Market Analysis: 19 October, 2016
by Christala Parmaxi:
UK & US Consumer Price Index
September’s CPI beat expectations for the UK and missed expectations for the US. Great Britain’s Consumer Price Index was released yesterday during the European session demonstrating 1% against forecasts of 0.9% while US CPI released at 0.1% losing estimations by 10 points. The Cable gained ground for the last 3 days and it is trading at the time of writing at around the critical level of 1.23. This exchange rate of GBPUSD is significant as it is heard to attract the interest of the bears; in contrast, if it holds it would trigger the Cable to higher levels. Moreover, the British Pound rose against all of its major counterparties yesterday with the biggest gain against the Euro. On the other hand, the greenback suddenly surged after the CPI release but then lost all of this sudden strength by the end of the day, closing lower against most of the major counterparties.
BoC Policy Meeting
The Bank of Canada is going to announce its interest rate decision today at 17:00 server time and thereafter at 18:15 Governor Stephen Poloz is going to follow it up with a press conference. The Bank is expected to keep its monetary policy unchanged and keep the interest rate stable at 0.5% since it has not commented on the stimulus package of the government yet. The monetary policy report will include the quarterly updates of the BoC on its forecasts for the economic growth. The members of the BoC are expected to rely also on the expected rise on oil prices above USD50 per barrel. Meanwhile, Oil prices rose today due to OPEC statement that a planned production cut would be achievable.
The US Building Permits of September are going to be released today at 15:30 server time and they are expected at 1.165M against the 1.152M figure of August. Moreover, tomorrow during the early Asian session The Employment change is expected at 15K against August’s negative figure of -3.9K. In general the Australian economy shows some signs of recovery and the Aussie is currently trading above 0.76. Furthermore, the third and final debate between Hilary Clinton and Donald Trump is going to be held tomorrow during the Asian morning.
The main currency traded lower yesterday after the US Core CPI release but it was not able to reach a lower low as it reached the level of 1.097 and then moved to the upside. At the time of writing the pair tests the psychological level of 1.10 which coincided with SMA100. If the price is able to break 1.10, then we expect further upside moves up to resistance of 1.1025 and upon penetration of it up to 1.1055. On the flip side, if the price is not able to break SMA100 then it is likely to test again the support of 1.097. The Average Directional Index indicates healthy positive direction.
In our Tuesday market analysis, we supported further upside stimulus on the Cable; today the pair reached a new weekly high since it touched the price level of 1.2332. At the time on writing the price is trending above SMA200 which is a strong support. Upon penetration of SMA200, the next valid support level lays at around the bullish cross of SMA50 and SMA100 at 1.22. The next valid bullish target is the resistance of 1.2465. The pattern of narrow Bollinger Bands usually indicate that the price is about to expand either to the upside or to the downside, according to the upper or lower band penetration respectively.
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
June 8, 2017
June 6, 2017