Forex Analysis by LiteForex

[MikhailLF]

USD/CAD: the pair shows ambiguous dynamics

Current trend

Today, during the Asian session, the USD/CAD pair is growing moderately, recovering from the active decline yesterday due to the market reaction to the publication of ambiguous reports on the US and Canadian labor markets. Now, the dollar has added about 0.32% and is preparing to test the level of 1.3100 for a breakout.

Canadian statistics for August reflected a sharp decline in the number of employees from 418.5K to 245.8K, which was significantly worse than market expectations of 275K. The unemployment rate in the country fell from 10.9% to 10.2%, which almost coincided with market forecasts of 10.1%. At the same time, the positive investor sentiment was supported by the average hourly wage, which increased by 6% YoY in August, as well as the Ivey business activity index, which was significantly better than forecasted: 67.8 points against 57.5 points.

Support and resistance

On the daily chart, Bollinger bands are steadily declining. The price range expands slightly from above, reflecting the ambiguous nature of trading in the short term. The MACD indicator is growing, maintaining a poor buy signal (the histogram is above the signal line). Stochastic is also strengthening, signaling in favor of further growth of the instrument in the ultra-short term.

The development of upward dynamics is possible in the nearest time intervals.

Resistance levels: 1.3100, 1.3132, 1.3160, 1.3200.
Support levels: 1.3043, 1.3000, 1.2975, 1.2950.

 

[MikhailLF]

GBP/USD: decline in instrument

Current trend

The GBP/USD pair is in a downtrend due to USD Index strengthening and is trading around 1.3130.

Discussions on a package of agreements on Britain's exit from the EU continue. Yesterday, it became known that the Parliament intends to approve a bill according to which the clause of the Brexit agreement, in which Northern Ireland will be assigned the status of an official subject of the UK customs space, will be canceled. It caused serious discontent from the EU, as it actually violates the terms of the entire agreement. Thus, the already half-forgotten GBP driver is relevant again.

Locally, the instrument is under pressure from the growing US dollar. The quotes of the index, which shows the ratio of the US dollar to a basket of world currencies, exceeded 93 points and are at 93.177.

Support and resistance

The price moves is within the boundaries of the global Expanding formation pattern, approaching the support line within the fifth wave. The likelihood of a further decline is quite high, as indicated by technical indicators: Alligator indicator’s EMA fluctuations range is expanded, and the AO oscillator histogram is below the zero line with a downward trend. Considering the statistics of this pattern, the probability of the formation of the sixth upward wave is more than 70%.

Resistance levels: 1.3170, 1.3260.
Support levels: 1.3090, 1.2970.

 

[MikhailLF]

NZD/USD: technical analysis

Current trend

The NZD/USD pair has significantly corrected downward after rising and is currently trading near the level of 0.6628. The global ascending channel is on the verge of implementation, and the instrument is moving near the support line. Today, it may try to break it again.

Locally, inside the channel, the Head and shoulders reversal pattern finishes forming, and in case of successful completion of the Second shoulder, the required sell signal will be received. Technical indicators are already reversing downwards: fast EMAs on the Alligator indicator crossed, and the AO oscillator histogram continues to decline, approaching the transition level.

Support and resistance

Resistance levels: 0.6700, 0.6790.
Support levels: 0.6525, 0.6290.

 

[MikhailLF]

EUR/USD: the pair is correcting upward

Current trend

The EUR/USD pair is correcting upwards due to the decline in the US dollar against the basket of world currencies and is trading around 1.1825.

Today, the ECB meeting should be held, at which a decision on monetary policy for the next quarter will be made. Although most analysts do not expect the current rate to be changed, there are concerns about further easing. In August, floating inflation reached the level of –0.2%, which is a critical value requiring immediate measures, the most effective of which will be to reduce the interest rate to the negative zone.

The American currency, which showed strength at the beginning of the week, began to decline again, and the reasons are again not economic. The air temperature in the state of California continues to break records and is approaching 50 degrees Celsius, which has already provoked the strongest forest fires that are approaching large cities. In this regard, grid operators are warning of possible power outages in Los Angeles.

Support and resistance

Yesterday, the asset quotes left the ascending channel, breaking the support line, and tries to consolidate below it. Technical indicators point downwards. Alligator indicator’s EMA fluctuations range narrows but the fast EMAs have not yet crossed. AO histogram is below the zero line.

Resistance levels: 1.1850, 1.2000.
Support levels: 1.1750, 1.1580.

 

[MikhailLF]

USD/CAD: USD tries to correct

Current trend

USD shows ambiguous dynamics of trading against CAD today. Yesterday the instrument showed moderate growth, despite the publication of weak macroeconomic statistics on the dynamics of jobless claims in the US. Initial Jobless Claims for the week ending September 4 remained at the same level of 884K, which turned out to be worse than the market's expectations, which expected a decrease to 846K. Continuing Jobless Claims for the week ending August 28 rose by 13.385M, following an increase of 13.292M in the prior period. Investors expected a slowdown in the growth rate of the indicator to 12.925M.

