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Forex News Timeline

Thursday, September 24, 2020

British Finance Minister Rishi Sunak is announcing the government's new plan to support the economic recovery and the labour market. Key quotes (via R

British Finance Minister Rishi Sunak is announcing the government's new plan to support the economic recovery and the labour market.  Key quotes (via Reuters) "Extending the deadline of all loans schemes to end of this year." "Will allow businesses to spread vat bill due in March." "Bounce-back loans will be extended to 10 from 6 years." "Firms in trouble can suspend repayments for 6 months." "Will extend government guarantee on Coronavirus Business Interruption Loan Scheme (CBILS) loans for up to 10 years." "Will launch a successor loan guarantee scheme to begin in January." Market reaction These remarks don't seem to be having a significant impact on market sentiment. As of writing, the UK's FTSE 100 Index was still down 0.3% on the day at 5,881.

EUR/JPY looks side-lined around the key 122.90 region so far on Thursday. This area is coincident with January’s peak (122.87). The recent selling pre

EUR/JPY appears to be stabilizing in the sub-123.00 region.Immediately to the downside comes in the 100-day SMA at 122.35.EUR/JPY looks side-lined around the key 122.90 region so far on Thursday. This area is coincident with January’s peak (122.87). The recent selling pressure seems to have met decent contention in the mid-122.00s for the time being. If cleared, there is a minor support at the 100-day SMA at 122.35 ahead of the critical 200-day SMA, today at 120.87. Below the 200-day SMA the outlook on the cross is expected to shift to bearish. EUR/JPY daily chart  

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting reviewed the latest set of inflation figures in the Malaysian economy. Key Quotes

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting reviewed the latest set of inflation figures in the Malaysian economy. Key Quotes “Headline deflation widened to -1.4% y/y in Aug (from -1.3% y/y in Jul), matching our estimate (-1.4%)… Aug’s higher deflation rate largely reflected lower electricity bills, housing rental, and fuel prices, which more than offset the rise in prices of food away from home, airline tickets, and jewelleries.” “Year-to-date, consumer price index (CPI) declined by -1.0% in the first eight months of 2020 (Jan-Aug 2019: +0.5%). This alongside expectations of easing deflationary pressures over the next few months suggests that our 2020 full-year CPI projection of -0.5% remains attainable (BNM forecast: -1.5% to +0.5%). Going into 2021, inflation is projected to return to positive territory at 2.1% (BNM forecast: 1.0%-3.0%). Volatile global oil prices and bumpy economic recovery would be wildcards for the inflation outlook.”

The Central Bank of the Republic of Turkey (CBRT) announced on Thursday that it raised its policy (one-week repo) rate by 200 basis points to 10.25%.

The Central Bank of the Republic of Turkey (CBRT) announced on Thursday that it raised its policy (one-week repo) rate by 200 basis points to 10.25%. With the initial market reaction, the USD/TRY pair fell sharply and was last seen losing 1.5% on the day at 7.5730. Developing story...

In a statement to parliament, British Finance Minister Rishi Sunak said that they are developing plans to protect jobs and the economy over the winter

In a statement to parliament, British Finance Minister Rishi Sunak said that they are developing plans to protect jobs and the economy over the winter, as reported by Reuters. Additional takeaways "People are anxious, afraid and exhausted, I share these feelings." "The resurgence of the virus poses a threat to the fragile recovery." "The main goal is to support jobs." "The economy is likely to undergo more permanent adjustment." "We must face up to trade-offs and hard choices." "There are reasons to be cautiously optimistic." "New measures must be different from before." "Sources of economic growth will adapt to new normal." "We need to allow the economy to move forward." "We must deal with real problems businesses and employees face now." Market reaction The GBP/USD pair largely ignored those comments and was last seen gaining 0.25% on the day at 1.2753.    

Turkey CBRT Interest Rate Decision above forecasts (8.25%) in September: Actual (10.25%)

Mexico 1st half-month Inflation above forecasts (0.12%) in August: Actual (0.16%)

Mexico 1st half-month Core Inflation below forecasts (0.19%) in August: Actual (0.17%)

The NZD/USD pair lost nearly 100 pips on Wednesday and extended its slide to a fresh monthly low of 0.6517 on Thursday. As of writing, the pair was do

NZD/USD is falling for the fourth straight day on Thursday.US Dollar Index stays in the positive territory near mid-94s.Focus shifts to mid-tier macroeconomic data releases from the US.The NZD/USD pair lost nearly 100 pips on Wednesday and extended its slide to a fresh monthly low of 0.6517 on Thursday. As of writing, the pair was down 0.28% on a daily basis at 0.6528. Earlier in the day, the data published by Statistics New Zealand showed that the country posted a trade deficit of NZD353 million following July's surplus of NZD447 million and made it difficult for the kiwi to stage a rebound. DXY rally remains unabated On the other hand, the US Dollar Index (DXY) closed the fourth straight day in the positive territory on Wednesday as the poor performance of Wall Street's main indexes helped the USD find demand as a safe-haven. With risk flows struggling to take control of financial markets, the DXY is posting modest daily gains at 94.45 ahead of the American session. Later in the day, the US Department of Labor's weekly Initial Jobless Claims, the US Census Bureau's New Home Sales and Kansas Fed's Manufacturing Activity data will be looked upon for fresh impetus. Meanwhile, FOMC Chairman Jerome Powell will appear before Congress on the second day of his testimony. However, Powell's remarks are expected to be identical to his opening statement from Tuesday and Wednesday.  There won't be any data releases from New Zealand during the Asian session on Friday and the USD's market valuation is likely to remain the primary driver of USD/CAD's movements. Technical levels to watch for  

The Norwegian krone is prolonging the downside momentum for yet another session and is helping EUR/NOK to advance to new 3-month tops in the vicinity

EUR/NOK extends the upside to the vicinity of 11.2000 on Thursday.The Norges Bank left the key policy rate unchanged at 0.00%, as expected.The rate path sees current levels to remain at least for the next 2 years.The Norwegian krone is prolonging the downside momentum for yet another session and is helping EUR/NOK to advance to new 3-month tops in the vicinity of 11.2000. EUR/NOK higher post-Norges Bank NOK navigates multi-month lows vs. its European peer on Thursday after the Norges Bank left unchanged the key policy rate at 0.00% at its meeting. However, the Scandinavian central bank delivered an unexpected cautious message, suggesting that current levels of the key rate are forecasted to persist until at least end of 2022, as opposed to markets’ expectations of an earlier move (up) on rates. The Norges Bank justified its renewed cautiousness by the rising uncertainty hovering around the global growth prospects. This view is also seen affecting the demand for crude oil and therefore its prices. What to look for around NOK NOK remains well on the defensive as of late amidst renewed concerns over the economic outlook across the world and the impact on a small economy like Norway’s. in addition, the absence of upside traction in prices of the Brent crude has been also weighing on the Nordic currency. On the more macro scenario, and following the latest meeting, the Norges Bank has now shifted to a more cautious (dovish?) tone, supporting the idea of a weaker krone in the months to come. EUR/NOK significant levels As of writing the cross is gaining 0.41% at 11.1063 and faces the next up barrier at 11.1769 (monthly high Sep.24) followed by 11.6965 (monthly high Apr.22) and then 13.1492 (2020 high Mar.19). On the downside, a breach of 10.6727 (200-day SMA) would expose 10.4618 (low Aug.14) and finally 10.3723 (monthly low Aug.31).

The GBP/JPY cross built on this week's modest rebound from the 133.00 mark, or near three-month lows and edged higher for the second consecutive sessi

GBP/JPY gained traction for the second consecutive session on Thursday.Move beyond 100-hour SMA supports prospects for further intraday gains.Mixed technical indicators still warrant some caution for aggressive bulls.The GBP/JPY cross built on this week's modest rebound from the 133.00 mark, or near three-month lows and edged higher for the second consecutive session on Thursday. The cross has now moved back above 100-hour SMA, with bulls now looking to build on the momentum beyond the overnight swing high. Given that the cross had shown some resilience below the 50% Fibonacci level of the 124.07-142.72 move up, a subsequent move beyond the 134.50-60 region might prompt some short-covering move. The cross might then accelerate the momentum towards reclaiming the key 135.00 psychological mark. The intraday constructive outlook is reinforced by the fact that oscillators on the 1-hourly chart have been gaining positive traction. However, oscillators on 4-hourly/daily charts are yet to recover from the bearish territory and warrant some caution before positioning for any further gains. Hence, any subsequent move up is likely to confront a stiff resistance and remain capped near the 135.60-65 confluence support breakpoint. The mentioned region comprised of 38.2% Fibo. level and 100-day SMA, which should now act as a key pivotal point and help determine the near-term trajectory. On the flip side, the 134.00 mark now seems to protect the immediate downside. Failure to defend the mentioned support could drag the cross towards the 133.40 horizontal level en-route the 133.00 mark. Some follow-through selling will be seen as a fresh trigger for bearish traders. The cross might then prolong its recent depreciating move and slide further towards 61.8% Flevel, around the 131.75-70 area. The 132.40-50 region might act as intermediate support on the way down. GBP/JPY daily chart Technical levels to watch  

United Kingdom CBI Distributive Trades Survey – Realized (MoM) above expectations (-10%) in September: Actual (11%)

In its latest review outlook on the UK economy, the US-based rating agency, S&P Global, cuts its GDP forecasts for 2020, although upgraded its 2021 ec

In its latest review outlook on the UK economy, the US-based rating agency, S&P Global, cuts its GDP forecasts for 2020, although upgraded its 2021 economic growth estimates.Key quotes“S&P Global cuts UK 2020 GDP forecast to a 9.7% fall versus previous forecast of -8.1%.” “The UK economy now seen rebounding 7.9% in 2021 vs. 6.5% in June forecasts.” “A hard Brexit leading to new import and export tariffs, as well as non-tariff trade barriers would add another layer of challenge for European companies, and be especially detrimental for the UK economy.”

