 20 day moving average and is looking like it will test support at 0.7761 and 0.7657 in the future if this slide continues. In the event it does look to push back upwards resistance levels can be found at 0.7901 and 0.8000, but a push through the psychological 80 cent level would be a very hard ask for the AUDUSD unless we saw a major turn in its economic good fortunes in the near future.

One of the more interesting developments has been the movements of the S&P 500 which had a large pull back in the previous week, but has managed to find some legs this week on the chart. American data was positive today on the basis that retail sales jumped to 0.6% m/m (0.3% exp) which is a positive for the US economy. However, there is still a large amount of worry in the markets around the current state of American politics which can swing on a day to day basis. This in turn has seen equity markets a little coy, and also a resurgence in speculative metal markets where traders are looking to hedge.

The S&P 500 though has struggled to gain momentum today after a strong Monday opening. The push upwards today to come through the trend line was met with resistance and the likelihood of pushing through resistance at 2484 continues to be problematic as the market has show time and time again that any movements to this region seem to encounter bears who believe that we need a lot more information to go higher. If it does fall I'm still watching for that 100 day moving average to act as the first target level for traders and support levels at 2406 and 2353.

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Daily Fundamental ForexTime ( FXTM )

Equity markets struggle to hold off the bears

The markets have been in minor turmoil today as US equities continued to dip on each rise. This in part was brought on by more bearish weakness in the US economy over the last few days, but also disappointing economic surveys carried out by the New York Fed, which showed that there were more people looking for work, and wage growth was not picking up at all. This comes at a somewhat interesting time, as the labour market has been the cornerstone of the US rebound after the financial crisis, so markets are fearful of anything bad happening to it - especially with a consumer based economy. The trump effect is also continuing to wear off, with neither congress or the administration working together it seems it's very hard for Trumps economic policies to be advanced at present.

This in turn has spilled over into equity markets in a rather ferocious way, the concern with many is that if the market does indeed start to turn and pull-back we could in turn see more aggressive bearish behaviour - as a number of analysts continue to feel it's overbought. On the charts at present the only thing holding back  the S&P 500 is continuing to be the 100 day moving average, which has so far slowed down the bears on two occasions now. The clear rejection is a good sign if you're bullish, however I am still expecting the bears to strike as Trumps grip looks to weaken (unless anything drastic changes). Support levels below the current 100 day moving average can be found at 2406 and 2353 and I would expect to see a lot of volatility around these levels as it moves lower, so expect big swings. Also, the 200 day moving average is trending up the charts and this will be a key target as well for bears.

Gold traders are having a field day at present on the back of this uncertainty, and it's clear that with any weakness in the equity markets we will see people look to hedge against the bad times in speculative metals and of course safety currencies. Gold has thus far trended strongly, with the bulls looking very strong with the potential to breakout. Previous movements where hindered by strong resistance at 1295 and a double top sent gold tumbling for some time. Fridays test though showed there is certainly a large amount of resolve to push through and look to touch higher resistance levels at 1313 and 1338, all of which are looking strong targets - 1338 being the strongest level at present. If Gold does a reversal then certainly support at 1258 and 1233 are likely to be where the bears look to aim, however the bulls have thus far been quite promising and the trend is generally every traders friend. 

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Daily Fundamental ForexTime ( FXTM )

Oil set to turn on data

Crude oil has been doing the rounds on media as it sits at a key turning point according to various analysts, and it's easy to see why given that market trending seems to have slowed down. Many in the market now believe that we are going to see the bulls make some sort of resurgence and they point at the current drawdown's from private and public data as the catalyst for further surges in the future. Tonight's drawdown of -3.5M barrels was to be expected by most, however the surge in gasoline is still a little worrying at this stage and it will be interesting to see how markets treat that tomorrow with the Department of Energy (DOE) figures. I also believe that in the long run oil prices are likely to rebound given OPEC's recent efforts, but it will come about when the US shale industry actually slows down, and does not keep boosting production further. Many believed that shale would die off with low prices; nevertheless they become more efficient, meaner and aggressive than ever before and have survived thus far as a result.