Today traders are focused on the US statistics on consumer inflation for August. Market forecasts assume that the growth of consumer prices in August will slow down from +0.6% MoM to +0.3% MoM. Canada will release the data on the level of Capacity Utilization for Q2 2020.

Support and resistance

Bollinger Bands in D1 chart demonstrate flat dynamics. The price range is narrowing from above insignificantly, reflecting the ambiguous nature of trading of recent days. MACD indicator is growing preserving a weak buy signal (located above the signal line). Stochastic, having approached the level of "80", reversed downwards, responding to the surge of the "bearish" trend at the trading on Wednesday.

To open new trading positions, it is necessary to wait for the signals from technical indicators to be clarified.

Resistance levels: 1.3200, 1.3250, 1.3300, 1.3350.
Support levels: 1.3160, 1.3132, 1.3100, 1.3043.

 

[MikhailLF]

Morning Market Review

EUR/USD

EUR shows insignificant growth against USD during today's Asian session, continuing the development of the moderate "bullish" impulse formed at the end of previous week. EUR is testing 1.1850, waiting for new drivers to appear on the market. Today, European investors are awaiting the publication of July data on the dynamics of industrial production in the eurozone. Forecasts assume that on a monthly basis, Production will accelerate from +9.1% MoM to +10% MoM, while the annual rate is likely to indicate a deterioration in dynamics from –12.3% YoY to –18.3% YoY. In addition, the market continues to analyze the results of the last week's speech by the ECB President Christine Lagarde. The regulator did not change the parameters of monetary policy, and Lagarde took a wait and see attitude, not responding to a noticeable increase in the EUR/USD rate which started in March.

GBP/USD

GBP is marginally strengthening against USD in the trading of today's morning session, retreating from the local lows since July 24, updated at the end of last week. The growth of GBP is technical in nature, while the pair continues to remain under the pressure of sharply increased risks associated with the hard Brexit. Markets are still trying to figure out what Boris Johnson is trying to achieve, having stepped up criticism of the EU recently. Last week the British government passed a bill that could allow the UK to actually violate international law on the issue of trade with Northern Ireland. It is possible that these are only political machinations, which are designed to bargain with the EU for the best terms of the deal, but so far Johnson's position looks quite plausible.

AUD/USD

AUD is trading near zero against USD during today's Asian session, developing mostly flat dynamics at the end of the last trading week. Last Friday's macroeconomic statistics from the US was again ambiguous. In August, the Consumer Price Index in the USA slowed down from +0.6% MoM to +0.4% MoM, which was slightly better than market expectations at +0.3% MoM. In annual terms, inflation accelerated from +1% YoY to +1.3% YoY with the forecast of growth by 1.2% YoY. Excluding food and energy, prices increased by 0.4% MoM and 1.7% YoY, which was also slightly better than the forecasts of +0.2% MoM and +1.6% YoY. Interesting statistics from the US and Australia are not expected today, but on Tuesday Australia will publish the minutes of the last RBA meeting and will release a quarterly survey of consumer sentiment from Westpac.

USD/JPY

USD is trading in different directions against JPY in today's Asian session, developing a flat channel that formed at the beginning of the month. The ambiguous macroeconomic statistics from the US on the dynamics of consumer inflation, published at the end of last week, did not provide significant support to USD, while JPY was expecting the publication of new drivers. Today's macroeconomic statistics from Japan provide moderate support to JPY, as a result of which the pair is actively testing the level of 106.00 for a breakdown. Industrial production in July increased by 8.7% MoM, accelerating from the previous value of +8% MoM. In annual terms, the pace of production decreased by 15.5% YoY, also slightly better than forecasts at the level of –16.1% YoY. Capacity Utilization rose by 9.6% in July, after rising by 6.2% in June.

XAU/USD

Gold prices are slightly strengthening during today's morning trading, testing 1950.00 for a breakout. Quotes are recovering, offsetting the decline at the end of the last trading week, when the ECB representatives reaffirmed their commitment to a wait and see attitude. The President of the European regulator Christine Lagarde did not react to the high rate of EUR, and also disappointed those investors who were counting on additional measures to stimulate the economy. At the same time, the demand for gold remained high amid persisting epidemiological risks. In addition, traders are actively discussing the upcoming US presidential elections and the inability of US lawmakers to approve new measures to support the economy. Last week, the US Senate again blocked a proposal from the Republican Party to allocate USD 300 billion to combat the consequences of the epidemic.

 

[MikhailLF]

WTI Crude Oil: oil prices consolidate

Current trend

Oil prices show flat trading dynamics, trading near the level of $37 per barrel. The weakness of USD, which is again fixed on almost the entire spectrum of the market, does not allow the instrument to recover, as prices are still under the pressure of uncertainty in the global economy. Also, investors react negatively to reports that Libya intends to resume oil production, which could have a devastating effect on the fragile balance of global supply and demand. Earlier, OPEC said that oil demand will decrease by 9.46 million barrels per day this year, which is much worse than previous estimates.