Gold remained depressed through the first half of the trading action on Thursday and was last seen hovering near two-month lows, around the $1950 regi

Gold remained under some selling pressure for the fourth straight session on Thursday.The prevalent USD buying continued weighing on the dollar-denominated commodity.The risk-off mood did little to lend any support or stall the ongoing bearish trajectory.Gold remained depressed through the first half of the trading action on Thursday and was last seen hovering near two-month lows, around the $1950 region. The precious metal prolonged this week's bearish break through the $1900 strong horizontal support and witnessed some follow-through selling for the fourth consecutive session on Thursday. The ongoing downtrend was exclusively sponsored by strengthening US dollar, which tends to undermine demand for the dollar-denominated commodity. The second wave of coronavirus infections raised uncertainty over the economic recovery and continued boosting the greenback's status as the global reserve currency. The USD bulls seemed rather unaffected and largely shrugged off warnings by various Fed officials about the need for further stimulus measures to sustain the recovery. Meanwhile, the prevalent risk-off environment – as depicted by a weaker tone surrounding the equity markets – did little to revive the precious metal's safe-haven demand. Even a fall in the US Treasury bond yields failed to lend any support to the non-yielding yellow metal or stall the ongoing slide to the lowest level since July 22nd. Market participants now look forward to the US economic docket, highlighting the release of Initial Weekly Jobless Claims and New Home Sales data. This, along with a scheduled testimony by the Fed Chair Jerome Powell and Treasury Secretary Steven Mnuchin, will influence the USD price dynamics and produce some short-term trading opportunities. Technical levels to watch  

In its September economic report, the Japanese maintained its overall assessment of the economy while upgrading its view on exports and output. Key t

In its September economic report, the Japanese maintained its overall assessment of the economy while upgrading its view on exports and output. Key takeaways Still sees the economy in a severe situation. Upgraded its views on exports and factory output for a third straight month and raised its assessment on the employment situation for the first time since January 2018. Downgraded its view on consumer spending for the first time in five months, saying it was “picking up” - as in the August report - but adding that it remained weak, along with business spending.

Economist at UOB Group Barnabas Gan assessed the recent inflation figures in Singapore. Key Quotes “Singapore’s consumer prices fell 0.4% y/y (+0.6% m

Economist at UOB Group Barnabas Gan assessed the recent inflation figures in Singapore. Key Quotes “Singapore’s consumer prices fell 0.4% y/y (+0.6% m/m nsa) in August, marking its sixth straight month of deflation. Core prices also declined 0.3% y/y in the same month, albeit a smaller contraction versus July’s -0.4% y/y.” “Deflation unsurprisingly persisted in August 2020 given lower oil prices, amid a lacklustre consumer demand and a non-existent tourism spending. Lower prices in clothing & footwear continued (17th straight month of decline), while transport prices softened for its 5th consecutive month.” “Official rhetoric by the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) continued to highlight a “subdued” inflation outlook in 2020. Official outlook for both headline and core inflation has been kept unchanged at an average of between - 1.0% and 0.0% in 2020.” “Note that improving global supply conditions may cap the increase in food prices going forward. Low oil prices will likely persist into 2020/2021, amid relatively weaker labour condition which could pressure domestic consumption demand.” “As such, we continue to expect deflationary pressures to persist for the rest of this year. The mix of falling domestic and tourism-led demand, coupled with low oil prices for the rest of 2020, are formidable headwinds against consumer prices. We keep our full-year headline and core inflation forecasts at -0.3% in 2020.”

The selling pressure around the single currency stays unabated and drags EUR/USD lower to fresh 2-month lows in the 1.1645/40 band on Thursday. EUR/US

EUR/USD remains under pressure below the 1.17 mark.German Business Climate improved below expectations.Fed’s Jerome Powell, Initial Claims next of note in the docket.The selling pressure around the single currency stays unabated and drags EUR/USD lower to fresh 2-month lows in the 1.1645/40 band on Thursday. EUR/USD offered on risk aversion, looks to data and Powell EUR/USD is extending the leg lower for the fifth consecutive session on Thursday amidst the persistent preference of investors for the safe haven universe, therefore bolstering further the demand for the dollar. Indeed, concerns among investors prevail over the pace of the economic recovery amidst the second wave of the coronavirus pandemic, while market chatter regarding another stimulus package from the Fed appears to by dying off. In the euro docket, the German Business Climate tracked by the IFO survey came in below estimates at 93.4 for the month of September, although it improved from the August’s reading. Later in the session, markets’ focus is expected to remain on the last testimony by Fed’s Jerome Powell ahead of weekly Initial Claims and New Home Sales for the month of August. What to look for around EUR EUR/USD recorded fresh 2-month lows near 1.1640 on Thursday. Despite the move, the pair’s outlook still remains constructive and bearish moves are deemed as corrective only. Further out, the positive bias in the euro remains underpinned by auspicious results from domestic fundamentals (which have been in turn supporting further the view of a strong economic recovery after the slump in the activity during the spring), the so far calm US-China trade front and the steady – albeit vigilant- stance from the ECB. The solid position of the EMU’s current account coupled with the favourable positioning of the speculative community also lends support to the shared currency. EUR/USD levels to watch At the moment, the pair is retreating 0.06% at 1.1652 and faces immediate support at 1.1644 (monthly low Sep.24) seconded by 1.1495 (monthly high Mar.9) and finally 1.1447 (50% Fibo of the 2017-2018 rally). On the other hand, a break above 1.1709 (38.2% Fibo retracement of the 2017-2018 rally) would target 1.1742 (55-day SMA) en route to 1.1917 (high Sep.10).

Following the Swiss Nation Bank (SNB) monetary policy announcement, Chairman Jordan said that strengthened interventions have had an impact against th

Following the Swiss Nation Bank (SNB) monetary policy announcement, Chairman Jordan said that strengthened interventions have had an impact against the upward pressure of the Swiss franc while addressing the post-policy press conference. Key Quotes                                                           “SNB will use all instruments to deal with an extremely uncertain environment.” “More details on FX transactions a response to bigger international interest.” “Monetary policy situation remains more or less the same.” “Brexit, US-China trade tensions heighten uncertainties, the environment for monetary policy remains challenging.” “Higher inflation forecast is based on higher oil prices mainly.” “Outlook has not fundamentally changed.” “Market intervention data publication is intended to give clarity and transparency.” “No plan to publish minutes of monetary policy decisions.” “Takes all currencies into consideration when considering the exchange rate, and decide then what is necessary for policy.” Related readsSNB’s Jordan: Economic recovery situation is still fragileUSD/CHF holds steady near two-month tops, just below mid-0.9200s post-SNB

Economist at UOB Group Lee Sue Ann reviewed the latest interest rate decision by the RBNZ. Key Quotes “The September meeting culminated with the Reser

Economist at UOB Group Lee Sue Ann reviewed the latest interest rate decision by the RBNZ. Key Quotes “The September meeting culminated with the Reserve Bank of New Zealand (RBNZ) keeping its Overnight Cash Rate (OCR) unchanged at 0.25%, as expected, in accordance with the guidance issued on 16 March. It also agreed to continue with its Large Scale Asset Programme (LSAP) at NZD100bn.” “The accompanying press release, however, outlined further measures that can be deployed if needed, including a Funding for Lending Programme (FLP), a negative OCR, and purchases of foreign assets. The Committee agreed that these instruments can be mutually supportive in bolstering economic activity.” “We think it is looking more likely that the RBNZ will cut the OCR, but we will only be revising our forecasts following the November meeting. In terms of timeline, at this juncture, the RBNZ looks likely to cut the OCR by 50bps at the 14 April 2021 meeting, alongside a FLP, pausing thereafter. Moving in February or April should not really matter in terms of policy effectiveness, since the move will have been well-signaled in advance, which we believe the RBNZ will indicate (and commit to) latest by the 24 February meeting. Moreover, the RBNZ has pledged to keeping the OCR unchanged until March 2021, and has made no promises – or even forecasts – beyond that point. We take this forward guidance seriously.”