Crude on the charts has seriously slowed down and the DOE data due out tomorrow will give it some serious movement as usual. Today's market is responding to a weak US dollar, and if we do see a strong US dollar well you can expect that to impact oil as well with further tests on support at 46.50 and 45.47. When the bulls do come back into the market and they will, I expect to see large tests on resistance at 48.82 and of course the level to beat which is 50.21, but encompasses that psychological 50 dollars a barrel zone. With a large push on here markets could quickly rally behind the bulls in the short term, especially if the US continues to post drawdown's with its crude oil inventory.

The Canadian dollar has been a strong against the USD in Q2 and is looking to further extend that going into Q3 this year. This has been underpinned by USD weakness, but also by a resurgence in the Canadian economy as of late with retail sales lifting to 0.7% m/m (0.1% exp) - a positive sign for an economy so underpinned by its resources and the fluctuations in the markets. While the Trump effect wearing off will have a positive effect and oil prices starting to look a little more bullish, it could be a good chance for the CAD to claw back further ground against the USD.

Chart wise the USDCAD has been in a bearish trend for some time, and the trend is always your friend. After a brief pull-back led in part by USD shorts being oversold, the CAD looks poised to make some strong moves again and is currently held up at support at 1.2553, with the potential to extend further to 1.2429. Given the recent movements we could see a bounce higher to resistance, but the potential for a double top certainly exists at 1.2757 in the current market environment. 

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Risk aversion reigns supreme in markets

Markets continue to be risk off today, as commodity currencies took a beating - no more so than the NZD. Recently markets had been piling into fixed interest rate currencies as economic optimism boomed, however that has recently turned as Trumps allure has worn off, and the markets remain more cautious than ever.  The Reserve Bank of New Zealand has not helped as they attempted to jawbone the NZDUSD last week as well; this is not really much of a surprise though anymore as the governor tends to every chance he gets. However, it's not all doom and gloom for the pair with trading balance data due out shortly and markets expecting to see -200M (NZD) as a reading, which will certainly be negative compared to the previous surplus. A fall here would be bearish signal, however trade balance data has shown in recent times to be quite resilient and could easily surprise the markets here as well. Exports will also be a key focus for traders, as a jump here would also boost the case for a stronger NZD.

So far the NZDUSD has had a very rough day with a sharp fall on today's attack on anything risky. At present it's held up on support at 0.7219 ahead of today's trade balance data reading. If we see a negative result, I would expect it to drop down to 0.7157 over the course of the evening. If we do see a positive result them a jump higher to 0.7323 would not be far off and even the possibility of further extensions to resistance at 0.7400. A push past the 74  cent mark may be a bit of a struggle though with the current conditions and the Jackson Hole meeting giving the potential to cause surprises in the markets.

Crude oil I touched on yesterday and for good cause as Department of Energy data came through and showed another drawdown of -3.33M barrels, just under expectations of -3.48M. However, it also showed a drawdown in gasoline reserves of -1.22M barrels as well, so the market has taken this as a positive. It's likely that analysts will take this as a positive sign and that OPEC which has imposed production cuts efforts are likely to be working. I am inclined to agree, but at the same time US production is increasing, and if it does taper off then we could see markets naturally relax a little more and the bulls take control.

For crude bulls resistance at 48.82 is the target to look to break with further extension at 50.21 likely to be the strong point and key area to break into going forward. If we do see USD strengthening however this could slow things down and even force oil down lower. In that event support levels at 46.50 and 45.47 are likely to be the key targets here and would most likely be the line in the sand for bulls with the recent trends. 

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Gold surges on U.S. hurricane woes

It's been a quiet day today globally, with little in the way of movements on the currency markets and in equities. However, gold has jumped into action and broken through the 1300 barrier for the first time since November. This is quite unusual given it's a bank holiday in the UK and that the market has been quiet, but it could be a case of traders hedging their bets on further issues with the hurricane, which is causing so much damage to Texas at present. What is abundantly clear, is that there has been a double top in the gold market and for some time and it has been itching to get higher on the charts; and after breaking through it looks like the upside may actually win here. The only way I can really see it being pulled back down is by either a stronger USD in the market, or the next FOMC being hawkish on the possibility of a rate rise.