On Tuesday, traders wait for a block of US statistics on the dynamics of industrial production and the report of the American Petroleum Institute on oil reserves for the week of September 11. The previous data reflected an increase of 2.97 million barrels.

Support and resistance

On the daily chart, Bollinger bands moderately decline. The price range narrows slightly, remaining spacious enough for the current level of market activity. MACD tries trying to reverse upwards; however, it keeps the sell signal (the histogram is below the signal line). Stochastic grows more actively but now its dynamics is weakly correlated with the real situation on the market.

To open new trading positions, it is better to wait for the signals from technical indicators to be clarified.

Resistance levels: 38.00, 38.41, 39.31, 40.00.
Support levels: 36.75, 36.00, 35.00.

 

[MikhailLF]

Morning Market Review

EUR/USD

EUR is trading near zero against USD during today's Asian session, hovering at 1.1850. The day before, EUR managed to demonstrate moderate growth against USD and even updated local highs since September 10, but the "bulls" failed to consolidated at new levels (at 1.1900). The instrument was supported moderately by the data from Germany, released on Tuesday. ZEW Economic Sentiment in September rose from 71.5 to 77.4 points, which turned out to be better than the negative forecasts, which assumed a decrease in the indicator to 69.8 points. In the euro area, ZEW Survey showed a moderate increase in Economic Sentiment in September from 64 to 73.9 points, which also exceeded the projected 62.8 points. Today, investors are focused on the publication of the final minutes of the two-day Fed meeting on the interest rate. In addition, traders are awaiting the release of the August statistics on the dynamics of retail sales in the United States.

GBP/USD

GBP is marginally strengthening against USD during today's Asian trading session, building on the corrective momentum that formed earlier this week. The instrument is steadily retreating from its two-month lows, although the positions of GBP are still under pressure from the ambiguous prospects around the Brexit trade deal. The macroeconomic statistics from the UK published on Tuesday was contradictory. Claimant Count Change in August rose again by 73.7K after increasing by 69.9K in the previous period, which turned out to be much better than market expectations, which assumed a sharp increase in the figure by 100K. At the same time, the Unemployment Rate from ILO in July, as expected, increased from 3.9% to 4.1%. Claimant Count Rate in August increased from 7.4% to 7.6%.

AUD/USD

AUD is developing upward dynamics against USD and is growing again this morning session. The day before, the pair showed one of the strongest gains in recent years; however, it failed to consolidate at new levels, and by the end of the afternoon session the instrument had lost most of the positions it had won. AUD was strongly supported by the data from China. Industrial Production rose sharply in August by 5.6% YoY after increasing by 4.8% YoY in the previous month. Analysts were expecting strong data, but hoped for +5.1% YoY. Retail Sales for the same period increased by 0.5% YoY after rising by 1.1% YoY a month earlier. Additional support to AUD was provided by the neutral minutes of the RBA meeting, published on Tuesday. As expected, the regulator did not change the parameters of monetary policy, and the question of lowering the rate in the near future was not raised.

USD/JPY

USD declines against JPY during today's Asian trading session, developing an ultra-short term downtrend that formed earlier this week. The pair is losing about 0.1% and testing the level of 105.25, the lowest since August 28, for a breakdown. The positions of USD remain vulnerable before today's publication of the final minutes of the Fed meeting, while JPY is receiving timid support from macroeconomic publications from Japan. Today's data showed improved Exports in Japan. In August, export volumes fell by 14.8% YoY, recovering slightly from the previous decline of 19.2% YoY. Imports for the same period fell by 20.8% YoY after a decline of 22.3% YoY last month. Improved export dynamics led to an increase in Japan's Trade Balance in August from JPY 10.9B to JPY 248.3B.

XAU/USD

Gold prices are slightly strengthening during today's Asian session, offsetting the weak decline the day before and trying to recover to two-week local highs. The negative dynamics for the instrument on Tuesday was facilitated by the uncertain growth of USD, caused by a number of technical factors. In turn, expectations of new easing of monetary policy by the Fed kept the pair from a stronger correction. Support was also provided by weak data from the US. Industrial Production in the US in August grew by only 0.4% MoM after a sharp increase of 3.5% MoM in the previous month. Analysts had expected growth of 1% MoM.

 

[MikhailLF]

USD/JPY: the pair declines again

Current trend

The USD/JPY pair declined amid negative investor reaction to the US Federal Reserve's decision, trading at 105.00.

Today, the Bank of Japan kept its course, chosen back in 2016, and kept the interest rate at –0.10%. In an explanatory letter, the regulator noted that it will continue to purchase Japanese government bonds so that the yield on 10-year JGB will remain near the zero level. The bank will begin to actively acquire ETFs and real estate in Japan, as well as investment trusts. The volume of corporate bonds in circulation will remain at 3 trillion yen. In general, the decision is absolutely expected, which has hardly influenced the market so far.

Last night, the US Federal Reserve decided to keep the current monetary policy unchanged, and the interest rate remained at 0.25%. FOMC forecasts for economic performance in the future did not instill optimism in the market. The level of real GDP by the end of the year is expected to be no higher than –3.7%, and the unemployment rate will drop below 7.6%.

