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Monday, October 2nd
The EUR/USD pair failed to extend its Friday’s recovery path and fell to its 2-day lows, located in the area of 1.1740 level, on the back of recent political headlines from Spain. The main currency pair came under strong selling pressure at the start of this trading week in wake of referendum vote for Catalonia’s independence from Spain, which was held on Sunday. As a result, 90% of Catalans voted "Yes" to leave Spain, but only 42.3% of voters took part in the referendum and the Spanish constitutional court declared referendum results illegal. This political uncertainty around the Euro area triggered fresh sell-off of the common currency across the market on Monday. Moreover, increased demand for the greenback, underpinned by market’s expectation of another Fed rate hike this year, also exerts negative influence on the main currency pair today. On the data front, today the European data calendar will offer only secondary data reports, which will unlikely provide the pair with notable impact, while the US ISM manufacturing data will be able to bring fresh trading opportunities for the pair during the NA trading session.
The GBP/USD pair looks depressed on Monday, having refreshed its 2-week lows near the level of 1.3340 on the European opening, as numerous factors are pushing the pair into the negative territory. Today the pair is mainly driven by increased demand for the US dollar, as investors hope that the Fed will follow its less gradual rate increase path. Adding to this, lack of direction from Brexit process negotiations and recent red numbers from the UK economy are strongly weighing the pound across the market that is another negative factor for the pair. Now all investors’ attention turns towards the UK manufacturing PMI, which will be able to bring some directional impetus to the pair during the European session, while the manufacturing data from the US side also won’t remain without traders attention later ahead in the session.
The USD/JPY pair was trading on a firm note so far this session, getting closer to the 113.00 level, as returned demand for the US dollar remains the key navigator across the market on Monday. Recently renewed strength of the greenback is mainly attributed to growing market conviction that the Fed will implement its plan of more aggressive monetary policy tightening. At the same time, interest around the US dollar appeared so strong that the yen was not able to benefit from positive numbers of Japanese Tankan manufacturing index. Looking ahead, today we have only US ISM Manufacturing PMI scheduled in the data calendar for the pair, so the US dollar price dynamics will remain as an exclusive driver for the pair throughout this trading session.
Seems that Bitcoin keeps positive mood at the start of this week, extending recovery against its US counterpart above the level of 4400. Recall, the BTC/USD pair fell to its multi month lows in mid-September, marked near the level of 3000, following China's ban on ICOs. However, the pair managed to recover its sharp loses, as investors have passed over recent news and regained its positive view regarding further potential of the digital cash. On the other hand, on Friday it became known that South Korea intends to follow Chinese steps, banning all ICOs in the country, adding that stern penalties await those, who will continue to support this method. These headlines have a negative basis for the all cryptomarket and may slow down pair’s further correction. However, there were some positive news too, Japan's Financial Services Agency issued operating licenses to 11 bitcoin exchanges, allowing the pair to maintain its positive tone. By the moment of writing, the pair was trading at 4436.90 spot, while its market capitalization was 73 billion USD, according to the data available on coinmarketcap.com.
The main events of the day:
German Manufacturing PMI – 10.55 (GMT +3)
UK Manufacturing PMI – 11.30 (GMT +3)
US ISM Manufacturing PMI – 17.00 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1746 R. 1.1866
USDJPY S. 111.95 R. 112.99
GBPUSD S. 1.3301 R. 1.3489
USDCHF S. 0.9638 R. 0.9740
AUDUSD S. 0.7794 R. 0.7874
NZDUSD S. 0.7151 R. 0.7265
USDCAD S. 1.2356 R. 1.2586
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