Either way gold is looking remarkably bullish on the charts and was shortly stopped by resistance at 1313. Tomorrow with London and NY open will be the real test to see if gold can sustain above the 1300 mark, but I am certainly a believer in it with all the uncertainty. For bullish traders looking for new targets then 1338 is likely to be the next big line in the sand to target, but it may take some time or worsening economic information to push it that high. If the bears do take back some control and look to push it lower and I would be focused on the 20 day moving average. Thus far it has acted as dynamic support on a number of occasions and there is every reason for this to continue in the long run given traders bullish temperament in the market.

Oil has also been one to watch today with the hurricane causing issues in Huston, well known as an important oil region where a large amount of oil is refined the flooding has caused oil prices to drop. As a result traders are now expecting to see a rise in oil surpluses in the upcoming Department of Energy (DOE) inventory data over the next few weeks, and a likely possibility of a drawdown in gasoline supplies.

On the charts oil has certainly been pushed lower and is showing continuing signs of a bearish trend despite the recent drawdown's from the DOE. Thus far the push through the bearish level at 46.50 has failed and pulled back slightly, however if the current trend is anything to go by we could indeed see another movement lower and the possibility of a further extension to 45.47. 

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US markets surge on GDP figures

US markets clawed back ground today as the hurricane started to let up in Texas and move across to Louisiana giving some reprieve for the embattled state. This was further boosted by GDP figures out today, which showed the annual rate q/q jumping to 3.0% (2.7% exp) - a strong result in for the US economy despite the recent turmoil. There will be question marks now about the economy and if it can growth further though with the Trump effect wearing off, but this lends strong weight to a potential December rate hike from the FED. There will now also be strong bets on a positive initial jobless claims report tomorrow, however the month to come may see it boosted by the damage caused by the hurricane.

For the market, turning heads today, the EURUSD was like no other, after recently hitting a high not seen since 2015 it has done an about turn after some stiff resistance. This is not to say the EUR is losing ground, it certainly has been making up plenty against the ever weaker GBP. For me though the EUR is likely to continue to be a strong currency in the foreseeable future as data continues to be positive and some of the weaker countries are now starting to show strong signs of growth with the accommodative monetary policy laid out by the European Central Bank.

The EURUSD hit stiff resistance at 1.2060 and the market is looking to jump higher on the charts in the near future as it travels up the bullish channel. Today's announcement has certainly given the bears a good swipe, and allowed traders to unwind positions. It's likely we could see further trending down and the 20 day moving average will be interesting to watch to see if the bears have really taken hold, a push through would confirm some bearish sentiment with a target at support at 1.1800. Further support can be found at 1.1798 and 1.1621 with the likelihood that these levels will be key to stopping further falls. The reality is that the USD could strengthen and push things lower, but with Germany recently recording a record trade surplus it seems that any weakness in the Euro may be a temporary thing.

Back on US soil and with the storm slowly subduing it's clear that the S&P500 is back in business when it comes to volatility with some strong movements over the last two days as traders once again defended bearish swipes on the 100 day moving average. This bullish sentiment around the moving average lends weight to the idea that we could see a resurgence and eager traders will be wanting to see if they can take another crack at the 2484 level which has acted as strong resistance recently. I would be surprised to see a push through however unless US economic data does improve a bit more, which could take some time after the impact in one the US's most productive states. 

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US woes cause dollar bears to strike

It's been a perfect storm for the USD bears today as the USD plummeted against major pairs and commodities. For some time the USD has been quite weak and major pairs have capitalised on it when possible, however there has been a major weather event recently with Hurricane Harvey causing major flooding and causing a large amount of damage, and also another storm likely to hit and impact Florida. Couple to this the huge backlog of political work that needs to be done by the end of the month and you can see why markets are not happy with the current US situation. The major bearish sign though was the durable goods orders m/m which fell to -6.8% (-2.9% exp) which gave the dollar bears another chance to dump the USD.

No where was this felt more than the commodity currencies which surged higher on the back of the USD weakness. After recent bearish behaviour after the last few months the NZDUSD has surged higher today on the back of the weaker USD, and also positive Australian outlook from the Reserve Bank of Australia. The push upwards today was very strong and cracked through the trend line before hitting resistance around the 20 day moving average. The bears have since pushed it back down but the new daily candle is searching to find weakness and it may find it with the current weak USD. I'm not sure how much further it can however rise, but resistance at 0.7323 and 0.7400 are likely to be strong targets for traders in the market. If we do see a fall back down the charts and the trend continuing then I would expect to see support at 0.7219 and 0.7157 be the focus.