Support and resistance

The pair exited the local Triangle pattern and declines within the next downward wave within the global channel. Technical indicators issued a new sell signal. Alligator indicator’s EMA fluctuations range began to expand downwards, and the histogram of the AO oscillator moved into the negative zone.

Resistance levels: 105.40, 106.90.
Support levels: 104.70, 103.00.

 

[MikhailLF]

Morning Market Review

EUR/USD

EUR shows insignificant gains against USD during today's Asian session, developing a correctional impulse that formed yesterday, when the instrument retreated from its local lows since August 12. The recovery of EUR is facilitated by the weakening of USD after a short growth against the background of the results of the Fed meeting. On Wednesday, the regulator left interest rates and volumes of the quantitative easing program unchanged, noting the readiness to use all available instruments, as well as the need for additional stimulation of the national economy. Additional pressure on USD was provided by data from the US. The number of Initial Jobless Claims for the week ending September 11 fell from 893K to 860K, which was slightly worse than market expectations of 850K. Building Permits in August reflected a drop of 0.9% MoM after rising by 17.9% MoM in July. Markets expected a moderate 4.4% MoM growth.

GBP/USD

GBP is showing ambiguous dynamics at the end of the trading week, consolidating near 1.2950. Yesterday, investors took a lead from the published minutes of the Bank of England meeting, which provoked a sharp decline in the instrument during the day. As expected, the regulator made no changes into the monetary policy parameters. The rate remained at 0.1%, and the asset purchase facility remained at the level of GBP 745 billion. At the same time, it became known that members of the board were considering the potential possibility of applying negative interest rates, if the economic situation so requires. Investors reacted to such statements with a wave of selling; however, by the end of the trading session on Thursday, GBP still managed to win back most of its losses. Additional pressure on the instrument remains due to the uncertainty surrounding Brexit. The bill proposed by the British Prime Minister effectively thwarted the negotiation process, which was already not particularly optimistic.

AUD/USD

AUD strengthens marginally against USD during today's Asian trading session, developing flat dynamics in the short term. AUD is recovering after a hesitant attempt by USD to strengthen amid the publication of neutral minutes from the Fed meeting. The instrument was supported by the data from Australia the day before. The markets reacted rather optimistically to the decline in the Unemployment Rate in Australia from 7.5% to 6.8%, while forecasts assumed its growth to 7.7%. At the same time, the Employment Change increased by 111K after increasing by 119.2K last month. Analysts had expected employment to drop by 50K jobs. Today, investors are focused on the Michigan Consumer Sentiment Index release in the US.

USD/JPY

USD is showing corrective gains during today's morning trading session, retreating from local lows since July 31, updated the day before. The growth of the instrument is supported by technical factors, as investors fix their profits before the weekend. In addition, JPY positions on Friday are under pressure from not the most confident macroeconomic statistics from Japan. National Consumer Price Index slowed down in August from +0.3% YoY to +0.2% YoY, which turned out to be sharply worse than market expectations of growth to +0.6% YoY. National Consumer Price Index Excluding Food and Energy slowed down from +0.4% YoY to +0.2% YoY, which also turned out to be worse than the neutral forecasts.

XAU/USD

Gold prices show corrective growth during today's Asian session, recovering after the decline the day before. The asset fell by more than 1% on Thursday, responding to the minutes of the Fed meeting published on Wednesday, which did not contain specific measures to further support the US economy. Moreover, the regulator tried to support the markets by issuing updated, more optimistic forecasts for the pace of economic recovery and normalization of the situation in the labor market. In turn, the minutes of the meeting of the Bank of England, released yesterday, contributed to a moderate rise in gold. The regulator did not change the parameters of monetary policy; however, traders learned that the Bank of England is seriously considering the prospects of introducing negative interest rates.

 

[MikhailLF]

USD/CAD: ambiguous trading

Current trend

Today during the Asian session, the USD/CAD pair is declining, balancing the moderate growth of the instrument at the end of last week. On Friday, the US dollar strengthened, responding to the appearance of poor macroeconomic statistics from Canada. Thus, the volume of retail sales for July fell from +22.7% MoM to +0.6% MoM, which was worse than analysts' average forecasts, which assumed a slowdown to +1% MoM. Retail sales excluding the automotive market declined by 0.4% MoM over the same period, despite expectations of 0.5% MoM growth.

On Monday, investors are focused on the speech of the head of the US Federal Reserve Bank Jerome Powell and the August data on the dynamics of the index of national activity of the Federal Reserve Bank of Chicago. In Canada, price indices for the primary housing market for August will be released.

Support and resistance

On the daily chart, Bollinger bands smoothly reverse into an upward plane. The price range narrows, reflecting the emergence of ambiguous trading dynamics in the short term. MACD grows, maintaining a poor buy signal (the histogram is above the signal line). Stochastic maintains a relatively strong downward signal, reacting poorly to the growth attempt of last Friday.

To open new trading positions, it is better to wait until the signals from technical indicators are clarified.