The greenback keeps the upside momentum well and sound so far in the second half of the week, lifting the US Dollar Index (DXY) to fresh 2-month tops

DXY extends the rally to the 94.50 region, or 2-month peaks.Chief Jerome Powell will testify once again later on Thursday.US Initial Claims, New Home Sales, Fedspeak next on the calendar.The greenback keeps the upside momentum well and sound so far in the second half of the week, lifting the US Dollar Index (DXY) to fresh 2-month tops around 94.50. US Dollar Index focused on Powell and data The index is looking to add to the ongoing rally well above the 94.00 barrier on Thursday, always propped up by the prevailing risk aversion sentiment. In fact, concerns over the impact of the second wave of the coronavirus pandemic on the economic recovery and rising uncertainty over extra stimulus from the Federal Reserve have been sustaining the renewed buying interest in the buck in past sessions. Recent Fedspeak, in addition, leaned towards the current dovish stance from the Fed, after Chicago Fed Charles Evans (2021 voter, centrist), Cleveland Fed Loretta Mester (voter, hawkish) and FOMC’s Richard Clarida (permanent voter, dovish) all agreed in that the current Fed’s accommodative stance should stay until inflation and employment reach the central bank’s goals, and that low rates are here to stay for some years. In the calendar, another testimony by Chief. Jerome Powell – this time before the Senate Banking Committee – will be in the limelight as well as weekly Claims and New Home Sales for the month of August. What to look for around USD The dollar keeps the buying bias unchanged in the second half of the week, looking to stabilize the recent breakout of the 94.00 barrier. The ongoing and moderate bullish move in DXY is (still) seen as temporary, however, as the underlying sentiment towards the greenback remains on the negative side. This view is reinforced by the “lower for longer” stance from the Federal Reserve, hopes of a strong recovery in the global economy, the negative position in the speculative community and political uncertainty ahead of the November elections and over further monetary/fiscal stimulus. US Dollar Index relevant levels At the moment, the index is gaining 0.09% at 94.43 and a break above 94.49 (monthly high Sep.24) would open the door to 95.59 (100-day SMA) and finally 96.03 (50% Fibo of the 2017-2018 drop). On the other hand, the next support emerges at 92.70 (weekly low Sep.10) seconded by 91.92 (23.6% Fibo of the 2017-2018 drop) and then 91.75 (2020 low Sep.1).

The Swiss National Bank (SNB) Chief Thomas Jordan, in the post-meeting press conference, was noted saying that the situation is slightly less negative

The Swiss National Bank (SNB) Chief Thomas Jordan, in the post-meeting press conference, was noted saying that the situation is slightly less negative than expected three months ago. The economic recovery situation is still fragile, Jordan added further.  Earlier, the SNB announced its latest monetary policy decision and left the policy rate unchanged at -0.75%. The comments, however, did little to provide any meaningful impetus to the USD/CHF pair, which held steady near two-month tops, around mid-0.9200s.

FX Strategists at UOB Group now see USD/CNH attempting a move to the 6.8600 region in the near-term. Key Quotes 24-hour view: “While our view for USD

FX Strategists at UOB Group now see USD/CNH attempting a move to the 6.8600 region in the near-term. Key Quotes 24-hour view: “While our view for USD to move higher was correct, our expectation that ‘any advance was likely limited to a test of 6.8100’ was not. USD surged past 6.8100 and hit a high of 6.8285 before closing on a strong note at 6.8260 (+0.60%), its biggest 1-day gain in 2 months. While overbought, the advance has room to break above the major 6.8300 resistance. That said, the next resistance at 6.8430 is likely out of reach. Support is at 6.8100 followed by 6.8000.” Next 1-3 weeks: “Two days ago (22 Sep, spot at 6.7900), we highlighted that the ‘month-long negative phase has run its course’. We held view that the ‘rebound in USD has room to extend higher but any advance is viewed as part of a broad 6.7500/6.8300 range’. While our view was not wrong, the pace by which USD approaches 6.8300 was faster than expected (USD rose to an overnight high of 6.8283 before closing higher by +0.60%, its biggest 1-day gain in 2 months). The price actions suggest that the rebound could extend further towards 6.8600. At this stage, the odds for a sustained rise above this level are not high. On the downside, 6.8000 is a strong support but only a break of 6.7800 would indicate the current upward pressure has eased.”

The EUR/GBP cross seesawed between tepid gains/minor losses through the early European session and was last seen trading in the neutral territory, jus

EUR/GBP struggled for a firm direction and remained confined in a range on Thursday.Signs of economic slowdown undermined the shared currency and capped the upside.A slight disappointment from German IFO Sentiment index failed to provide any impetus.The EUR/GBP cross seesawed between tepid gains/minor losses through the early European session and was last seen trading in the neutral territory, just above mid-0.9100s. Following the previous day's pullback of around 70-80 pips, the cross managed to regain some positive traction during the early part of the trading action on Thursday. The uptick, however, lacked any strong follow-through and ran out of the steam near the 0.9180 region. The shared currency's relative outperformance against its British counterpart could be attributed to worries about the emerging signs of an economic slowdown in the Eurozone. The market concerns resurfaced following the release of the flash Markit PMI prints for September. According to the data released on Wednesday, the economic recovery in the Eurozone took a hit in September amid the second wave of coronavirus infections. In fact, the gauge for the services sector fell into contraction territory, to 47.6 for September. Adding to this, the headline German IFO Business Climate Index also fell short of market expectations and came in at 93.4 in September. Meanwhile, the Current Economic Assessment arrived at 89.2 points in the reported month as compared to last month's 87.9 and 89.5 anticipated. On the other hand, the British pound struggled to gain any meaningful traction and was seen consolidating its recent losses as investors await Brexit updates before placing fresh directional bets. This, in turn, led to a subdued/range-bound price action around the EUR/GBP cross. Technical levels to watch  

Following the release of the final German IFO Business Survey, the institute’s Economist Klaus Wohlrabe said that the uncertainty over the Brexit issu

Following the release of the final German IFO Business Survey, the institute’s Economist Klaus Wohlrabe said that the uncertainty over the Brexit issue and US election has not yet had any impact on the German business. Additional quotes “Industry is continuing recovery and its export expectations have improved significantly.” “German exporters profiting from industrial recovery in major trading partners.” “Rising infection rates hurting sentiment in the service sector, especially tourism branch.” Market reaction EUR/USD has stalled its rebound, now trading at 1.1656, almost unchanged on the day. The spot hit a high of 1.1682 ahead of the German data release.

The headline German IFO Business Climate Index came in at 93.4 in September, stronger than last month's 92.6 while missing the consensus estimates poi

German IFO Business Climate Index came in at 93.4 in September.IFO Current Economic Assessment stood at 89.2 this month.September German IFO Expectations Index arrived at 97.7.The headline German IFO Business Climate Index came in at 93.4 in September, stronger than last month's 92.6 while missing the consensus estimates pointing to a reading of 93.8. more to come ... About German IFO The headline IFO business climate index was rebased and recalibrated in April after the IFO research Institute changed series from the base year of 2000 to the base year of 2005 as of May 2011 and then changed series to include services as of April 2018. The survey now includes 9,000 monthly survey responses from firms in the manufacturing, service sector, trade and construction.

Germany IFO – Expectations below forecasts (98) in September: Actual (97.7)

Germany IFO – Current Assessment below expectations (89.5) in September: Actual (89.2)

Germany IFO – Business Climate came in at 93.4, below expectations (93.8) in September

Norway Norges Bank Interest Rate Decision in line with expectations (0%)

The USD/CHF pair held steady near two-month tops, just below mid-0.9200s and had a rather muted reaction to the latest SNB monetary policy update. Fol

USD/CHF reverses an early dip and turn positive for the fifth consecutive session.The pair moved little after the SNB announced its latest monetary policy decision.The risk-off mood, a modest USD pullback might keep a lid on any runaway rally.The USD/CHF pair held steady near two-month tops, just below mid-0.9200s and had a rather muted reaction to the latest SNB monetary policy update. Following an early dip to the 0.9215 region, the pair caught some fresh bids and moved into the positive territory for the fifth consecutive session on Thursday. The USD/CHF pair moved little after the Swiss National Bank (SNB) announced its latest monetary policy decision and left the policy rate unchanged at -0.75%. The accompanying policy statement reiterated that the Swiss franc is highly valued and that the SNB is ready to step up intervention in the FX market as necessary. The statement further revealed that the inflation outlook is subject to usually high uncertainty. The SNB now sees inflation at -0.6% in 2020, at +0.1% in 2021 and at +0.2% in 2022. The fact that the SNB reaffirmed its pledge to intervene in the market and limit any significant appreciation in the domestic currency was seen as a key factor lending some support to the USD/CHF pair. However, a combination of factors might hold investors from placing aggressive bullish bet and cap any strong gains. The prevalent risk-off environment – as depicted by a negative trading sentiment around the equity markets – extended some support to the Swiss franc's safe-haven status. The anti-risk flow was reinforced by a fresh leg down in the US Treasury bond yields, which prompted some US dollar profit-taking from two-month tops. The lack of any strong follow-through buying warrants some caution before positioning for any further appreciating move. That said, the overnight sustained move beyond the 0.9200 mark favours bullish traders. Hence, some follow-through buying will set the stage for an extension of this week's positive momentum towards reclaiming the 0.9300 mark. Technical levels to watch  

more to come ...

SNB leaves policy steady in September.       USD/CHF little changed at two-month highs of 0.9247. At its September quarter monetary policy assessment this Thursday, the Swiss National Bank (SNB) board members left the monetary policy settings unchanged. The SNB left the benchmark sight deposit rate unchanged at -0.75%. The central bank maintained the 3-Month Libor Target Range steady between -1.25% to -0.25%, as widely expected. On the expected rates on-hold decision by the SNB, the Swiss franc showed little reaction vs. the greenback, with USD/CHF flirting with two-month highs of 0.9247.   more to come ...

