Market Analysis: 16 November 2016
by Christala Parmaxi
Yesterday the US Dollar showed some consolidation since it was trading somehow lower or in a trading range against most of the G7. The trend didn’t last long, however, just until the better-than-expected US Retail Sales were revealed to the public. With that supportive data, the US Dollar rose back again ending the day higher against most of them except the Aussie and the Loonie which were following another fundamental development.
The US Core Retail Sales of October were released at 0.8% against the 0.5% expected and the figure of September was revised upwards by 0.2%. Moreover, the retail sales were also released 0.2% higher than expected at 0.8% and the figure of September was revised higher by 0.4% at 1%. Investors will be looking closely the Fed’s Chairwoman speech tomorrow, seeking for a confirmation as to whether Trump’s fiscal plans will lead to faster heating of the economy and thus of the Fed’s plans.
The oil and consequently the Canadian Dollar plummeted yesterday after the announcements that Russia and OPEC will hold informal talks about oil output freeze or cut during Thursday and Friday ahead of the scheduled OPEC meeting on November 30th. The USCL reached a 3-month low level after Trump’s election and yesterday it recovered from 42.8 to 46.6 per barrel, achieving a 9% increase. In our view, an immediate deal is unlikely to happen and thus we see the oil rising back to its previous levels before the informal meeting announcement.
Today we await the publication of the UK Average Earnings Index which is expected at 2.4% against the 2.3% of the previous month. At the same time, 11:30 server time, the Claimant Count Change Index is about to be released with expectations lying at around 2K against September’s 0.7Kst month. Later, during the US Session at 15:30 server time, the US Producer Price Index will be released and the estimations want the Index to remain steady at around 0.3%. At the same time, the Canadian Manufacturing Sales of September are expected to be released at 0.1% against the higher figure of 0.9% of the previous month.
The Canadian Dollar experienced a deep fall yesterday, closing the day -0.8% against the greenback. Today, the indicators are slopping upwards while RSI and Stochastic have already risen into bullish territories. The price has crossed SMA200 to the upside and it is currently trading above Bollinger’s middle band heading to the cross of SMA50 and SMA100. The overall picture is bullish while the medium term uptrend has not been broken. The targets are the resistances of 1.35 which coincides with the cross of SMA50 and SMA100 and 1.355 while the risks are near the supports of 1.342 and 1.337.
The Aussie broke the rectangle formation to the downside and the confirmation of the downtrend continuation is official. ADX indicates strong negative directional movement while both MACD and RSI are again on bearish territories indicating sell signals. Our view is that the Aussie is about to walk to Bollinger’s lower band and fall near the support of 0.744. The risks are near the resistances of 0.752 and 0.757 that coincide with the bands of the rectangle formation.
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