Resistance levels: 1.3200, 1.3250, 1.3300.
Support levels: 1.3160, 1.3132, 1.3100, 1.3043.

 

[MikhailLF]

Morning Market Review

EUR/USD

EUR shows a slight increase against USD during today's Asian session, correcting after an active decline the day before, which led to the renewal of local lows of August 12. Noticeable pressure on EUR on Monday was exerted by the speech of the ECB President, Christine Lagarde, who said that the regulator carefully analyzes the euro exchange rate against other currencies when determining the vector of monetary policy. The specifics were quite sparse, but markets are still wary of additional intervention from the ECB, as the economic situation in the region remains uncertain. Today, European investors are focused on the speech of the ECB representative Fabio Panetta, as well as on the publication of information on Consumer Confidence in the euro area in September.

GBP/USD

GBP is trading ambiguously against USD during today's morning session, consolidating near 1.2820 after a strong decline the day before. By the end of Monday, GBP fell noticeably, losing more than 1% and updating local lows against USD since September 14, in response to possible tightening of quarantine restrictions in the UK due to the increase in cases of COVID-19. According to preliminary estimates of experts, without additional restraining measures, by mid-October, the incidence rate in the country may rise to 50 thousand new cases per day. In addition, investors are still assessing the prospects for a trade agreement between the UK and the EU before the end of the transition period after Brexit. Despite a number of optimistic comments from European officials that the conclusion of an agreement is still possible, Boris Johnson's actions raise a number of questions.

AUD/USD

AUD is showing ambiguous trading versus USD during today's Asian session, having managed to update local lows since September 9 at the opening. Investors expect new drivers to appear on the market, but for now the focus is only on the speeches of officials who do not bring anything fundamentally new to the market. The macroeconomic calendar is almost empty so far. Published on Monday, Chicago Fed National Activity Index in August fell sharply from 2.54 to 0.79 points against the forecast of a decline only to 1.95 points. Today, investors are focused on Existing Home Sales in the US, as well as on the speech of the Fed Chairman Jerome Powell in the US Congress. US lawmakers still have not been able to decide on a new package of economic assistance.

USD/JPY

USD is trading lower against JPY during today's Asian session. The instrument is testing the level of 104.50 for a breakdown, taking a lead from the generally neutral background of the beginning of the new week. Markets in Japan were closed on Monday to celebrate the Autumnal Equinox, so the main focus of investor attention was shifted to the speech of the Fed Chairman Jerome Powell and the US FOMC member Lael Brainard. Today, traders are expecting Powell to speak again, but this time in Congress, where he will report on the implementation of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

XAU/USD

Gold prices are relatively stable during today's morning trading session, consolidating near 1900.00 after a strong decline the previous day. The instrument lost more than 3.5% on Monday, responding to the correctional growth of USD. At the same time, the activity of the "bulls" on USD remains reduced, as investors are afraid of the adoption of new measures to stimulate the American economy, the need for which is long overdue. This week there will be several speeches by the Fed Chairman, Jerome Powell, who, among other things, will speak on new measures to support the economy. Gold, in turn, has received some support from news from Europe, where there is an alarming upward trend in new cases of COVID-19.

 

[MikhailLF]

XAU/USD: gold on the cusp of new lows

Current trend

Gold prices are slightly declining today, developing a "bearish" signal, formed at the end of last week, but staying within the local lows, updated on September 21. Gold is depreciating amid a growing USD, which has received support from the difficult situation with COVID-19 in Europe, where some countries are considering returning some of the quarantine restrictions. American investors are also worried about the prospect of new stimulus measures in the USA, which have been the subject of the most heated debate for a long time.

This week, Fed Chairman Jerome Powell and US Treasury Secretary Steven Mnuchin will hold a series of speeches in Congress, where they will talk about their vision of the current economic situation. Mnuchin's speech attracts the most attention, since Powell's position is well known to the markets and he is unlikely to say anything new.

Support and resistance

Bollinger Bands in D1 chart demonstrate a slight decrease. The price range is widening actively but does not conform to the development of the downtrend yet. MACD is going down keeping a fairly stable sell signal (located below the signal line). Stochastic demonstrates a similar dynamics, but is approaching its lows, signaling future risks of the oversold instrument in the nearest future.

The current showings of the indicators do not contradict the further development of the downtrend.

Resistance levels: 1895.06, 1910.00, 1935.00, 1955.00.
Support levels: 1876.23, 1850.00, 1830.00.

 

[MikhailLF]

Morning Market Review

EUR/USD

EUR is relatively stable against USD during today's Asian session, consolidating near the local lows updated the day before. EUR is under pressure from a growing USD, as well as from information about a slowdown in the recovery of the European economy, as the risks of further spread of the COVID-19 epidemic remain and support measures expire. Macroeconomic statistics from Europe on business activity released on Wednesday reflected a marked decline in the services sector again, while manufacturing sector remains positive so far. Markit Services PMI in the euro area in September fell from 50.5 to 47.6 points, while analysts did not expect any changes at all. Markit Manufacturing PMI for the same period increased from 51.7 to 53.7 points with the forecast of growth only up to 51.9 points.