Oil has surged today on the back of a number of key things. Firstly there are talks that Saudi Arabia and Russia are looking to extend further rate cuts. Additionally, the USD has been somewhat weaker and this always leads to a rise in the value of oil in the short term. Further adding to this is the fact that refineries in the US are starting to come back into full swing, and there demand for oil products will increase to make up for lost ground - if they're not already at full capacity. US oil inventory data would normally be the next thing also to focus on for oil traders but due to the US public holiday it's going to be a day later than normal.

Technical traders will be focused on the failure of oil to break through resistance today at 48.82. For some time now there has been a bearish expectation for the market and it had been trending lower, but the last few days have seen jumps and expectations are the bulls might be looking to take control again. Certainly oil is big on trending, but each wave has been weaker. If the market fails to break and hold above 48.82 then I would expect it to swing lower to 46.50 and 45.47.

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USD beats monday blues

The dollar has begun a strong rally on the charts and US markets are surprisingly upbeat, most likely on the bipartisan actions that have occurred in the US, with Trump working with the democrats to push through debt ceiling reform and provide aid for Harvey and Hurricane Irma as it hits Florida. This US resolve has been somewhat missing over the previous month, with many struggles and failures for the Trump administration as well as added heat from the investigation into Russia and its influence in the recent US elections. Some economic information also had a boost with consumer credit lifting positively to 18.5B (15B exp) showing that the consumption based economy which is the United States is still going ahead full steam and there may be plenty more left in the tank.

With all the turmoil recently for the USD the one winner may in fact be the S&P 500, which has been lifting on speculation that the FED will not lift interest rates in December as many had been expecting. The mindset is that the hurricanes will have an impact on the economy, and force the FED to act more dovish in the later part of the year. So with the FED being dovish the S&P 500 is looking to close at record highs and the market is poised to continue its bullish run against all odds.

With the S&P climbing through resistance at 2484 and closing above the market is looking quite bullish an extension up to the magic 2500 mark looks on the cards. Anything above the 2500 mark would most likely be aiming for the next psychological level at 2524. In the event we did see a strong pull back on the chart my focus would be on 2484 and 2459 with the 100 day moving average being the real test if the markets start to become bearish.

The other key pair which has certainly been in the headlights today has been the cable which saw some stiff resistance at 1.3224. Now the UK economy has been undergoing a tough time with the uncertainty around Brexit and this has not been helped by comments from the Euro-zone which have tried to undermine the position of the British. But for the most part it has been dollar weakness which has enable the pound to climb so high.  A reversal of this position could certainly be in the works after failing to climb any higher at 1.3224.

Expectations are now building that we could see the bears taken a decent swipe as the market swings lower. I would certainly be aware of the 20 day moving average which does have a habit of providing support. Traders are likely to target the key area of 1.3000 which is a psychological level, but also a strong area of support and could be the land in the sand for the bulls to look to regain control - it certainly has a lot to play for around this level given the recent history.

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Global tensions set to boost metals

North Korea is on the move again when it comes to upsetting the western world, as reports are now surfacing that they will test launch another ICBM and potentially point it towards pacific targets. With the latest rounds of sanctions having little to no effect, it seems likely that the US may rattle its sabre once more at North Korea with further tough talk, this could in turn have a flow on effect in the markets which will look to hedge on any escalation risk. Albeit at the last possible moment if traders can help it, but so far the bounce off these events has been substantial. One of the key winners of such trades is indeed precious metals, which speculators enjoy to the fullest when it comes to hedging against risk. While traditionally a hedge against inflation, it has since become the go to move for traders look to hedge against political events as well.

Silver for me is the key metal I will be watching for a number of reasons. Firstly it's a little more robust technically than gold, and secondly it seems to be less likely to spike wildly on big movements but instead take a direction and go with it. Also for silver traders support was recently tested at 17.696 and the market quickly pushed back on the occasion. So far the bulls are trying to hold and are holding out on a weaker USD and further political upheaval. In the event it does slide further the next level can be found at around 17.352, how ever, the 20 day moving average should also be treated as dynamic support in this instance as well. On the upside it's clear to see that resistance can be found at 18.214 and 18.607, beyond these levels might be quite hard as silver does start to struggle above the 20 dollar mark, but any massive unrest could certainly send it flying higher.