Switzerland SNB Interest Rate Decision meets forecasts (-0.75%) in September 18

The USD/JPY pair edged lower during the early European session and refreshed daily lows, around the 105.20 region in the last hour. The pair failed to

USD/JPY witnessed a modest intraday pullback from mid-105.00s, or one-week tops.A softer risk tone extended some support to the safe-haven JPY and exerted pressure.The USD witness some profit-taking from two-month tops and contributed to the slide.The USD/JPY pair edged lower during the early European session and refreshed daily lows, around the 105.20 region in the last hour. The pair failed to capitalize on its early uptick, instead witnessed a modest pullback from the vicinity of mid-105.00s and eroded a part of the previous day's strong positive move to one-week tops. The prevalent risk-off environment extended some support to the Japanese yen's perceived safe-haven status, which, in turn, was seen as a key factor exerting some pressure on the USD/JPY pair. Worries that the second wave of coronavirus infections threatened to derail the global economic recovery. Adding to this, concerns about the return of severe lockdown restrictions continued taking its toll on the global risk sentiment. The anti-risk flow was evident from a weaker trading sentiment around the equity markets and forced investors to take refuge in traditional safe-haven assets. The global flight to safety was further reinforced by sliding US Treasury bond yields. This coupled with warnings by various Fed officials on Wednesday, stressing the need for more fiscal stimulus to sustain the recovery, prompted some US dollar profit-taking from two-month tops and contributed to the USD/JPY pair's downtick of around 20 pips from the Asian session swing highs. The pair, for now, seems to have snapped three consecutive days of the winning streak. Market participants now look forward to the US economic docket, featuring the releases of Initial Weekly Jobless Claims and New Home Sales data. This, along with a scheduled testimony by the Fed Chair Jerome Powell and Treasury Secretary Steven Mnuchin, will influence the USD price dynamics and produce some meaningful trading opportunities later during the North American session. Technical levels to watch  

UK Finance Minister Sunak set to unveil new wage support scheme later today more to come ...

UK Finance Minister Sunak set to unveil new wage support scheme later today   more to come ...

The German IFO survey for September is due for release later today at 0800 GMT. The headline IFO Business Climate Index is seen improving to 93.8 vers

The German IFO Business Survey Overview The German IFO survey for September is due for release later today at 0800 GMT. The headline IFO Business Climate Index is seen improving to 93.8 versus 92.6 previous. The Current Assessment sub-index is seen arriving at 89.5 this month, while the IFO Expectations Index – indicating firms’ projections for the next six months – is likely to come in at 98.0 in the reported month vs. 97.5 last. Deviation impact on EUR/USD Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 3 and 30 pips in deviations up to 3.0 to -4.2, although in some cases, if notable enough, a deviation can fuel movements of up to 60 pips. How could affect EUR/USD? EUR/USD is consolidating near two-month lows of 1.1645, undermined by broad US dollar strength. The economic worries globally take a toll on the risk sentiment and make the greenback more attractive as a safe-haven, Ahead of the German IFO Survey, the spot trades modestly flat at 1.1651, with the immediate resistance seen at the pivot point of 1.1676. The round figure of 1.1700 is the next upside barrier en route the 1.1725 5-DMA. To the downside, the buyers will find some support at 1.1633, the daily S1, below which the 1.1600 psychological level could be tested. Key notes EUR/USD Outlook: Remains vulnerable to slide further amid fading hopes of global recovery EUR/USD faces the next support at 1.1630 – UOB Forex Today: US dollar keeps shining as investors shun risk amid coronavirus, economic woes About the German IFO Business Climate This German business sentiment index released by the CESifo Group is closely watched as an early indicator of current conditions and business expectations in Germany. The Institute surveys more than 7,000 enterprises on their assessment of the business situation and their short-term planning. The positive economic growth anticipates bullish movements for the EUR, while a low reading is seen as negative (or bearish).
 

“We've been working on a winter plan for the economy since the summer,” the UK Health Secretary Matt Hancock said in a daily news briefing on Thursday

“We've been working on a winter plan for the economy since the summer,” the UK Health Secretary Matt Hancock said in a daily news briefing on Thursday. Additional quotes “We're determined economic support should continue.” “We've been working on a plan since the summer, in case cases started to rise again.”

USD/JPY is seen extending its current correction phase in the next weeks, in opinion of FX Strategists at UOB Group. Key Quotes 24-hour view: “We expe

USD/JPY is seen extending its current correction phase in the next weeks, in opinion of FX Strategists at UOB Group. Key Quotes 24-hour view: “We expected USD to strengthen yesterday but we were of the view ‘105.50 is not expected to come into the picture’. Our view was not wrong even though the pace of advance was faster than we expected (USD touched an overnight high of 105.48). Upward momentum has improved, albeit not by all that much. From here, we see room for USD to edge higher but a sustained rise above the major 105.75 resistance is unlikely (next resistance is at 106.00). Support is at 105.10 followed by 104.90.” Next 1-3 weeks: “We have held a negative view in USD since early last week. In our latest narrative from Monday (21 Sep, spot at 104.55), we held the view that USD ‘could dip below 104.16 but oversold conditions suggest that a sustained decline below this level is unlikely’. We added, ‘the weakness in USD appears to be overstretched but only a break of 105.20 (‘strong resistance’ level was previously at 105.50) would indicate that the negative phase has run its course’. USD subsequently dropped to a low of 103.99 before rebounding strongly over the past two days. While 105.20 is still intact, the rapid loss in momentum indicates that the negative phase has run its course. The current movement is viewed as the early stages of a correction phase. From here, USD could edge higher but any advance is viewed as part of 104.25/105.75 range (for now, a sustained rise above 105.75 is not expected).”

Advanced readings for Natural Gas futures markets from CME Group noted open interest extended the erratic performance on Wednesday and shrunk by aroun

Advanced readings for Natural Gas futures markets from CME Group noted open interest extended the erratic performance on Wednesday and shrunk by around 2.6K contracts. Volume, instead, increased by 157.7K contracts, partially fading the previous pullback. Natural Gas: Further upside not ruled outNatural Gas prices regained the $2.00 mark and beyond per MMBtu on Wednesday, advancing more than 15% on the back of prospects for higher demand coupled with disruption fears following the Tropical Storm Beta. That said, extra gains remains on the cards although shrinking open interest could leave the topside somewhat limited in the short-term horizon.

France Business Climate in Manufacturing came in at 96, above forecasts (95) in September

The USD/CAD pair held steady near multi-week tops, with bulls looking to build on the momentum further beyond the 1.3400 round-figure mark. The pair a

A combination of factors assisted USD/CAD to gain some follow-through traction on Thursday.Coronavirus jitters, the prevalent risk-off mood continued benefitted the safe-haven greenback.Sliding crude oil prices undermined the loonie and remained supportive of the positive move.The USD/CAD pair held steady near multi-week tops, with bulls looking to build on the momentum further beyond the 1.3400 round-figure mark. The pair added to the previous day's strong positive move and gained some follow-through traction through the first half of the trading action on Thursday. The uptick was supported by sustained US dollar buying and a weaker tone surrounding crude oil prices, which tend to undermine demand for the commodity-linked currency – the loonie. Worries that the second wave of coronavirus infections threatened to derail the global economic recovery and continued weighing on investors' sentiment, which, in turn, boosted the greenback's safe-haven status. The USD bulls largely shrugged off warnings by various Fed officials, stressing the need for more fiscal stimulus to sustain the recovery. Meanwhile, concerns that the second wave of COVID-19 cases could lead to the return of severe lockdown and travel restrictions dampened prospects of any meaningful recovery in the fuel demand. Jitters over demand and economic outlook weighed on crude oil prices, which fell around 1% on Thursday and remained depressed below the key $40.00 psychological mark. Thursday's US economic docket highlights the release of Initial Weekly Jobless Claims and New Home Sales data. This, along with a scheduled testimony by the Fed Chair Jerome Powell and Treasury Secretary Steven Mnuchin, will influence the USD price dynamics and produce some meaningful trading opportunities later during the North American session. Technical levels to watch  

The kiwi dollar could drop further to the sub-0.6500 area vs. the greenback in the next weeks, suggested FX Strategists at UOB Group. Key Quotes 24-ho

The kiwi dollar could drop further to the sub-0.6500 area vs. the greenback in the next weeks, suggested FX Strategists at UOB Group. Key Quotes 24-hour view: “NZD plummeted to an overnight low of 0.6536 before ending the day on a weak note at 0.6651 (-1.25%). The weakness exceeded our expectation as we were of the view that ‘0.6545 is unlikely to come into the picture’. While deep in oversold territory, the current weakness is yet to show sign of stabilizing. That said, the pace of any further weakness is likely to be slower and the next major support at 0.6490 is unlikely to come under threat (0.6520 is already quite a strong level). Resistance is at 0.6580 followed by 0.6615.” Next 1-3 weeks: “There is not much to add to our update from yesterday (23 Sep, spot at 0.6610). We highlighted that ‘the negative phase has more room to run’ and added, ‘the next support is at 0.6545 followed by 0.6490’. NZD dropped below 0.6545 (overnight low of 0.6536) and the outlook remains weak. From here, the focus is at 0.6490. On the upside, the ‘strong resistance’ level has moved lower to 0.6650 from 0.6720.”

CME Group’s preliminary readings for crude oil futures markets note open interest went up for the second straight session on Wednesday, this time by n

CME Group’s preliminary readings for crude oil futures markets note open interest went up for the second straight session on Wednesday, this time by nearly 11.5K contracts. In the same direction, volume reversed the previous drop and rose by around 27.6K contracts. WTI faces the next support around $38.70 (100-day SMA) Prices of the WTI inched lower on Wednesday in tandem with increasing open interest and volume. That said, there is still room for further decline to, initially, the interim support at the 100-day SMA around $38.70.

