Market Analysis: 28 September, 2016

Market Analysis: 28 September, 2016

by Christala Parmaxi:


Overview:

US CB Consumer Confidence

United States Conference Board Consumer Confidence measures the level of the confidence of US consumers in the economic activity. The figure of the index for the month of August was 96.7 and was expected as 99.0 for September. The index beat expectations as the actual figure was surprising good at 104.1, which is very important since the index has gone above 100.  However, the Dollar ended the day mixed against its major counterparties, higher against Euro, Yen, and Swiss Franc and lower against Pound, New Zealand, Australian and Canadian Dollar.

Algeria Meeting

The meeting of the major OPEC and non-OPEC oil producers in Algeria will conclude today. The oil minister of Iran stated yesterday that they are attending the meeting to see other producers’ views and share their views, but nothing more. Furthermore, the oil minister of Saudi Arabia was skeptical if they would proceed with a deal today, expecting the case to remain open until later this year. Meanwhile, oil closed the day at around USD45 per barrel while USDCAD is moving around the 1.32 price level.

Economic Calendar

It is a busy day ahead with speeches from both Mario Draghi and Janet Yellen. The ECB president speech will be of great interest since he is going to support the Bank’s monetary policy and the easing measures that are currently adopted. Draghi is going to face the criticism of German lawmakers regarding the effectiveness of the current policy and whether the low rates benefit the “strong” European economies such as German economy. German lower-house members would have 90 minutes for a discussion with Draghi, and they are expected to come up with a set of critical questions. Some of the lawmakers are concerned that the risk to reward ratio of the current asset purchasing program is not efficient.

The Governor of the Federal Reserve is going to give the semi-annual testimony on Federal Reserve supervision and regulation of the financial system before the House Financial Services Committee. Due to the nature of the testimony, Yellen is not expected to declare any new views on the current monetary policy; especially since she has already expressed her view last week on the official monetary policy meeting. There could be some questions from the lawmakers regarding the general outlook and the easing program that may cause some movement of the greenback. The event will take place at 17:00 server time.

Despite the leaders’ speeches, there is the release of the US Core Durable Goods Orders of August which is expected to be negative at -0.4%. There will be two more speeches from the Fed members today: Chicago Fed President Evans at 20:30 and FOMC member Mester at 23:35.

Technical View

The Loonie keeps on moving above the SMA50 and according to the upside trendline.  The indicators are slopping upwards on bullish territories while the pair managed to avoid a lower low yesterday. We would expect the price to reach the resistance level of 1.327 today and maybe it finds some volatility after the announcement of the conclusion of the oil producers meeting in Algeria. The risks to the downside are near the levels of 1.315 and 1.309.

USDCAD

USDCAD

 

GBPUSD

The pound is testing the downtrend on the 4-Hour chart while it is consolidating to the upside. The Average True Range index indicates low volatility while MACD is on bearish territories.

 

GBPUSD

GBPUSD

On the other hand, on the hourly chart a short-term uptrend has been created. The price is testing the uptrend line at the time of writing while both MACD and RSI are slopping to the downside. It is worth mentioning that the price tested twice the Fibo retracement level of 50% with no success on breaking it. If the price moves below the short-term uptrend line then we could expect a further move down to the support level of 1.294. On the other side, if the price breaks Fibo 50% at 1.302 then a further upside move up to Fibo 61.8% and 1.3045 would be expected.

 

GBPUSD

GBPUSD

 

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