If you're looking for further excitement in your trading day then the Australian dollar is set to swing low or high depending on your views of the current employment data due out shortly. The Australian labour market has been full of surprises recently, and many Australians are expecting the Reserve Bank of Australia to perk up more if the labour market continues to expand at the present pace. Today's reading is expected to come in at 20K, but the previous reading of 27.9K is what the market may be hungering for here. Certainly any movements in the participation rate will also be closely watched as well.

At present the AUDUSD has slipped back under the 80 cent market and is trending lower on the stronger USD. Resistance can be found at 0.8000 and 0.8110 with the 80 cent market likely to break on positive employment data. In the event we see weaker than expected data then I would expect the AUD to plunge sharply down to support at 0.7901 and potentially 0.7821 in the coming weeks.

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[Guest FXTM Official]

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RBA minutes offer guidance on economy

The Australian economy has hit the spotlights as the Reserve Bank of Australia meeting minutes are out. As usual it's quick to point the finger at the Australian dollar as being a potential catalyst of pain for the prospect of further expansion in the economy, namely inflation. The feeling is that the weaker USD is likely to be a temporary thing and that there is potential for the AUD to sink lower in the long run. Generally speaking, central banks have a poor track record of managing currency expectations on these sort of subjects, given they can't control markets at all. Also to add to it all China expectations continue to increase and the mining sector has the potential to improve further in the long run in the wake of weaker prices. For me this seems likely that the Australian economy will improve, but for now the RBA is certainly not pushing for a rate rise - even as the labour market picks up.

The AUDUSD has been a mover in recent weeks and the higher high it recently achieved was a very bullish sign. However, the weaker USD has been the main driver for any commodity currency rises. With the AUD trending lower at present it seems the bears are in control, even though we've had more bullish waves. Support at 0.7901 is likely to be a key moment to see if the bears either take control or the bulls surge back into the market. If we do see a push through then 0.7821 is likely to be the next level lower. If the AUDUSD does surge back higher then resistance at the 0.8006 is likely to be the main level with a weaker level at 0.8110, but it's unlikely to test these levels in a hurry.

NZD traders should be aware that the NZD is in for a bumpy ride ahead of this Saturday and the NZD might not be the same after the weekend. What I am speaking about it is political elections, and the ramifications for the market as a result. Currently it's a two horse race for two major parties to potentially govern, however, one is left wing and one is right wing. So the market could drop suddenly or spike suddenly depending on polls in the lead up to the election. Either way despite all the market movements it's one to be careful of but also creates strong opportunities for fundamental speculators.

For the NZDUSD it's currently looking like it may be stuck in a ranging pattern and playing of key levels. Resistance levels can be found at 0.7322 and 0.7400 and I would expect these to be tested if the current government is maintained. Support levels, on the other hand, can be found at 0.7219 and 0.7157 - these are likely to be tested in the build up to the election as traders get a bit spooked and could be smashed if a left wing government is elected at present. Either way strong levels and political uncertainty can give traders great opportunities for targeting.

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[Guest FXTM Official]

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Trade balance data weighs on NZD this week

The New Zealand has been the weakest trade for Monday, but that was in part to markets holding off on economic data coming out the following morning. We now know why as trade balance data was much worse than expected at -1.24B (NZD) and exports dipped to 3.69B (4.63B prev). This will certainly raise eye brows for NZD traders but also the Reserve Bank of New Zealand who always takes a very careful approach when dealing with trade balance data. Expectations are now that the RBNZ may in fact look to hold off further rate rises if we see further weakness, especially in the labour market. A drop in the NZDUSD however may assist the RBNZ at the end of the day as it feels that at present it is overvalued when sitting in the 70 cent range and would prefer something in the low 60s; at a more traditional trade weighted value.

