Thread: Daily Market Analysis from ForexMart

The Canadian dollar inched higher than the USD during the last trading session in the light of the impending US retail sales data to be released on Friday. The risk appetite for the currency pair dropped due to a slowdown of the Chinese economy, with the nation’s exports contracting 10% annually and imports sinking by 2% in spite of a drop in commodity prices.

Oil prices rose due to the weakening of the USD and an offset in crude stocks due to drawbacks from inventories in refined products. Meanwhile, Canadian house prices increased by 0.2% last August, while prices of real estates are now under close monitoring due to an increase in household debt fuelled by lower interest rates, which might become unsustainable for the Canadian economy.

Meanwhile, the Canada-EU Trade deal has already passed another test after the German court denied a petition to block the said agreement. EU Ministers will be having a meeting next week with an aim to discuss this particular deal following concerns that the Belgian opposition might attempt to block the said deal due to the possibility of farm imports overshadowing local farm production.

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The USD/JPY pair is at steady in an uptrend channel for short-term. Nevertheless, the Yen strengthened against greenback despite the weak economy of China.

The price increase for a while but it declined again lower than 104.00 level. It is expected to go lower but the tension dwindled when it reached the 103.50 level. The price bounce back and the traders were able to recover some losses. Henceforth, the pair is trying to gain its momentum back to 104.00 level. The Resistance level is at 104.00 while the Support level is at 103.00 .

In the Moving Averages chart, the prices are at a high level as it continues the Bullish trend. The MACD is within the positive territory but the histogram declined implying the frail command of buyers. The RSI is also moving downward. It is expected for the physiological level to hold at 104.00 level followed by a decline to 103.00 level.

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The GBP/USD pair continued to trade ambiguously after traders and investors expressed their uncertainties over the current state of the sterling pound, especially now that the UK’s strategies for Brexit have also become uncertain. The market has become dependent on the decision between the European Union and UK with regards on how to go about the Brexit, but so far this has not created enough stability for the market players.

The pricing of the GBP/USD pair remained highly volatile for the rest of last week’s session, with the pair having reactions to movements from both the European Union and Britain, creating difficulties for those wanting to choose a trade direction for the pair. In the coming weeks, a significant number of economic data is expected to be released which will greatly affect the movement of this particular currency pair. For this week, investors and traders are expecting the release of the US CPI data, as well as the US Presidential Debate. The UK retail sales data as well as the UK CPI data will also be released within the week. The recent data releases for the UK turned out well for the most part, but the uncertainties surrounding the Brexit will most likely affect the market.

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The USD decreased its value against the JPY during Monday’s trading session after the release of US economic data which turned out to be lower than expected, on top of investor reaction to comments from Fed Chairwoman Yellen last Friday. The Empire State manufacturing index was released last Monday, with the index dropping by -6.80 in October, faring worse than the previous data of -2.0 and falling below the expected +1.1 estimate.

Meanwhile, the data for Industrial Production also fell below its expected reading of 0.3% since the data came out at 0.1%, but was better than the September release of -0.5%. The Capacity Utilization Rate data came out at 75.4%, going a bit higher than the previous data release of 75.3% but still lower than the expected reading of 75.6%.The Federal Reserve’s Vice Chairman recently warned that low interest rates might increase the vulnerability of the economy due to impending recessions.

For the last trading session, the USD/JPY pair traded at 103.779 points, going down by -0.37% or 0.387 points. Market players initially reacted to Yellen’s statement the Fed might wait for inflation rates to go beyond its expected range before inducing an increase in interest rates.

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The CAD traded within its previous range after the USD and commodity prices had a slow start for the week. Fed representatives have kept traders and market players on their toes in light of the expected interest rate hike in December, but the US fundamental factors are shifting the focus on the release of the inflation data in the coming days.

The Canadian Foreign Security purchases data increased by 12.74 billion, with the input of foreign funds in the country marking the eighth consecutive month of positive net investments.

For the USD/CAD pair, the pair decreased by 0.08% during the last trading session, with the currency pair now trading at 1.3129 prior to the expected rate statement release from the Bank of Canada on Wednesday. The CAD decreased in value due to the decrease in crude oil prices last Monday, and the CAD will be dependent on the BoC’s rate statement on Wednesday, with the BoC expected to become more dovish in spite of little chances of an interest rate cut within the week, mostly due to the expected interest rate hike of the Federal Reserve later this year.

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The EUR/JPY pair has recently experienced a trading high of 116.30, a long shot from September’s monthly low of 112.00 points. The currency pair backtracked from the Fibonacci levels of 23.6 and 38.2 last week after support levels went up to 1114.00-114.12 due to the 20-50 DMA, as well as the Fibonacci levels of 50.0. A breach beyond this level might cause a drop at 113.00 and 112.00, which is in line with the weekly and monthly time frames for the currency pair.