GBP/USD

GBP is once again showing ambiguous performance against USD during today's morning session, trading near 1.2700. The pair updated local lows since July 22; however, the "bears" remained rather weak against the background of fixing short profits on the instrument. The macroeconomic background on Wednesday also contributed to the development of multidirectional dynamics. Markit Services PMI in the UK in September fell from 58.8 to 55.1 points, which was worse than the forecasts of 56 points. Manufacturing PMI for the same period corrected from 55.2 to 54.3 points, which coincided with forecasts. Statistics from the US were slightly better. Services PMI also declined from 55 to 54.6 points, while Manufacturing PMI rose from 53.1 points to 53.5 points.

NZD/USD

NZD declines against USD during today's Asian session, updating local lows of August 25. The descending movement of the instrument has been observed for the fourth trading session in a row, which is associated with an attempt at corrective growth of USD. The pressure on NZD was exerted yesterday by the results of the RBNZ meeting on the interest rate. As expected, the regulator did not change the parameters of monetary policy, maintaining the rate at 0.25%. At the same time, the RBNZ noted that in conditions of continuing risks for the economy, additional incentives may be needed in the future. The difficult situation on the labor market was also mentioned, where the risks of increased unemployment persist. Today, investors are focused on statistics on Trade Balance dynamics in New Zealand for August. Amid a slowdown in Exports from 5.036B dollars to 4.411B dollars in August, the Trade Balance showed a deficit of 353M dollars, which was worse than average market expectations.

USD/JPY

USD continues to strengthen against JPY and during today's Asian session is trading near the local highs since September 15, updated the day before. USD maintains a corrective upward momentum; however, the activity of the "bulls" is gradually slowing down. Pressure on the yen was exerted yesterday by Japanese macroeconomic statistics, as well as the results of the speech of the head of the Bank of Japan Haruhiko Kuroda, who promised that the regulator will continue to support the economy and enterprises. All Industry Activity Index in July slowed down from +6.8% MoM to +1.3% MoM against the forecast of +3.3% MoM. Today traders are awaiting speeches by Fed Chairman Jerome Powell and US Treasury Secretary Steven Mnuchin. In addition, the US will present updated statistics on the dynamics of Jobless Claims.

XAU/USD

Gold prices are slightly declining during today's Asian trading session, updating local lows since July 22. The day before, the instrument showed a steady decline, responding to another attempt by USD to strengthen. In addition, negative sentiments on stock markets exert pressure on gold, while the continuing risks of complicating the epidemiological situation in the world faded into the background for some time. USD, in turn, was supported by positive data on the dynamics of Markit Manufacturing PMI. In September, the index rose from 53.1 to 53.5 points, which was better than market expectations of 53.2 points.

 

[MikhailLF]

XAU/USD: weak upward correction

Current trend

Gold prices are trading near zero during today's Asian session, developing a weak upward correction, the momentum for which was formed the day before, after the instrument renewed local lows since July 22. The emergence of corrective dynamics in favor of gold is facilitated by the weakening of USD, which has shown moderate growth all week amid fears of a slowdown in the global economic recovery.

The pressure on USD on Thursday came from uncertain data on the dynamics of Initial Jobless Claims in the US, which increased market fears about the urgent need for new measures to stimulate the American economy. In turn, statistics on the dynamics of New Home Sales in the USA provided moderate support to USD. In August, sales increased by 4.8% MoM after a sharp 14.7% MoM growth last month. Analysts had expected a decline by 1% MoM.

Support and resistance

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range is actively widening from below but does not conform to the surge of the "bearish" sentiment yet. MACD is going down preserving a moderate sell signal (located below the signal line). Stochastic, having dropped below the level of "20", reversed into a horizontal plane, reacting to an attempt at corrective growth at the end of the week.

To open new positions, it is necessary to wait for the trade signals to become clear.

Resistance levels: 1876.94, 1895.06, 1910.00, 1935.00.
Support levels: 1850.00, 1830.00, 1808.71.

 

[MikhailLF]

EUR/USD: the decline slowed down

Current trend

Since the opening of trading, the EUR/USD pair has been trying to recover, trading at 1.1635.

Amid growing concerns about the growing number of COVID-19 cases in Europe, the instrument is declining. Yesterday, French Prime Minister Jean Castex warned that the government could re-introduce quarantine measures in several regions of the country if the number of cases continues to rise. Macroeconomic data is also deteriorating. Thus, the German IFO business climate index for September amounted to 93.4 points, down from the forecast by 93.8 points.

The US dollar index is retreating from its local highs after the publication of reports that the US court did not allow the US government to block the TikTok application. On November 12, the ban on downloading the application in the United States was supposed to come into force but Judge Carl Nichols sided with the owner of the application and rejected its entry into force. Macroeconomic statistics from the United States is not positive either. Core orders for durable goods for August fell to 0.4% from 3.2% for July.