For the NZDUSD bulls the time may be up on the good run. It has been the case of a weaker USD helping drive commodity currencies higher and the NZD has benefited greatly accordingly. However, dollar bears have eased off and as a result the weakness in the NZD is starting to show. Thus far the 20 day moving average has acted as dynamic support for movements lower on the daily chart, but I feel it can't slow it much further. Support levels from a price standpoint can be found at 0.7219 and 0.7157; these levels are like to come under stress and a further extension below 0.7157 would pave the way for more aggressive bearish action. In the event that markets turned upwards I would be surprised but expect resistance to be found accordingly at 0.7323 and 0.7400, with 0.7400 likely to be the strongest resistance level at present in the market. Traders, however should also be aware that the RBNZ rate decision is due out Wednesday early morning GMT time and will carry some weight with the market, but it's extremely unlikely the rates will move at this time - the statement will be of the biggest impact.

Oil has jumped up the charts in an unprecedented move for a Monday trading day. The jump to resistance at 52.10 is a clear sign that oil has finally crossing back into positive territory. This should come as no surprise as demand has increased globally and the production cuts from OPEC are helping to reduce the glut that plagued the market over the last two years.

For traders looking to fade the bulls on this trade the next levels to target are 54.04 and 55.12 with the 55.12 zone likely to be a very strong candidate for bears to push the market or traders to look to take profit. It would be unexpected to see sharp falls from the current position unless we saw some major dollar strengthening. However, it seems to be a mixed bag for the dollar at present. 

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Brexit steals spotlight in late trading

The pound has been the strongest currency today on the back of positive Brexit news that the UK government is looking like it may have it under control. The Prime Minister of the UK, Theresa May spoke positively to the house of commons today about talks in private with the EU and that they were much better than what the public realised. She was quick to show strength around negotiating the exit from the EU and also retaining access to the single market. It will be interesting to see what the EU has to say on this however, as they've said it will take a miracle to get all of this over the line. Especially with the major point of freedom of movement being the elephant in the room that seems to cause Brexit to trip up constantly. Further news will certainly develop during the course of the week, but I can't see the EU backing down and being positive around talks anytime soon, especially as they seem to have a lot of leverage in this negotiation.

Looking at the charts and it's clear to see the GBPUSD bounced sharply on the 100 day moving average, showing that there is very much the case for bulls to stay in this market. With the prospect of a Bank of England rate rise in the near future there are positive signs for the pound, but that won't be an event till next month. Resistance levels higher are looking like key targets at 1.3219 and 1.3339 at this stage, and I would expect the potential for further extensions higher as well if the BoE talks about the rate rise prospects more so. If the market does slip lower I would watch the 100 day moving average and also the bullish trend line which has been in play for some time. This is a key area for the bulls to take advantage, when looking to tackle the bears.

The Euro has also been an interesting one as well as the EURGBP continues to be a bit of a battle between the two Brexit sides, and it certainly has clawed back a lot of ground over the past year of all this turmoil. After dropping sharply the Euro has managed to grab back some ground from the Pound but it looks unlikely to continue unless the UK can make real promise on its Brexit talk.

At present the EURGBP came under selling pressure today, but support at 0.8918 showed that many traders still believe the Euro is going to be the winner in the long run. The 100 day moving average also added to the bulls favour as well with the support level. Expectations are that if the Euro-zone shows a strong hand then it could lift higher to 0.9038 and further levels at 0.9136. I would expect that it could potentially go higher, but we could see some back and forth in the mean time so it's hard to say just yet.

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Catalan back down sends EUR higher

The Euro has rallied in later trading after waiting on to hear the speech from Puigdemont in the Catalan parliament in Spain. There had been concern from Euro-zone members that Puigdemont the president of the Catalan province may use the speech to declare independence from Spain which would have cause some major issues. However, he never went on to declare independence, but instead suspended the idea under the guise of further talks with Madrid. In all reality this is likely to end badly for Puigdemont in the long run as Spain is now holding a special cabinet meeting on Wednesday in order to deal with the issue. What is certainly clear though is that no EU leaders support such a move and after today's speech the Euro has rallied sharply on the belief that nothing more will come of this in the long run which could disrupt the Euro-zone project.

