FX News Today

French business confidence mixed, with the overall headline number unexpectedly rising to 101 from 100, but manufacturing confidence falling to 103 from 104 and the production outlook indicator slumping to 2 in October, while the September reading was revised down to 5 from 7 reported initially. The own company production outlook held up better, with the reading declining only slightly to 13 from 14 in the previous month, highlighting that concerns about global developments and the slowdown in emerging markets rather than actual weakness at company level are the main factors.

Bank of Canada Constructive on Growth as Forces Awaken. The Bank of Canada maintained the 0.50% setting for the overnight rate target, matching widespread expectations. While the growth projections for 2016 and 2017 were trimmed, the outlook remains constructive as the projected recovery in Canada’s economy takes hold. The return to full capacity was moved ahead to mid-2017 but Governor Poloz explained that the shift was within the range anticipated in July. The bank is comfortable with the current state of policy and the economy, content to remain on the sidelines as the forces unleashed by 50 basis points in rate cuts in the first half of this year continue to ease the adjustment to lower oil and commodity prices.

BoC Poloz praised the constructive evolution of the economy, answering a question on just how high the debt to income ratio can go. He noted that Canada does not have much experience with ratios this high, but that other countries run higher ratios (not that he’s saying higher ratios are ok, he added). But he is pleased the Bank identified the right forces in the economy when things were uncertain in January. Those forces continue to growth, he noted, and the constructive evolution gets the economy back to better growth. On the CAD, he said the currency has been moving roughly in-line with the terms of trade (ToT), which it has done historically. He noted that “roughly” comes with lots of advisement, as the zone around ToT movements is not trivial. Further solidifying his status as one of the most entertaining of the current crop of central bankers, he likened these moves to walking a dog with a stretchy leash — you get footprints (from the dog) that are not straight like a railroad track. His Q&A has ended.

Main Macro Events Today

• ECB Rates Decision: ECB seen on hold, focus on presser. We expect the central bank to stay on hold today, as does the overwhelming majority of analysts in the latest Bloomberg survey, with only one expecting further easing measures already this week. This does not mean that an extension or expansion of the QE program will be off the table however and Draghi’s comments at the press conference will likely strike a fine balance between justifying the current wait and see stance and assuring markets that the ECB is ready and willing to act again if necessary. Comments suggest that the low inflation environment is once again becoming a concern and December, when the updated set of economic projections is due, will become a major focal point for a decision on additional steps.
• US Initial Jobless Claims: Claims data for the week of October 17 is out today and should reveal an increase to 264k (median 265k) from 255k last week. We expect the average for October to be 270k from 269k in September. This supports our call for a 190k employment headline which would follow a 142k increase in September.
• US Existing Home Sales: September existing home sales data today should reveal a 1.7% increase to a 5.400 mln (median 5.350 mln) headline following a 5.310 mln August figure and 5.580 mln in July which set a high back to 2007. Other housing measures are coming in mixed for the month with the NAHB holding steady at 61 in September, starts rising to 1.206 mln but permits slowing to 1.103 mln

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our TopForex Brokers official website:http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

FX News Today

The fact that a recent ECB survey indicates rising demand for company loans and mortgages, it is a net positive development that the ECB measures are starting to take root. The central bank said in the release of its latest bank lending survey that banks are using the liquidity created by the quantitative easing measures to grant more loans. Meanwhile banks are reporting rising demand for company loans as well as lending for house purchases. A large part of the trouble within the Eurozone has been the lack of confidence from borrowers to borrow funds from banks. The whole point of the ECB QE program is to stimulate the Eurozone’s economy through making borrowing attractive enough for business to borrow and invest those borrowed funds back into their business. The hope of the ECB is that those businesses will create jobs and get the economy moving.

Fed’s Williams repeated his preference for an early move to raise interest rates. The Fed board member was speaking on Bloomberg and he said that he sees good arguments on both sides of the timing of a FED rate hike. But a 0% interest rate stance will not likely be needed in the future. He said the economy is strengthening, but noted that there are some concerns to the future economic outlook.

ECB’s Linde: Inflation trend is somewhat worrying. The Spanish central bank head stressed that the ECB has manifested that it can extend the QE program if needed, although he also said that the third Greek bailout deal has mitigated risks in Europe and that Spain is well positioned to deal with external challenges. No clear call for further easing, although so short ahead of the meeting, this would be unusual. Still, as Nowotny before him, Linde also voiced concerns about the inflation numbers, instead of highlighting that the weak headline rates are driven by the drop in oil prices, as Draghi has done so far.

