The director of the Trump presidential campaign at the Federal Bureau of Investigation (FBI) and the dollar is negatively affected against most currencies
The US Dollar eased against its Rivals as an FBI probe resulted in charges of conspiracy against Donald Trump’s former campaign manager. Reports that tax cuts would be implemented at a slow pace weighed on the Dollar. Speculation that Jerome Powell would be the next Fed Chair rose with Trump expected make an announcement on Friday. As the appetite for risk waned, the Yen climbed 0.5% ahead of today’s BOJ rate announcement and press conference. The Euro rallied after trading to 3 months lows on Friday.
German Retail Sales rose 0.5% as forecast. German Preliminary CPI fell to 0.0% from 0.1% and a forecast of 0.1%.
Spain’s CPI missed with a print of 1.6% against a forecast of 1.7%. Spain’s Flash Q3 GDP came out exactly as forecast at 0.8%.
UK Net Lending to Individuals for September was GBP 5.5 billion, the same as forecast.
US September Core PCE Price Index was at 0.1%, the same forecast.
US Personal Spending in September rose to 1.0%, higher than the 0.8% forecast.
Wall Street stocks eased. The Dow slipped 0.36% to 23,363 (23,424 yesterday).
The yield on the US Ten Year Bond fell 4 basis points to 2.36%. Japan’s Ten Year JGB was yielding 0.06%, unchanged from yesterday.
USD/DXY– Index falls back to 94.465 from 94.808 yesterday.
EUR/USD – rallies to 1.1655 (1.1608)
USD/JPY – falls to 113.14 from 113.70 yesterday. The BOJ’s Interest Rate decision, Monetary Policy Statement and Press Conference are all later on today
GBP/USD – climbs to 1.3210 (1.3130). The Bank of England is expected to raise its official bank rate at its meeting on Thursday.
AUD/USD – higher to 0.7688 from 0.7675 yesterday.
Outlook: Politics dominated the currency markets yesterday. Traders will monitor developments on the FBI probe and it’s disruption on the Trump administration’s progress in terms of reform. Speculation that Jerome Powell will be selected as the next Fed Chair will limit the Dollar’s topside for now. The Dollar Index (USD/DXY) eased to the mid 94’s after testing 95 Friday and is now in a period of consolidation.
Markets will look ahead to today’s busy events and data releases:
Japan Unemployment Rate, Overall Household Spending, and September Industrial Production: (GMT 11.30 pm, Oct 30/Local Time 10.30 am, Oct 31): forecast for Unemployment Rate 2.8% from 2.8%; forecast for Overall Household Spending: 0.7% from 0.6%; forecast for Industrial Production (m/m): -1.5% from 2.0%; (y/y): 2.0% from 5.3%
New Zealand ANZ Business Confidence Index: (GMT 12 am, Oct 31/Local Time 11 am, Oct 31): forecast: previous data was 0.0%
Australian September Private Sector Credit: (GMT 12.30 am, Oct 31/Local Time 11.30 am, Oct 31): forecast 0.5% from 0.5%
China Manufacturing and Non-Manufacturing PMI: (GMT 1 am, Oct 31/Local Time 12 pm, Oct 31): forecast for Manufacturing PMI: 52 from 52.4: forecast for Non-Manufacturing PMI: previous PMI was 55.4
Japan – Bank of Japan Interest Rate Decision: (GMT 2 am, Oct 31/Local Time 1 pm, Oct 31): The BOJ is not expected to change its Policy Rate currently at -0.10%
Bank of Japan Economic Outlook Report: (GMT 3 am, Oct 31/ Local Time 2 pm, Oct 31)
Bank of Japan Monetary Policy Statement: (GMT 3.50 am, Oct 31, Local Time 2.50 pm, Oct 31)
Bank of Japan Press Conference: (GMT 6.30 am, Oct 31/Local Time 6.30 pm, Oct 31)
France Flash CPI: (GMT 7.45 am, Oct 31/Local Time 6.45 pm, Oct 31): forecast: 1.1% from 1.1%
Italy Unemployment Rate: (GMT 9 am, Oct 31/Local Time 8 pm, Oct 31): forecast 11.1% from 11.2%
Euro Zone Q3 GDP, Unemployment Rate, October Core and Headline CPI: (GMT 10 am, Oct 31/Local Time 9 pm, Oct 31): forecast Q3 GDP (q/q): 0.5% from 0.6%; forecast Q3 GDP (y/y): 2.4% from 2.3%; forecast Unemployment Rate: 9.0% from 9.1%; forecast for Headline CPI: 1.4% from 1.5%; forecast for CPI (y/y): 1.2% from 1.3%
Canada August GDP: (GMT 12.30 pm, Oct 31/Local Time 11.30 pm, Oct 31): forecast: 0.1% from 0.0%.
Trading View: The Dollar should consolidate today after the big moves late last week and ahead of a busy event and data calendar. Political developments will continue to influence the markets with the focus now on the US and FBI probe. Donald Trump is expected to announce his pick for the Fed Chair on Friday with Jerome Powell the favorite. This is also weighing on the Dollar. However, we won’t know for sure who it will be.
The Dollar Index (USD/DXY) topped out at the 94.80/95.00 area. We could correct back to the immediate support levels of 94.30 and 94.00.
EUR/USD – rallied off Friday’s lows to close at 1.1655 this morning. Overnight high traded was 1.1654. A host of Euro Zone countries report data today with French CPI, Italian Unemployment and Euro Zone GDP, CPI and Unemployment. Euro Zone GDP is seen slowing. Catalonia was relegated to the background as markets shifted their focus on the US politics. EUR/USD has immediate resistance at 1.1670/80. Immediate support is found at 1.1620/30 and then at 1.1600. Likely range today 1.1610-1.1660. Prefer to sell rallies.
USD/JPY – slipped as risk aversion crept into the markets and stocks retreated. Immediate support for USD/JPY lies at 113.00 (113.026 was the low). US Ten year yields fell 4 basis points to 2.36% from 2.40% while the Japanese Ten Year JGB yield was unchanged at 0.06%. The latest CFTC/Reuters report saw speculative JPY shorts increased to their largest since the late July. Ahead of today’s BOJ meeting and announcement we should see limited trade. Immediate support lies at 113.00. There is immediate resistance found at 113.30 and 113.60. Likely range today 113.10-113.80. Prefer to sell rallies on USD/JPY
AUD/USD – managed to rally due to a weaker overall US Dollar. Iron Ore prices have slumped to their lowest in 4 months. The metal started falling in Shanghai yesterday. AUD/USD has immediate resistance at 0.7700 (overnight high was 0.7690). Immediate support can be found at 0.7660 and then 0.7630. Speculators remain long of Aussie. Yesterday the Ten Year Australian Bond yield matched the fall of it’s US counterpart, dropping 4 basis points to 2.73%. Any rebound in the US Dollar will see the Aussie head south very easily. Likely range today 0.775-0.7795. Look to sell rallies.
GBP/USD– ahead of the Bank of England’s policy meeting Thursday, we should see Sterling consolidate. The BOE is expected to raise it’s Official Bank Rate to 0.5% from 0.25%. The MPC vote is forecast to be unanimous at 9-0-0. GBP/USD has immediate resistance at 1.3215 (it’s overnight high). Immediate support can be found at 1.3185/90. Likely range today 1.3180-1.3230
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***Information contained in this newsletter are gathered from third parties and should not be regarded in any way as trade advice or recommendations by CM Trading. CM Trading does not recommend or advise traders or investors in their decision making but merely provides information from the market for its clients as additional information is made available as per the events occurring in the financial markets.
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