Gold’s (XAU/USD) correction from record highs of $2075 has regained traction this week, with the August low of $1863 taken out, thanks to the relentle

Gold’s (XAU/USD) correction from record highs of $2075 has regained traction this week, with the August low of $1863 taken out, thanks to the relentless surge in the US dollar’s safe-haven demand. Global economic recovery worries amid coronavirus resurgence in key economies and central banks’ on hold monetary policy outlooks continue to fuel the dollar’s rally.   The bright metal extends Wednesday’s 2% sell-off this Thursday, down for the fourth day in a row, as bear eye a test of the critical support at $1844.  How is gold positioned on the chart ahead of the US Jobless Claims data and Day 3 of the Fed Chair J. Powell’s testimony. Gold: Key resistances and supports The Technical Confluence tool suggests that gold’s path of least resistance appears to the downside, with immediate soft cushion seen at $1949, which is the previous low on one-hour. The fierce support at $1944, the convergence of the SMA100 one-day, pivot point one-day S1 and Bollinger Band one-hour Lower, is the level to beat for the bears. A fresh sell-off will be triggered on a breach of the latter, opening floors towards the July low of $1806. On the flip side, recapturing the $1863 level with conviction is critical for the recovery to gain momentum. That level is the confluence of the previous month low and pivot point one-month S1. Further north, the buyers will challenge the $1868 hurdle, where the Fibonacci 61.8% one-day and Bollinger Band 15-minutes Upper coincide. The next strong cap sits at $1875, which is the Fibonacci 38.2% one-day. Here is how it looks on the tool About the Confluence Detector The TCI (Technical Confluences Indicator) is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc. Knowing where these congestion points are located is very useful for the trader, and can be used as a basis for different strategies. Learn more about Technical Confluence

In light of the recent price action, Cable could recede to the mid-1.2600s region in the next weeks. Key Quotes 24-hour view: “GBP dropped to a low of

In light of the recent price action, Cable could recede to the mid-1.2600s region in the next weeks. Key Quotes 24-hour view: “GBP dropped to a low of 1.2676 yesterday before rebounding to close little changed at 1.2726 (-0.06%). The price actions were in line with our expectations wherein GBP could weaken further but ‘1.2650 is likely out of reach for now’. While downward momentum has slowed, it is too soon to expect a sustained rebound. For today, GBP could drift downwards but any weakness is viewed as part of lower trading range of 1.2650/1.2760 (a sustained decline below 1.2650 is not expected).” Next 1-3 weeks: “Yesterday (22 Sep, spot at 1.2820), we expected GBP ‘to trade with a downward bias towards 1.2730’ and we highlighted that GBP ‘has to close below this level before further weakness can be expected’. GBP subsequently dropped to 1.2711 before closing at 1.2734. While GBP did not close below 1.2730, downward momentum has improved considerably. In other words, GBP is likely to weaken further. The next support is at 1.2650. The current negative outlook for GBP is deemed as intact as long as it does not move above 1.2860 (‘strong resistance’ level was at 1.2930 yesterday).”

The AUD/USD pair continued losing ground for the fifth consecutive session on Thursday and dived to over two-week lows, around the 0.7030 region. The

AUD/USD witnessed some heavy selling for the fifth consecutive session on Thursday.Renewed coronavirus jitters, the risk-off mood benefitted the safe-haven greenback.Technical selling below the 0.7100 further contributed to the pair’s ongoing downfall.The AUD/USD pair continued losing ground for the fifth consecutive session on Thursday and dived to over two-week lows, around the 0.7030 region. The pair prolonged its recent bearish trajectory and has now retreated over 300 pips from the vicinity of the 0.7345 supply zone amid sustained US dollar buying interest. Renewed concern about the second wave of coronavirus infections continued weighing on investors sentiment and boosted the greenback's status as the global reserve currency. The USD bulls largely shrugged off warnings by various Fed officials on Wednesday, stressing the need for more fiscal stimulus to sustain the economic recovery, instead took cues from the prevalent risk-off environment. The anti-risk flow further weighed on the perceived riskier Australian dollar and contributed to the AUD/USD pair's ongoing slide. Given the overnight breakthrough the 0.7140 horizontal support and a subsequent fall below the 0.7100 round-figure mark, the downfall could further be attributed to some technical selling. Hence, some follow-through weakness towards 100-day SMA, around the key 0.7000 psychological mark, now looks a distinct possibility. Market participants now look forward to the US economic docket, highlighting the release of Initial Weekly Jobless Claims and New Home Sales data. This, along with a scheduled testimony by the Fed Chair Jerome Powell and Treasury Secretary Steven Mnuchin, will influence the USD price dynamics and provide some trading impetus. In the meantime, the broader market risk sentiment and developments surrounding the coronavirus saga will play a key role in driving the AUD/USD pair through the European trading session on Thursday. Technical levels to watch  

Traders increased their open interest positions for the second session in a row on Wednesday, this time by nearly 4K contracts in light of flash data

Traders increased their open interest positions for the second session in a row on Wednesday, this time by nearly 4K contracts in light of flash data from CME Group. In the same line, volume prolonged the choppy performance and rose by 142.2K contracts. Gold faces interim support at $1,825/ozGold prices remain on the defensive amidst rising open interest and volume, opening the door to the continuation of the downtrend in the very near-term. That said, the next interim support emerges at the Fibo level (of the June-August rally) at $1,825.31.

USD/CHF is consolidating its four-day winning streak to two-month highs of 0.9245 amid the ongoing US dollar’s upbeat momentum, as the focus now shift

USD/CHF bounced off key support on the hourly chart after the slump. Hourly RSI rebounds from the oversold region, points north.21-HMA to challenge XAG/USD’s pullback from monthly lows.USD/CHF is consolidating its four-day winning streak to two-month highs of 0.9245 amid the ongoing US dollar’s upbeat momentum, as the focus now shifts towards the Swiss National Bank’s (SNB) quarterly monetary policy assessment, due later on Thursday at 0730 GMT.   The SNB is expected to leave the benchmark sight deposit rate unchanged at -0.75% while maintaining the 3-Month Libor Target Range steady between -1.25% to -0.25%. The central bank is likely to reiterate that it will remain active in the fx markets, despite the recent weakness in the Swiss franc. Short-term technical outlook As observed on the hourly chart, the spot edges north, having managed to hold above the critical 21-daily Simple Moving Average (DMA), currently at 0.9228. The price has formed a Doji candlestick, at the time of writing, suggesting that the buyers are turning cautious ahead of the SNB rate decision. However, the path of least resistance remains to the upside, with the hourly Relative Strength Index (RSI) inching higher above the midline at 58.80. Also, backing the bullish case, the price trades above all major HMAs. The major could test the July 24 high of 0.9260 should the bulls regain control. The next barrier is seen at 0.9300. Alternatively, the 21-HMA support could limit the downside, below which the bears could challenge the intraday lows of 0.9215. Further south, the upward-sloping 50-HMA at 0.9206 could be put to test should the selling pressure intensify. USD/CHF: Hourly chart USD/CHF: Additional levels  

FX Strategists at UOB Group noted that EUR/USD risks a move to 1.1630 ahead of 1.1600 in the next weeks. Key Quotes 24-hour view: “We highlighted yest

FX Strategists at UOB Group noted that EUR/USD risks a move to 1.1630 ahead of 1.1600 in the next weeks. Key Quotes 24-hour view: “We highlighted yesterday that EUR ‘could weaken further but oversold conditions suggest a sustained decline below 1.1660 is unlikely’. We noted that the next support is at 1.1630. The subsequent weakness exceeded our expectation as EUR dropped to a low of 1.1649 before closing on a soft note at 1.1659 (-0.40%). Downward momentum is showing some signs of slowing but there appears to be room for EUR to dip below the major support at 1.1630. For today, the next support at 1.1600 is unlikely to come into the picture. On the upside, a break of 1.1710 would indicate that the current weakness has stabilized (minor resistance is at 1.1685).” Next 1-3 weeks: “We noted yesterday (22 Sep, spot at 1.1765) that the ‘rapid improvement in downward momentum suggests EUR could weaken further towards the next major support at 1.1695’. While our view was correct, we did expect 1.1695 to come into the picture so soon (EUR dropped to an overnight low of 1.1690). Downward momentum has improved further and the risk is still on the downside. From here, the next support is at 1.1630 followed by 1.1600. On the upside, the ‘strong resistance’ level has moved lower to 1.1815 from yesterday’s level of 1.1855. On a shorter-term note, 1.1760 is already quite a strong level.”