Support and resistance

The price is in the global ascending channel, moving down within the next downward wave. Fast EMAs on the Alligator indicator crossed the signal one downwards, and the AO oscillator histogram moved into the sell zone, which indicates a strong downward signal.

Resistance levels: 1.1700, 1.2000.
Support levels: 1.1600, 1.1270.

 

[MikhailLF]

EUR/USD: waiting for new drivers

Current trend

EUR has shown slight gains against USD during today's Asian session, building on a weak "bullish" momentum formed yesterday as EUR retreated from its two-month lows. The macroeconomic background for EUR remains neutral, and the main driver of the instrument's growth is technical factors. Investors are alarmed by the rising incidence of COVID-19 in Europe. France and the UK have already returned a number of restrictive measures, and traders fear the return of a full-fledged lockdown, which will jeopardize all plans and hopes for a gradual recovery of the region's economy.

Today, investors are focused on economic sentiment statistics in the euro area for September. In addition, the markets are awaiting September statistics on the dynamics of consumer inflation in Germany. The forecasts do not expect significant changes in the indicator. In the US, Redbook Retail Sales data are to be released, and several speeches by representatives of the Fed are expected.

Support and resistance

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range is almost unchanged, but it remains rather spacious for the current level of activity in the market. MACD is reversing upwards preserving a sell signal (located below the signal line). Stochastic is showing similar dynamics, retreating from its lows and signaling in favor of growth in the ultra-short term.

It is worth looking into the possibility of full-fledged growth in the short and/or ultra-short term.

Resistance levels: 1.1700, 1.1751, 1.1780, 1.1808.
Support levels: 1.1657, 1.1625, 1.1600.

 

[MikhailLF]

AUD/USD: the pair retains an upward momentum

Current trend

AUD shows correctional decline against USD during today's Asian session, retreating from the local highs since September 23, updated at the opening. The decline in the pair is largely facilitated by technical factors, while the macroeconomic background of the first hours of trading on Wednesday remains quite favorable for AUD.

The most support is provided by data from China. Non-Manufacturing PMI in September increased from 55.2 to 55.9 points with the forecast of the decline to 52.1 points. NBS Manufacturing PMI for the same period strengthened from 51 to 51.5 points, which also turned out to be better than market expectations of 51.2 points. Only the Caixin Manufacturing PMI was slightly disappointing. In September, the index fell from 53.1 to 53.0 points with a neutral forecast.

Support and resistance

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range is changing slightly, but remains rather spacious for the current level of activity. MACD indicator is growing preserving a weak buy signal (located above the signal line). Stochastic shows a similar dynamics, with the only difference that the indicator line is rapidly approaching the level of "80", which limits the potential of "bulls" in the ultra-short term.

Existing long positions should be kept in the short and/or ultra-short term until the signals from technical indicators clear up.

Resistance levels: 0.7150, 0.7200, 0.7247, 0.7274.
Support levels: 0.7100, 0.7071, 0.7036, 0.7000.

 

[MikhailLF]

Morning Market Review

EUR/USD

EUR is again trading with positive dynamics against USD during today's Asian session, recovering to previous local highs after an uncertain correction the day before. The positions of EUR were somewhat weakened by the rather optimistic macroeconomic statistics from the US, while the European data did not have a noticeable effect on the dynamics of the market. Instead, investors widely discussed the speech of the ECB President Christine Lagarde, who noted that the regulator could follow the path of the US Fed and allow a short-term excess of the inflation target in order to "catch up" with the previous rates of economic growth. In addition, traders are still seriously concerned about the coronavirus situation. The second wave is likely to make significant adjustments to the current forecasts from leading regulators. Today, investors are focused on the publication of data on the Unemployment Rate in the euro area for August. Markets will also be watching a special summit of the EU heads who will gather to discuss the situations in Belarus and Nagorno-Karabakh.

GBP/USD

GBP shows growth against USD during today's morning session, updating local highs of September 21. GBP is strengthening against the backdrop of weak USD positions, as well as hopes for a trade agreement between the UK and the EU by the end of the year. Meanwhile, the US macroeconomic statistics published on Wednesday provided significant support to the USD. ADP's Employment Change report indicated an increase of 749K jobs in September after rising by 481K in the previous period. Analysts had expected an increase of 650K. However, it should be noted that the positive statistics from ADP was partially offset by news of large-scale layoffs at Walt Disney and Shell. Disney Corporation announced 28K job cuts, while Shell intends to lay off almost 9K of its employees. Today, British investors are awaiting a speech by Andrew Haldane from the Bank of England's Monetary Policy Committee.

NZD/USD

NZD maintains its "bullish" momentum during today's Asian session and is updating local highs since September 23. Buyers' activity is gradually decreasing, as the positions of USD look more and more attractive against the background of the existing risks in the global economy. Investors are noticeably concerned about the epidemiological situation in the world, which provokes an increase in demand for safe assets. In addition, the USA is preparing for the presidential election, which can also make significant adjustments to the dynamics of the market. In turn, support for NZD is provided by strong statistics from China. Chinese Non-Manufacturing PMI in September increased from 55.2 to 55.9 points with the forecast of the decline to 52.1 points. NBS Manufacturing PMI for the same period strengthened from 51 to 51.5 points, which also turned out to be better than market expectations of 51.2 points. Today, traders are focused on the data from the US on the dynamics of personal income and spending, and on business activity in the manufacturing sector.