Main Macro Events Today

• EUR German producer price inflation: dropped to 2.1% y/y in September, from -1.7% y/y in the previous month. Expectations had been for an unchanged headline rate and the drop further into negative territory was to a large extent due to lower energy prices, which fell 1.1% m/m and were down 6.1% y/y. Basic goods prices were also lower over the month.

• GBP BOE’s Governor Carney Speech: Sterling has been shining since data last week showed a drop in UK unemployment below 5.4%, which is for the first time in the cycle below the point at which the BoE expects labor market constraints to push price pressures upward. Traders will seek clues in Mr. Carny’s speech about when a rate hike could be expected.

• USD Housing Starts: Housing starts are expected to edge up to a 1,130k unit pace in September following the 3.0% drop to 1,126k in August. July set a high back to Oct ’07 and compares to a low of 521k in April ’09. Forecast risk: upward, as the NAHB remained firm. Market risk: downward, as a run of weaker data could impact rate hike time-lines. Permits are expected at 1,150k in September from 1,161k in August.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our TopForex Brokersofficial website:http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

EURUSD, Daily

EURUSD printed a low of 1.1308 earlier today. At the time of writing this, price has managed to make a small price recovery and trades around 25 pips off the day’s low. Price has broken the 1.1340 support level. The EURUSD market will now focus on the ECB policy meeting later this week; ECB president Draghi is expected to hint at the expansion of the QE program. With the break of the 1.1340 support, this raises the fears for EURUSD bulls for a potential price return towards the 1.1280′s. On the daily observations, looking back 3 months, current price remains without clear direction. However, I do have a bullish bias towards a retest of the 1.1460′s – 1.1560′s, provided that price can manage a clean close above the 1.1370 (38.2% Fibo July low – August high), otherwise we could see a price breakdown below the 1.1280′s.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our TopForex Brokersofficial website:http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

S&P 500, Weekly

In my previous report from September 7^th I took the view that ES (S&P 500 e-mini future) will not go below 1813 over the coming weeks. I also said that I’d be closing shorts and opening longs at around 1850 support while ES was trading at 1933 at the time. This worked out very well. Price retraced to 1860 where it pivoted and has been rallying since. I also predicted that this rally will take ES to 2046 resistance. We are at the time of writing 24 index points away from this prediction becoming fulfilled.

Market is getting overbought in terms of Stochastics Oscillator while it is getting close to the 2034 – 2046 resistance area. The 50 week SMA (currently at 2054) coincides roughly with this area. These technical factors together with other factors in the daily timeframe create a technical resistance that I expect will turn the price lower again. Support levels in the weekly chart are at 1813, 1861 and 1943.75 while resistance levels are at 2034.25, 2046 and 2104.70.

S&P 500, Daily

Since rallying strongly higher from 1860 support the upside momentum in ES has slowed down. The pivotal resistance area between 1982 and 2011.75 was a challenge to the bulls and price had to correct lower for a couple of days after hitting the 2011.75 resistance. This was highlighted by the Stochastics Oscillator. After price found support at 50 day SMA last week, we’ve seen another push higher but this has taken place with a lower volume. Price is now trading at the upper Bollinger Bands and near the resistance levels mentioned earlier. The 100 and 200 day SMAs coincide with the 2034 and 2046 resistance levels. As per usual these resistances are created by levels that used to support price. Stochastics and Money Flow are in the overbought zone wile RSI is indicating weakness by diverging from the price action (bearish divergence).

S&P 500, 240 min

The 4h chart reveals how there are no signs of market turning yet. Therefore another push higher should be in the cards. It also reveals the potential support levels that could cause the short sellers some challenges. The first one is at 2011.75, the pivotal high from September 17^th while the 23.6% Fibonacci level almost coincides with the 1982.50 support. The importance Fibonacci support is at 1925 (61.8%).

Conclusion

Market is overbought and getting near important resistance levels. I expect that we will see a reaction lower from 2034 – 2046 range. I’m looking for price action confirmation for short trades inside  this range with targets at 1982.50 (T1) and 1945 (T2). By taking partial profits at T1 the probabilities of my trade being successful are increased. I expect that the ES will create a higher low between 1943.75 and 1973 where the 100 week SMA currently is. The stock market is still in a topping formation that followed a 6 year bull market. A market top in my experience is not a good time for long term stock investments.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our TopForex Brokersofficial website:http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.