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Thursday, October 12th
The EUR/USD pair extends its northward trend for the fifth consecutive session, having refreshed its 2-week highs in the vicinity of 1.1880 level, on the back of ongoing decline of the greenback. Recent weakness of the dollar is mostly attributed to the dovish outcome of the latest FOMC meeting, which revealed that some members were worried that recent drawdown of the inflation may not be temporary. These dovish comments eased market’s confidence that the Fed will continue to implement more aggressive tightening path of the monetary policy. Moreover, the common currency continues to benefit from easing concerns over the separation of Catalonia. Yesterday Spanish PM M.Rajoy announced that he gives 5 days to Catalonia’s leader C.Puigdemont to clarify the situation with the independence of Catalonia and 3 more days to "correct" it. Today all traders attention will remain focused on the US PPI data and several speeches from both sides, which will set up pair’s further trajectory during this trading session, while tomorrow’s US CPI report will keep investors from making important decisions, especially in light of the outcome of the latest FOMC meeting.
The GBP/USD pair is advancing for the fourth consecutive session, having refreshed its 6-day highs at 1.3265 spot. Ongoing weakness of the US dollar remains the key driving theme across the market, as yesterday’s FOMC minutes appeared less hawkish than it was expected. The FOMC protocols showed that the Fed members were worried that low inflation transitory period could be prolonged. This outcome of the meeting triggered wave of speculations of narrowing divergence between monetary policies of the Fed and BoE, which are especially interesting in wake of recent BoE talks of probable rate hike in the near future. Adding to this, positive sentiments surrounding the UK political space continue to support the pound so far this week, as investors hope that EU and UK will keep its positive relationship after Brexit. Today all investors’ attention will be focused on the US PPI report, while several speeches from both sides will also be able to bring some fresh trading opportunities during the NA session.
The AUD/USD pair remains bullish for the third session in a row, having refreshed its weekly highs in the region of 0.7825, benefiting from the USD weakness. Yesterday the US dollar accelerated its decline against its main competitors in wake of less hawkish FOMC meeting minutes. Despite reaffirming expectation of Fed rate hike, the minutes also showed Fed members’ concerns regarding slow inflation growth pace that in turn heavily weighed on the US dollar across the market. Moreover, positive secondary data from the Australia’s housing market, seen this morning, also underpinned bullish sentiments around the pair. Looking ahead, today investors will look forward for the US PPI data, while the USD price dynamics will remain the key driver for the pair during this trading session.
The USD/JPY pair came under fresh selling pressure, having reversed its yesterday’s gains, as sell-off of the US dollar is still gripping the market. Yesterday the US dollar received another bearish impetus, extending its streak of losses against its main competitors, as the outcome of the latest FOMC meeting appeared not so positive, as it was expected. Fed members once again reaffirmed market expectations of another rate increase this year, while showing concerns regarding low inflation level that in turn negatively affected sentiments around the US dollar. However, the ongoing silence from the Korean Peninsula is positively affecting risk appetite, which limits pair’s further losses. Today the US data calendar will offer the US PPI report, which will be released during the NA session, while several Fedspeaks will also provide investors with short-term trading opportunities in the day ahead.
The main events of the day:
US PPI – 15.30 (GMT +3)
ECB President M.Draghi’s Speech – 17.30 (GMT +3)
US Crude Oil Inventories – 18.00 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1766 R. 1.1916
USDJPY S. 111.87 R. 112.89
GBPUSD S. 1.3151 R. 1.3271
USDCHF S. 0.9687 R. 0.9787
AUDUSD S. 0.7750 R. 0.7828
NZDUSD S. 0.7040 R. 0.7120
USDCAD S. 1.2403 R. 1.2559
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