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Thursday, October 19th
The EUR/USD pair stays positive on Thursday, having refreshed this week tops at 1.1822 level, as slight weakness of the US dollar is one of the key driving factors on the market. Seems that yesterday’s retreat of the greenback, additionally boosted by lackluster US housing data, supports the pair in the second half of this week, forcing it to keep its positions above the level of 1.1800. However, the pair stalled its downside direction in early Europe, as investors are digesting recent headlines, saying that the Catalan leader C.Puigdemont threatened Spain PM M.Rajoy that he would declare formal independence in case of no dialogue from Madrid. In response to this announcement, the Spanish PM intends to call a cabinet meeting on Saturday to discuss current situation. Expected, that today the pair will remain influenced by Catalan political updates, while the US will release Philly Fed manufacturing index, which will bring additional trading opportunities during the NA session.
The NZD/USD pair came under strong selling pressure during the Asian trading session, having lost 130 pips, on news that NZ First party will form the governments with Labour party. Earlier today, it became known that after a month of inconclusive negotiations New Zealand First finally made a decision to form the government with Labour party, which means that current NZ PM Bill English, whose party won a small advantage in the September elections, will have to resign. However, there is still no official announcement, but investors have already started to correct their positions in accordance to the latest news headlines, forcing the pair to retreat to its 5-month lows, marked at 0.7038 spot. On the other side, slight US dollar downside correction across the market might provide the pair with much needed respite, stalling its sharp rally. Looking ahead, today we have Philadelphia Fed Manufacturing Index, scheduled in the US data calendar, however, further developments from the NZ political field will continue to navigate the pair during this trading session.
The GBP/USD pair failed to sustain its yesterday’s gains and retreated back below the level of 1.3200 by the European opening. The main reason of pound’s recent weakness is that investors remain cautious ahead of the EU Summit, with the agenda mainly centered on the Brexit negotiations. Investors mainly await for UK PM Theresa May’s speech for fresh insight on Brexit deal after long negotiations, which lacked any progress. Meanwhile, slight downside correction of the US dollar across the board and nervousness ahead of the important data release are limiting pair’s current retreat. Besides the EU Summit, investors will also pay attention to the UK retail sales numbers and Philly Fed manufacturing data, which will help to form next short-term trajectory of the pair on Thursday.
The AUD/USD pair failed to gain direct momentum following slew of positive data from Australia and China, released earlier this session. The pair received moderate bullish impetus during Asia, rallying 30 pips, on the back of a promising Aussie jobs report. However, the spike was short-lived and the pair retreated back to its comfort zone, located in the vicinity of 0.7850, as investors’ sentiments about the Aussie are still unclear after dovish RBA meeting minutes, seen on Tuesday. Nevertheless, the pair managed to recover its positive tone after China released upbeat data from the industrial sector. In general, the pair is showing bullish dynamics at the European morning, also taking into account slight retreat of the US dollar against its main competitors. Today all traders attention will remain focused on Philly Fed manufacturing data, while the US dollar price dynamics and broad market trend will continue to remain as key driving factors for the pair on Thursday.
The main events of the day:
UK Retail Sales – 11.30 (GMT +3)
Philadelphia Fed Manufacturing Index – 15.30 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1697 R. 1.1849
USDJPY S. 111.78 R. 113.62
GBPUSD S. 1.3114 R. 1.3252
USDCHF S. 0.9746 R. 0.9870
AUDUSD S. 0.7803 R. 0.7879
NZDUSD S. 0.7089 R. 0.7209
USDCAD S. 1.2409 R. 1.2561
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