Here is what you need to know on Thursday, September 24: The US dollar kept pushing higher, as investors preferred the safety bet to riskier assets am

Here is what you need to know on Thursday, September 24: The US dollar kept pushing higher, as investors preferred the safety bet to riskier assets amid downbeat market mood. Markit’s dismal Preliminary business activity data on both sides of the Atlantic underscored growing risks of the coronavirus resurgence on the nascent global economic recovery.   Skepticism over additional US monetary and fiscal stimulus also weighed on the investors’ sentiment. Asian stocks followed Wall Street lower while the US stock futures resumed the decline after a brief pullback. Risk-aversion fed dollar’s demand rattled the Antipodeans, with AUD/USD the main laggard amongst the G10 currencies The aussie was dumped to fresh two-month lows below 0.7050 amid narrowing AU-US 10-year yield spread, in light of increased calls for the Reserve Bank of Australia (RBA) rate cut as early as the next month. The kiwi also lost ground and headed towards 0.6500. The sell-off in the commodities-complex also collaborated with the declines in the Antipodeans. Gold slipped to the lowest in six weeks just above $1850 while WTI almost tested the $39 mark on mounting demand concerns.EUR/USD refreshed two-month lows at 1.1645 due to fears of intensifying virus spread in the Old Continent, as the number of cases tops 5 million. The euro area economic recovery hopes faltered with mixed PMI reports and deteriorating confidence. The focus, therefore, remains on the German IFO survey.GBP/USD battled 1.2700, having retreated from a temporary bounce from two-month lows to near 1.2775 region.  EU’s Barnier said he is determined to reach a post-Brexit transition trade deal with the UK. Virus risks and slower expansion in the Kingdom’s business activity undermined the sentiment around the pound. The UK reported 6,178 new infections, the biggest daily jump since May.Cryptocurrencies’ licked wounds, with Bitcoin attempting a recovery around $10,300.

GBP/USD sellers await fresh catalysts amid Brexit optimism. Coronavirus concerns, dollar’s demand could cap the cable’s upside. Eyes BOE Bailey’s spe

GBP/USD sellers await fresh catalysts amid Brexit optimism. Coronavirus concerns, dollar’s demand could cap the cable’s upside.Eyes BOE Bailey’s speech, US Jobless Claims and Powell’s testimony.GBP/USD looks to extend its overnight consolidation phase above 1.2700 into Europe, having faded the recovery momentum near 1.2775 region. The cable witnessed a good 100-pips price movement on Wednesday, initially falling to the lowest levels since July 23 at 1.2674, as investors fretted over the UK’s nascent economic recovery after Prime Minister (PM) Boris Johnson’s government announced activity restriction on Tuesday to contain the virus spread. Even so, the Kingdom reported 6,178 new infections, the biggest daily jump since May. Markets witnessed a turnaround in the second half of the day, as buyers returned alongside the renewed optimism on a post-Brexit transition trade deal after the European Union (EU) Chief Brexit Michel Barnier said, “We remain determined to strike a Brexit deal.” However, the bulls failed to sustain the upside as the Preliminary Markit PMIs showed a slower expansion in the business activity in the UK this month. Meanwhile, the US dollar continued to appreciate amid persistent demand for safe-havens, in the wake of rising virus concerns and tumbling US equities.   In the day ahead, the UK CBI Distributive Trades Survey on realized sales will offer some cues to the pound traders. However, the Bank of England (BOE) Governor Andrew Bailey’s speech and US Jobless Claims will be the key highlights while Fed Chair Jerome Powell’s third day of testimony could also draw some attention. GBP/USD: Technical levels “The Doji candle has appeared following a notable sell-off from 1.3483 to 1.2675 and at the 200-day SMA support line. As such, it could be taken to represent seller exhaustion. That said, a bullish reversal would be confirmed if the pair ends Thursday above the Doji candle's high of 1.2777. Alternatively, acceptance below the Doji's low of 1.2675 would imply a continuation of the sell-off from 1.3483,” explains Omkar Godbole, Analyst at FXStreet. GBP/USD: Additional levels    

The spread between the yield on the 10-year Australian and US government bonds fell to 13.8 basis points on Wednesday, the lowest level since April 13

The spread between the yield on the 10-year Australian and US government bonds fell to 13.8 basis points on Wednesday, the lowest level since April 13, according to data source TradingView.  The spread has declined from 31.3 basis points to 13.8 basis points this month. That explains the recent sell-off in AUD/USD. The pair is trading at 0.7048 at press time, the lowest level since July 21, having hit a high of 0.7413 on Sept. 1. The downward move has gathered steam this week amid the US dollar's broad-based recovery rally. AUD/USD has dropped by nearly 300 pips this week alone. The 10-year yield spread is currently seen at 14.2 basis points.  AU-US 10-year yield spread

EUR/USD's options market, which flipped bearish earlier this week, now shows the strongest EUR-negative bias in at least three months. One-month EUR/U

EUR/USD's risk reversals drop to a three-month low on put demand. Put options represent right to sell euros at a predetermined rate. Investors anticipate deeper decline in the common currency. The bulls need a better-than-expected German IFO to stall the sell-off. EUR/USD's options market, which flipped bearish earlier this week, now shows the strongest EUR-negative bias in at least three months.  One-month EUR/USD risk reversals, a gauge of calls to puts on the common currency, fell to -0.30 on Wednesday, the lowest level since June 19, as investors rushed to buy insurance (put options) against weakness in the common currency.  In other words, investors foresee the euro trading under pressure over the next four weeks.  EUR/USD hits two-month low The increased demand for put options, as highlighted by risk reversals, could be attributed to EUR/USD's drop to two-month lows.  The currency pair fell to 1.1651 on Wednesday, the lowest level since July 27, despite a better-than-expected German Manufacturing PMI.  EUR/USD is currently trading near 1.1660, representing a 2.3% decline on a month-to-date basis. The pair has shed more than 200 pips in the last three days on a broad-based US dollar rally.  Technical charts indicate scope for a further slide toward 1.15. However, the common currency may find a floor well above 1.15 if the forward-looking German IFO Expectations Index for September, scheduled for release at 08:00 GMT on Thursday, blows past expectations.  The index is seen rising to 98.00 from August's 97.5. The pair may also take cues from the Business Climate and Current Assessment indices. Later, the focus would shift to the Federal Reserve Chairman Jerome Powell's testimony, speech by the US Treasury Secretary Mnuchin, and the US weekly jobless claims data.  Technical levels  

FX desks continue to offer Australian dollars, pushing AUD/USD to fresh multi-month lows. AUD/USD is now trading at 0.7052, the lowest level since Jul

AUD/USD slips to a fresh multi-month low of 0.7052. The Australian currently has depreciated by over 4% this week. The daily chart shows bearish sentiment is quite strong. FX desks continue to offer Australian dollars, pushing AUD/USD to fresh multi-month lows.  AUD/USD is now trading at 0.7052, the lowest level since July 21. The previous two-month low of 0.7068 was set on Wednesday.  According to Wednesday's big red marubozu candle, the bearish sentiment is quite strong. Marubozu occurs when sellers lead the price action from UTC open to close. The pair has also breached the horizontal support of 0.7076 – the low of the Doji candle created on Aug. 3.  As such, AUD/USD looks set to test the 100-day simple moving average (SMA), currently located at 0.70.  However, readers should note that the hourly and 4-hour chart relative strength indexes are currently reporting oversold conditions with a below-30 print. Hence, a minor bounce of consolidation may be seen before a drop to the 100-day SMA.  A close above the descending 10-day SMA, currently at 0.7229, is needed to invalidate the bearish outlook.  Daily chartTrend: Bearish Technical levels  

While talking to the South Korean President Moon Jae-in on Thursday, Japan’s new Prime Minister (PM) Yoshihide Suga said, “we cannot leave 'severe' re

While talking to the South Korean President Moon Jae-in on Thursday, Japan’s new Prime Minister (PM) Yoshihide Suga said, “we cannot leave 'severe' relations where they are now.” Further comments (via Reuters)“Japan-South Korea cooperation, including with the US, important to deal with North Korea.” “Will continue to seek appropriate behavior from South Korea including in dealing with war-time labor issue.”

While the Turkish Lira has recovered somewhat from the new record low reached early Thursday, the risks remain skewed to the downside. Lira is trading

Lira hit a record low of 7.71 early Thursday. Risk of a balance of payment crisis looms large despite the emergency rate hike. While the Turkish Lira has recovered somewhat from the new record low reached early Thursday, the risks remain skewed to the downside.  Lira is trading at 7.6737 per US dollar at press time, having hit a lifetime low of 7.71 an hour ago. The bounce could be attributed to oversold conditions, given the currency has declined by over 10% this quarter alone and nearly 30% this year.  Moreover, Turkey still faces the risk of a full-blown balance of payment crisis. Indeed, the country's central bank steeply raised interest rates from 13.5% to 16.5% on Wednesday. Even so, Lira fell by nearly 0.4% on Wednesday and reached new record lows today.  The emergency rate hike seems to have conveyed panic to markets. "The central bank rate hike is seen off-limits," popular macro analyst Holger Zscahepitz on Thursday.  As such, the path of least resistance for Lira remains to the downside.   