The EUR will be reliant on this coming Thursday’s events, with the European Central Bank seemingly uncertain on whether to increase stimulus to an already expanded policy due to increasing inflation rates and an increase in momentum levels as suggested by growth indicators. However, the ECB still has to remedy the decrease in supply as a means to keep its current program in line and make way for another program, albeit at a reduced level.

Market players are expecting a particularly uneventful ECB statement due to speculations of an unchanged policy and ECB merely repeating its calls for politicians to improve structural reforms in order to boost economic growth in the European Union and to increase inflation in the region.

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The USD/JPY pair is currently trading at 103.87 points, increasing by 0.01% during the last trading session after a high of 103.98 and a daily low of 103.80 points. The Asian trading session exhibited an ambiguous trading activity while the market waits for the release of the Chinese GDP data for the third quarter of the year. The USD is currently on the uncertain side while the USD/JPY was able to retain its stance in the positive territory in spite of rallying from the 100 handle in September.

However, this ambiguity of the pair can be remedied by the oil bulls, since this can be used as a means to measure risk appetite and market demand. So far, oil has been moving on an impressive note recently, with the AUD/JPY pair having a positive bid on its 4-hour chart from the handle of 76-80.

Although the currency pair is trading on the positive side, analysts are speculating that going above the 104.63 means that this could possibly target the monthly low in May at 105.55 points. Since the pair is currently trading at 103.88 points, then the next resistance point is at the 103.91 range of the 20 EMA, 103.98 range of the 100 SMA and the daily high. Meanwhile, support levels is expected to be at the 103.87 range and could also possibly drop to the 200 SMA of 103.80.

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The EUR/USD pair cannot seem to break through the 1.1030 range and move upwards above this particular range. This is because when the pair tries to move towards 1.1030, the pair has always experienced a lot of selling, causing the pair to be pushed back into the 1.0950-70 trading range.

This activity was also seen during the last trading session, after the EUR/USD pair again tried to go beyond the 1.1030 range but was immediately met with resistance due to the release of the US CPI data, which caused the euro to further drop in value and causing it to revert back to the 1.0960 region. The relatively solid support level of the pair has only caused a minor reversion for the pair after the EUR/USD bounced back to 1.1000 in spite of the significant weakening of the US dollar while traders are waiting for the release of China’s GDP data.

For today’s trading session, there is no major economic news to be expected from the eurozone today, although the US building permits data is set to be released within the day. Market players are not expecting any major movements following this release and bulls will be continuously concerned with the drop in the trading value of the EUR/USD. This is because the EUR will be suffering once the USD manages to bounce back from its weak state if the pair still does not manage to break through the 1.1030 while the USD has not yet regained its strength.

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The AUD/USD pair was able to maintain its hold on the upper range of the 0.76 handle after AUD bulls were unimpressed with the expectations coming from the impending release of the Chinese GDP data. The currency pair is now trading at 0.7672 points after increasing by +0.07%. The AUD streamlined its gains after consecutive macro releases from China, which caused an uncertain outlook for the Chinese economy and curbed a possible catalyst for the AUD, especially since China is one of Australia’s main export destinations.

In spite of this, the AUD/USD has still managed to maintain its current bids after sentiment levels remain supported by recent oil prices. The positive data from the Australian Westpac Index also improved support for the AUD in spite of the weakness exhibited by the USD. After the release of the Chinese GDP data, investors are now waiting for the releases of the US housing data, as well as inventory reports on the EIA crude oil, which will be released during the New York session.

The resistance levels for the AUD/USD is currently at 0.7693, and gains could further extend to 0.7707 and 0.7750. On the other hand, support levels for the pair is currently located at the 0.7637 range for the 5-DMA. If selling pressure for the pair manages to increase, then the pair would drop further to 0.7576 for the 100-DMA and 0.7511 at the 200-DMA.

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The AUD/NZD pair is currently trading at 1.0624 after dropping by -0.50% during the last session with a session high of 1.0696 points and a session low of 1.0613. The currency pair has decreased significantly following a negative Australian market report release, and the Reserve Bank of Australia is now considering ways on how to further stimulate economic factors for the nation.

The currency pair plummeted from 1.0696 to 1.0612 on the hourly chart, with the AUD exhibiting remarkable resiliency in the recent bulls in the market. The NZD and AUD are both exceeding expectations and gaining significant profits especially now that the market is primarily driven by oil prices.

Since the currency pair is at the 1.0624 region, resistance levels is expected to be at the last session low of 1.0626, 1.0633, and 1.0667 for the hourly EMA. Meanwhile, support levels are expected to be at the daily S1 of 1.0621, its daily low of 1.0613, and the daily 20-SMA of 1.0594.

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