USD/JPY

USD shows the flat dynamics of trading against JPY during today's morning session, consolidating after another update of local highs the day before. On Wednesday, USD updated its highs since September 15; however, the "bulls" failed to consolidate at new levels, despite the publication of a strong report from ADP. Buying activity in USD is significantly limited ahead of the release of the final report on the US labor market this Friday. Japanese data released today were controversial and did not provide any support to JPY. Tankan Large Manufacturing Index in Q3 2020 increased from –34 to –27 points, which turned out to be worse than the market expectations of an increase to –23 points. Tankan Non-Manufacturing Index for the same period strengthened from –17 to –12 points, while analysts expected growth to –9 points.

XAU/USD

Gold prices have returned to growth during today's Asian trading session in an attempt to recover to the previous local highs, updated the day before. USD received not the most confident impetus for growth yesterday, responding to the first debate between Donald Trump and Joe Biden, as well as from the publication of a rather strong ADP Employment Change report, which somewhat softened the general negative sentiment. At the end of the week, the September labor market report will be published in the US. According to forecasts, Non-Farm Payrolls could be reduced from 1.371M to 850K. In turn, the instrument feels support from the previous factors including the difficult epidemiological situation in the world and the upcoming elections in the US, which will become another source of uncertainty.

 

[MikhailLF]

Morning Market Review

EUR/USD

EUR is declining against USD during today's Asian session, consolidating near 1.1700 and local highs since September 22, updated the day before. Another decline in EUR is due to technical factors, as investors fix their long positions ahead of the publication of the September report on the US labor market. The previously strong ADP report on private sector employment provided significant support to market sentiment. It is likely that Friday's statistics will also be better than forecasts, which, however, will only provide USD with a short-term support. The market today reacts to any optimistic signals from the US with an increase in demand for risky assets. European investors today expect the publication of data on Consumer Prices in the euro area in September. In addition, ECB Vice President Luis de Guindos will speak during the day.

GBP/USD

GBP is declining during this morning session, developing the corrective impulse formed the day before, when the pair retreated from its highs since September 18. Market participants are closing part of their long positions on the instrument before the publication of the US labor market report for September. In addition, investors are concerned about the rapid increase in the number of new cases of coronavirus, which could significantly complicate the recovery of the British economy. Yesterday, the UK reported a decline in the Manufacturing PMI from 54.3 to 54.1 points, while analysts did not expect it to change at all. The US data was slightly better, but also reflected a slowdown in growth. The ISM Manufacturing PMI in September fell from 56 to 55.4 points against the forecast of growth to 56.3 points.

AUD/USD

AUD has declined against USD during today's Asian session, retreating from local highs since September 22, updated on Thursday. The instrument loses about 0.35%, testing the level of 0.7150 for a breakdown. Buying activity for the instrument is expected to decline at the end of the week, as investors are fixing long profits. In addition, traders are in no hurry to open new positions before the publication of the report on the US labor market, which, given the previously published strong report from ADP, may be positive. AUD was slightly supported on Friday by the Australian Retail Sales statistics. In August, sales were down by 4% MoM after falling by 4.2% MoM in the previous month.

USD/JPY

USD is growing during today's morning trading session, again approaching its local highs since September 15, which were updated at trading last Wednesday. USD is strengthening after yesterday's publication of rather optimistic macroeconomic statistics from the US. At the same time, it should be noted that strong data from the US is leading to an increase in demand for risky assets; however, paired with the "safe" JPY, USD is expected to win. The number of Initial Jobless Claims in the US for the week ending September 25 fell from 873K to 837K, which was better than market expectations of 850K. Core Personal Consumption Expenditure Index was also positive, having increased by 1.6% YoY in August, accelerating from the previous value of +1.4% YoY. JPY was also under pressure from weak data from Japan. Japan's Unemployment Rate in August rose from 2.9% to 3.0%, and the Jobs/Applicants Ratio for the same period corrected from 1.08 to 1.04.

XAU/USD

Gold prices decline significantly during today's Asian session, retreating from local highs since September 22, updated the day before. Investors are fixing long positions ahead of the release of reports on the US labor market on Friday, as well as responding to some improvement in market sentiment. Strong data from the US supported the demand for risk, especially after the US Treasury officials said that the chances of early approval of the new economic aid package increased markedly. At the same time, gold continues to benefit from rising coronavirus incidence statistics in Europe. The trend has not yet been reversed, as many countries are reluctant to return quarantine restrictions, fearing to disrupt the fragile economic recovery. Today investors are focused on the publication of the US labor market report. Investors expect the emergence of 850K new jobs in Non-Farm Payrolls, which is significantly less than the previous growth of 1.371M. However, given the strong performance in private sector employment, it is possible that the real dynamics will be noticeably better.