The USD/CAD pair extends its bullish consolidative mode just shy of the 1.3400 level so far in Thursday’s Asian trading, taking cues from the US dolla

USD/CAD looks to build on Wednesday’s rally. Dollar strength, oil price-weakness remain supportive.Focus shifts to the US macro news, Day 3 of Powell’s testimony.The USD/CAD pair extends its bullish consolidative mode just shy of the 1.3400 level so far in Thursday’s Asian trading, taking cues from the US dollar price action. The spot refreshed six-week highs at 1.3394 in early trades, courtesy of the renewed weakness in oil prices. WTI hit fresh session lows at $39.13, as oil demand concerns returned to the fore amid a faltering economic recovery in the US and Europe. The coronavirus resurgence has cast a shadow on the post-pandemic nascent recovery world-wide, especially after new restrictions and localized lockdowns reimposed in the UK and Europe. Therefore, investors scurried for safety in the US dollar, fuelling its haven demand across the board. The resource-linked Loonie remains undermined by the oil-price weakness while persistent US dollar strength helps keep the buoyant tone intact around the major. The US dollar index sits at the highest levels in eight weeks near 94.40. Attention now turns towards the US Jobless Claims and Housing data for fresh trading impetus. The US dollar dynamics and broader market sentiment will remain the key drivers behind the pair’s price action. Also, of note remains the third day of the US Federal Reserve (Fed) Chair Jerome Powell’s testimony after he pushed for fiscal stimulus a day before. Powell is due to testify on the CARES Act before the Senate Banking Committee later on Thursday. USD/CAD: Technical levels  

GBP/USD created a Doji candle at the confluence of the 200- and 100-day simple moving averages (SMA) on Wednesday. A Doji candle occurs when an asset

GBP/USD charted a Doji candle on Wednesday, neutralizing the immediate bearish outlook. Tuesday's low is now the level to beat for the bears. GBP/USD created a Doji candle at the confluence of the 200- and 100-day simple moving averages (SMA) on Wednesday.  A Doji candle occurs when an asset sees two-way business but ends the day on a flat note. It is considered a sign of indecision.  In GBP/USD's case, the Doji candle has appeared following a notable sell-off from 1.3483 to 1.2675 and at the 200-day SMA support line. As such, it could be taken to represent seller exhaustion.  That said, a bullish reversal would be confirmed if the pair ends Thursday above the Doji candle's high of 1.2777. Alternatively, acceptance below the Doji's low of 1.2675 would imply a continuation of the sell-off from 1.3483.  At press time, the pair is trading at 1.2722, a level housing the 100- and 100-day SMAs.  Daily chartTrend: Neutral Technical levels  

Analysts at Morgan Stanley offered a bearish outlook on iron-ore prices over the next 12 months, in its latest client note. Key quotes “Shipments from

Analysts at Morgan Stanley offered a bearish outlook on iron-ore prices over the next 12 months, in its latest client note. Key quotes “Shipments from Vale increasing and demand from China (steel output) easing.” “China demand eases during the country's winter with slowing construction.” “Some support from China port inventory replenishment.” “Seen Iron-ore prices at 100$/ton in Q4 and dropping to $81 in 2021.” FX implications The bearish iron-ore price forecasts s something to watch out for the aussie traders, implying likely weakness in the Australian dollar going forward. The ferrous metal is Australia’s top export product. AUD/USD was last seen trading at two-month lows of 0.7056, down 0.19% on the day.

West Texas Intermediate (WTI), the North American oil benchmark, is trading largely unchanged on the day near $39.50 at press time, having hit a low o

WTI fades the drop to sub-$39.30 levels for the third consecutive day. The repeated bear failure may entice buyers and yield a bounce. However, Sept. 18 high remains a level to beat for the bulls.West Texas Intermediate (WTI), the North American oil benchmark, is trading largely unchanged on the day near $39.50 at press time, having hit a low of $39.12 an hour ago.  The black gold has found dip demand below $39.30 for the third straight day. While prices fell by 4% on Sept. 21, the sellers could not establish a foothold below $39.00.  The repeated bear failure near $39.00 could invite buying pressure, although the technical outlook would turn bullish only after prices rise above the lower high of $41.72 created on Sept. 18.  Alternatively, a close below $39.00 would shift the focus back to the bearish Doji reversal pattern confirmed by Monday's 4.3% decline and open the doors for a re-test of the Sept. 8 low of $36.13.  Daily chartTrend: Neutral Technical levels  

Silver (XAG/USD) paused its six-day losing streak, having hit fresh nine-week lows of $21.70 in early trades. The bears take a breather after the rece

Silver bounced off key support on the hourly chart after the slump. Hourly RSI rebounds from the oversold region, points north.21-HMA to challenge XAG/USD’s pullback from monthly lows.Silver (XAG/USD) paused its six-day losing streak, having hit fresh nine-week lows of $21.70 in early trades. The bears take a breather after the recent slump, mainly driven by the relentless strength in the US dollar across its main competitors. A flight to safety amid growing fears over coronavirus resurgence and its implications on the global economy bolstered the haven demand for the greenback.   From a short-term technical perspective, the white metal is attempting a minor recovery after meeting strong demand at $21.70, the falling trendline support while the spot wavers in a potential falling channel formation. To the upside, the bulls look to reclaim the critical 21-daily Simple Moving Average (DMA), currently at $23.02, for the recovery to gain momentum. The hourly Relative Strength Index (RSI) has rebounded from within the oversold territory and points higher at 37.20, adding credence to the pullback. A firm break above the 21-HMA barrier could open the door towards the falling trendline resistance at $23.60. The next upside target awaits at the downward-sloping 50-HMA of $23.78. Alternatively, a rejection at the 21-HMA could reinforce the bearish bias, calling for a retest of the falling trendline support. A breach of the last could trigger a fresh sell-off towards the $20 mark. Note that silver trades below all major moving averages on the hourly sticks, suggesting that the bulls to face an uphill task on the road to recovery. XAG/USD: Hourly chart XAG/USD: Additional levels  

“The budget coming up on October 6 will be addressed at a 'unique' recession, said Australian Treasurer Josh Frydenberg while speaking at a news brie

“The budget coming up on October 6 will be addressed at a 'unique' recession, said Australian Treasurer Josh Frydenberg while speaking at a news briefing in Canberra this Thursday. Additional quotes “Strategy is for a focus on a jobs-led recovery.” “Recession will dampen participation, productivity.” “Medium-term budget position to weaken.”  “Australia to have lower level of prices, wages.” 

The NZD/USD bears are taking a breather, having pushed the pair lower by 1.28% on Wednesday. That was the biggest daily decline since Aug. 7 and the t

NZD/USD is consolidating near 0.6550 after Wednesday's 1.28% drop. Kiwi has lost more than 200 pips this week. The bulls remain on the sidelines despite the upbeat New Zealand trade surplus.The NZD/USD bears are taking a breather, having pushed the pair lower by 1.28% on Wednesday. That was the biggest daily decline since Aug. 7 and the third straight consecutive decline.  The recent decline from 0.68 to 0.6536 (overnight low) could be attributed to the broad-based US dollar demand. The greenback picked up a bid earlier this week, tracking risk aversion in the global stock markets and due to relatively less dovish comments by Federal Reserve policymakers.  The Reserve Bank of New Zealand kept interest rates unchanged on Wednesday; however, the status quo decision failed to put a floor under the Kiwi. Similarly, the upbeat New Zealand data released early Thursday has so far failed to impress the Kiwi bulls.  According to Stats NZ, New Zealand's imports fell by more than $1 billion in August 2020, leading to the largest annual trade surplus since 2014. 
While imports declined by 16% in annualized terms, exports increased by 8.6%.  At press time, the pair is trading near 0.550, representing a 0.11% gain on the day.  The daily chart shows a double top bearish reversal pattern. As such, the bias would remain bearish while the pair is held below the double top neckline level of 0.6601 (Sept. 9 low).  The dollar index has broken higher from its two-month range of 92.00 to 94.00. Hence, the US dollar's broad-based recovery rally looks set to continue.  Technical levels  

The People's Bank of China (PBOC) has set the yuan reference rate at 6.8028 versus Wednesday's fix at 6.7986.

The People's Bank of China (PBOC) has set the yuan reference rate at 6.8028 versus Wednesday's fix at 6.7986.

USD/JPY is drawing in attention considering the level it has reached in recent trade since the break of the 105 figure. As per yesterday's analysis, U

USD/JPY is stalling at market structure are bears looking for an opportunity to the downside.Bulls might have some upside to go yet, but the air will be getting thinner at those heights. USD/JPY is drawing in attention considering the level it has reached in recent trade since the break of the 105 figure. As per yesterday's analysis, USD/JPY has run to the 105.40/50s target: Current market The question is, where now? Accoding to the market structure, there is resistance at this juncture which could give rise to a test of support in the lower end of the 105 area: On the other hand, this could be the last dance for the bulls for some time. Failures here will open prospect of a continuation of the deteroration of the pair towards a 103.50 target: DXY has run too far too soon, maybe? However, while this may fit the US elections headge narrative, from a technical standpoint, there are upside arguments for the dollar long term: For the meantime, however, there is room for a correction to that 61.8% fib retracement which would give rise to some downside in USD/JPY. A 5-wave analysis offers some give atthis juncture to a test of 93.59 before 95.50 can be achieved in the DXY. 

Gold could hit a record high above $2,075 before the end of 2020 on the back of uncertainty surrounding the US elections, analysts at Citigroup Inc. w

Gold could hit a record high above $2,075 before the end of 2020 on the back of uncertainty surrounding the US elections, analysts at Citigroup Inc. warned on Wednesday, according to Bloomberg.  Key points The precious metals market is underpricing prospects of the US election outcome delay.  The bank’s forecast implies a surge of more than $200 for bullion futures from Wednesday's price of $1,900. The election “could be an extraordinary catalyst for gold flat price and volatility skew late in the fourth quarter, even though historically there is no clear pattern for gold trading or price volatility into and after the US elections.  The yellow metal rallied from $1,450 to $2,075 in 4-1/2 months to Aug. 7, as unprecedented liquidity injections by major central banks coupled with fears of prolonged coronavirus-led economic downturn strengthened the demand for scarce safe-haven assets.  At press time, gold is trading near $1,860 per ounce. 

