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Wednesday, November 1st
The EUR/USD pair failed to sustain its bid tone, seen in early Europe, and returned to the red zone, as demand for the US dollar dominates the market today. During the Asian trading session, the greenback received additional bullish impetus, following the Chief of tax-writing committee K.Brady’s announcement, saying that the Committee will release the tax bill text on Thursday. Today all eyes are focused on the Fed meeting outcome, which in most cases will trigger massive volatility across the financial markets. It is widely expected that the regulator will keep its interest rate level unchanged, but investors will be eagerly awaiting for any clues what to expect in 2018 regarding Fed monetary policy. Besides the FOMC verdict, investors will also pay attention to the US ADP employment and ISM manufacturing reports, which will help the pair to form its near-term trajectory, while the EU data calendar will remain absolutely silent during this session.
The NZD/USD pair extends its bullish rally, having refreshed its weekly highs above the level of 0.6900, following strong data from the NZ labor market. During the Asian trading session, the pair received strong bullish impetus after NZ jobs data came above market’s expectations that helped the pair to come out of the region of its 5-month lows. Moreover, seems that the risk-on rally is still at full steam that also exerts some support to the higher-yielding Kiwi at the equator of this week. On the other hand, renewed demand for the US dollar, underpinned by announcement that the US tax bill text will be released on Thursday, and ongoing uncertainty regarding upcoming political and economic reforms in NZ weigh on NZD/USD, thus capping its recovery. Today investors will pay attention to the bloc of the US data, featuring the US ADP jobs and ISM manufacturing PMI releases, for fresh trading opportunities ahead of the much-awaited FOMC decision, which will hog the limelight during the NA session.
The GBP/USD pair continues to move northward for the third session in a row, eyeing to its key resistance level of 1.3300. The main reason of pound’s recent bullish rally remain expectations that the BoE will increase its interest rate by 25 bps on Thursday. The pair has already gained more than 2 figures since Friday’s lows, marked at 1.3070 level, as investors are pricing in hawkish outcome of the BoE meeting, however, whether it will be hawkish or dovish we will know already tomorrow. Moreover, positive comments by Brexit Secretary David Davis, who expects a free-trade agreement to be reached after the UK leaves the Eurozone, also provide some support to the pair today. However, renewed demand for the US dollar, backed by headlines, saying that the US house tax committee Chairman K.Brady announced that the Committee would release the bill text on Thursday, may stall pair’s further upside trend. Today we have pretty busy trading session, as both economic calendars will release important microdata, while Fed meeting’s outcome will be the climax of this trading session.
The USD/JPY pair remains positive for the second session in a row, oscillating in the vicinity of 114.00 level, on the back of several supportive factors, which are navigating the pair on Wednesday. Renewed demand for the US dollar remains one of the key determinants across the market today, as recent remarks of US house tax committee Chairman K.Brady, saying that he intends to publish the text of tax plan on Thursday, are making long-awaited tax reforms one step closer to its implementation. Moreover, seems that risk appetite is still gripping the market that, in turn, negatively affects positions of the safe-haven yen on Wednesday. Looking ahead, today all investors’ attention remains focused on the key event of this session - the FOMC decision, as investors await fresh hints regarding further Fed monetary policy path, while bloc of important data from the US economy will also be closely watched for additional impetus during the NA session.
The main events of the day:
UK Manufacturing PMI – 11.30 (GMT +2)
US ADP Nonfarm Employment Change – 14.15 (GMT +2)
US ISM Manufacturing PMI – 16.00 (GMT +2)
US Crude Oil Inventories – 16.30 (GMT +2)
Fed Interest Rate Decision – 20.00 (GMT +2)
BoC Governor S.Poloz’s Speech – 22.15 (GMT +2)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1605 R. 1.1681
USDJPY S. 112.66 R. 114.22
GBPUSD S. 1.3156 R. 1.3350
USDCHF S. 0.9913 R. 1.0025
AUDUSD S. 0.7605 R. 0.7723
NZDUSD S. 0.6803 R. 0.6903
USDCAD S. 1.2783 R. 1.2967
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