For the EURUSD traders tomorrow I expect they will be expecting a very strong response from Spain and I would expect the bulls to take full advantage of the situation to push the Euro higher. The EURUSD failed today to gain further ground, after touching resistance around 1.1814, as it waits on the Spanish government response. Further potential extensions are likely to target key levels at 1.1915 and 1.2000 in the long run. If the Spanish government is seen to be weak then I would expect support levels at 1.1719 and 1.1621 to come back into the fray, as the bears look to capitalise on the weakness. It's also worth paying attention to the 20 day moving average, but I expect that the market will be focused on fundamentals instead of technical's tomorrow given all that is happening in Spain.

Across the world in New Zealand and the  major political parties are currently going through negotiations with minor political parties in order to form a government after the most recent election. It's a case of demands from the minor parties as they hold the balance of power, and the uncertainty (much like Spain) has been weighing on the currency in the face of an active market. You only have to look at the AUDUSD which normally is a close mirror to the NZDUSD to see the deviation caused by political instability. So far the market is wondering which side the minor parties will go with, so much so that the NZD has not moved but this Thursday is meant to be an indicator of how things will go.

For the NZDUSD traders, the focus is on support at 0.7054 which is currently holding up further drops. The expectation is that a left-wing leading party gets into power then we could see further NZDUSD drops into the 60 cent range. With support levels at 0.6983 and 0.6921 likely to come under pressure. If we see a right-wing party come into power (which was the previous government) then the market will likely jump and put pressure on resistance levels at 0.7166 and 0.7219 respectively. 

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It is all about inflation

When the Federal Reserve met on 19-20 September, it announced the start of winding down the $4.5billion balance sheet and maintained plans for a third-rate hike in 2017. The statement reflected confidence in the economic activity particularly the pickup in household spending and growth in business investments.  Despite the storms Harvey and Irma, the central bank was still confident the U.S. economy would keep its momentum, and Janet Yellen sounded more hawkish than markets anticipated. This was all good news for the U.S. dollar which rallied for three weeks after the meeting, appreciating 2.3% against a basket of currencies.

The primary concern was low inflation. Fed chair Janet Yellen described it as something of a "mystery." When an institute which employs over 300 Ph.D. economists still doesn’t know whether low inflation is persistent or transitory, the risk of tightening monetary policy further might be a huge policy mistake if inflation did not return to normal levels. The Phillips Curve Model which theorizes that there should be a strong inverse relationship between unemployment and price inflation is apparently not working, and probably it is time for the Fed to drop this theory and find new models.

Yesterday’s Fed minutes reflected such worries.  Several members insisted that the decision of raising rates for the third time in 2017 should depend on economic data which increase their confidence that inflation would move towards the Fed’s 2% inflation target. The dollar bulls did not like the statement despite expectations of a December rate hike remained above 80% according to CME’s Fedwatch Tool. The dollar index continued to fall on Thursday for the fifth day in a row, with overall declines of 1.5% from Oct-6 highs.

Given that inflation has become the most important economic metric impacting the dollar’s direction, today’s PPI and more importantly tomorrow’s CPI should be watched very closely. Any upside surprise would curb the dollar’s fall; however, a disappointing figure would be an excuse to keep dragging the USD lower.

The Euro performed very well, climbing to the highest level in more than two weeks at 1.1878. After Carles Puigdemont suspended the process of Catalonia's independence, Spain’s Prime Minister Mariano Rajoy has given him five days to say whether or not he has declared independence. Depending on the response, the government in Madrid could impose direct rule on Catalonia. I think the overall crisis in Spain is still underpriced, and if no agreement is reached in the next couple of days the stability of the Eurozone as a whole would be at risk. Although economic fundamentals continue to support a stronger Euro, politics will play a significant role as to where the Euro heads next. ECB’s Mario Draghi will participate today in the annual meetings of the World Bank Group and the IMF in Washington. Any new hint provided will move the single currency.

Despite no advances made in the Brexit negotiations, Sterling continued to trade higher against the dollar for the fourth consecutive day. Although Brexit will keep weighing on Sterling on the longer run, monetary policies seem to be the major driver for now. Expectations of BoE raising rates in the final quarter of 2017 remained high, thus narrowing monetary policy divergence with the Federal Reserve. I think in the next couple of days, Sterling will be driven by economic data rather than Brexit negotiations.

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