EUR/USD closed Wednesday at 1.1670, breaching the 23.6% Fibonacci retracement level of the uptrend from the March low of 1.0623 to the Sept. 1 high of

EUR/USD closed Wednesday below 23.6% Fibonacci retracement of the March to September rally. The daily chart suggests scope for a decline to 1.15. EUR/USD closed Wednesday at 1.1670, breaching the 23.6% Fibonacci retracement level of the uptrend from the March low of 1.0623 to the Sept. 1 high of 1.2011. That Fibonacci level of 1.1687 may now act as resistance.  The pair is currently trading at 1.1670 amid signs of bullish divergence of the hourly chart relative strength index. As such, the pair may challenge resistance levels at 1.1687 to 1.17, before suffering a deeper drop, as suggested by the head-and-shoulders breakdown seen on the daily chart.  The 14-day RSI, too, is reporting a bearish bias with a below-50 print.  Support levels are seen at 1.1495 (March 9 high) and 1.1486 (38.2% Fibonacci retracement).  A close above the head-and-shoulders neckline level of 1.1770 is needed to invalidate the bearish outlook.  Daily chartTrend: Bearish Technical levels  

The Bank of Japan minutes revealed that a few members said prolonged damage to economy from pandemic could lead to solvency problems for some firms, a

The Bank of Japan minutes revealed that a few members said prolonged damage to economy from pandemic could lead to solvency problems for some firms, affect financial system stability.  Members agreed must ease without hesitation if needed, with eye on impact of pandemic on economy.  One member said must examine whether current policy framework was sufficient, act promptly if action was needed.  One member said close, appropriate coordination between fiscal, monetary policies crucial.  Members agreed there was risk financial intermediation could stagnate if financial institutions' profits remain under prolonged strain.  Members agreed there was chance financial system vulnerability might heighten. One member said BoJ must look more deeply into how monetary policy could be shaped in 'with-corona' world. One member said must scrutinise how monetary policy affects business management from medium-term perspective.  Govt representative said hope boj keeps in close contact with govt in achieving early economic recovery via appropriate monetary policy. A few members said must retain cautious view on pace of overseas economic recovery. A few members said must be on alert to risk Japan, other countries, might see a renewed resurgence in coronavirus infections. One member said a resurgence in infections would delay timing of economic recovery. One member said impact of pandemic, if prolonged, could lead to job losses, hurt household income and spending. A few members said prolonged damage to economy from pandemic could lead to solvency problems for some firms, affect financial system stability. The Bank of Japan publishes a study of economic movements in Japan after the actual meeting. These meetings are held to review economic developments inside and outside of Japan and indicate a sign of new fiscal policy. Any changes in this report tend to affect the JPY volatility. Generally speaking, if the BoJ minutes show a hawkish outlook, that is seen as positive (or bullish) for the JPY, while a dovish outlook is seen as negative (or bearish). Market implications There is a growing sentiment of insolvency problems in the market. The bank indexes are bleeding to extraordinarily low levels, such as the KRB. More here: USD/JPY testing bear's commitments at a critical resistance  

GBP/CAD has failed to break out of from the reverse heand and shoulders on the monthly chart and is rejected at a strong level of supply. The price is

GBP/CAD is being rejected at monthly resistance which opens the case for the downside. Bears can be enthused by the restest at the countertrendline resistance but 4HR price action is dubious.GBP/CAD has failed to break out of from the reverse heand and shoulders on the monthly chart and is rejected at a strong level of supply.  The price is making signs for a breakout to the downside on both the weekly and daily chart but there is less conviction on the lower time frame.  The following is s topdown analysis that illustrates the downside bias. Monthly chart The price failed to break the resistance once again which is invakudting the reverse head and shoulders.  Weekly chart The weekly chart shows that there are prospects of a move above the trendline to the prior structure. Weekly chart 38.2% Fib confluence However, there are many confluence of the the 28.2%, the counter trendline and prior nearterm structure.  Daily chart The daily chart has already offered a number of confirmations that the counter trendline and confluence resistance structure is solid on the restest in what appears to the formation of wave-3. 4HR chart reverse head and shoulders risk The 4-hour chart is, however, seeing the price test back above the 21 moving average. The risk here is a formation of the reverse head and shoulders and a break to the upside above structure in choppy conditions.  The price action fro here should be monitored for a test of the recent lows. A break and restest could offer prospects of a bearish setup with a lower target. 

Gold prices have deteriorated in the US dollar's relentless comeback as investors move away from stocks. The price of the dollar is correlated to gold

Gold is on the verge of a correction to give rise to further bearish prospects.Bears will be seeking resistance to hold in a weekly bearish close.Gold prices have deteriorated in the US dollar's relentless comeback as investors move away from stocks.  The price of the dollar is correlated to gold, so it stands to reason that if the dollar is about to tail off its gains, then gold should find reprieve. The following is a top-down analysis of where the price is anticipated to travel between resistance and support structures, offering further opportunities to the downside. The opportunities will arise if the US dollar breaks higher on the monthly and daily charts as illustrated below. Monthly chart The monthly chart shows that the price has seen a heavy rejection fro the highest levels on record. The move has snapped four straight months of gains. Weekly chart The weekly chart is offering prospects of some further room to the downside. Daily chart However, the daily chart is meeting a prior low and a 78.6% Fibonacci retracement.  If the US dollar now stalls, then this could be as about as far as gold will travel for the time being before an upside correction. Bears will be looking for a weekly close below the resistance structure to give rise to further downside opportunities.  As it stands, the DXY could be about to correct the recent bullish leg and be set on the completion of a bullish 5-wave pattern: Monthly bullish DXY outlook

New Zealand Exports down to $4.411B in August from previous $4.912B

New Zealand Trade Balance (YoY) up to $1.34B in August from previous $-0.12B

New Zealand Imports increased to $4.76B in August from previous $4.63B

New Zealand Trade Balance NZD (MoM) fell from previous $282M to $-353M in August

AUD/USD has been in the hands of the bears all the way to a critical support area and the focus now is on the correction pertaining to the USD. At the

AUD/USD is held up on the downside at a critical support structure.The focus is now on whether the US dollar gives back some ground before completing a 5-wave technical move to the upside.AUD/USD has been in the hands of the bears all the way to a critical support area and the focus now is on the correction pertaining to the USD. At the time of writing, AUD/USD is trading at 0.7018 at the start of the new Asian day. Yesterday's latest economic data from Australia showed the damage done from the renewed lockdowns in Melbourne and regional Victoria. The ABS’s preliminary estimate of retail sales for August shows a drop of 4.2% m/m. This doesn’t come as a surprise, and the initial reaction was muted. However, over the course pf the rest of the day, the Aussie buckled on the strength of the greenback. Sales were down 12.6% m/m in Victoria. Spending elsewhere in Australia was down 1.5% m/m. The looming reduction of JobKeeper and JobSeeker payments, as well as the first raft of mortgage deferral expiries, may be keeping households more cautious than they were in previous months, analysts at ANZ bank said.  Risk sentiment supports the bullish case for USD Meanwhile, risk sentiment tumbled again on Wednesday. Wall Street's stocks were more than undoing yesterday's rebound. DXY continued to trek higher (+0.4%), gaining ground vs. all its G10 peers. Commodity currencies led declines with the Aussie now down some 3.75% since the last swing high. AUD/USD & DXY price analysis Meanwhile, from a technical point of view, there is now scope for a short term correction on the charts. First, looking to the DXY, what can we see? We can see a 3-wave move that has the potential to transpire into a 5-wave move.  This gives some breathing space to the Aussie that rhymes perfectly with a correction from the current structure to  a 38.2% Fibonacci retracement as follows: Overall, however, the outlook, from a technical standpoint, is bullish for the greenback: As can be seen, the upside potential for DXY is compelling towards a 61.8% Fibonacci retracement at around 95.50. 

US stocks ended up in the red again on Wednesday and the dollar hit its strongest level in two months.; Invrstors are increasingly concerned by the pr

The Dow Jones Industrial Average lost 525.05 points, or 1.92%.The S&P500 dropped 78.65 points, or 2.37%.The Nasdaq Composite also fell  330.65 points, or 3.02%. US stocks ended up in the red again on Wednesday and the dollar hit its strongest level in two months.; Invrstors are increasingly concerned by the prospects of the lack of stimulus in the run up to the US elections that will clash with flu season and the spread of the coronavirus. The economic outlook is under scrutiny pertaining tot he concerns that new restrictions to counter coronavirus infections will hurt the recovery. Consequently, the Dow Jones Industrial Average lost 525.05 points, or 1.92%, to 26,763.13, while the S&P500 dropped 78.65 points, or 2.37%, to 3,236.92. The Nasdaq Composite also fell  330.65 points, or 3.02%, to 10,632.99.  S&P 500 top movers: Nike Inc (NKE: NYSE) surges to record high above $130Business activity, as per the US preliminary Markit PMI data, has shown a stable measure but will employment softening. The manufacturing PMI was 53.5, as expected, up from 53.1. The services PMI was 54.6, down from 55.0. The composite employment sub-index fell by 0.8 points to 54.1, aligning with other data showing a slowing in job creation. Analysts at ANZ bank noted that Federal Reserve's Chair Jerome Powell said that the economy would likely need more support and that there’s a long way to go to achieve an economic rebound. Vice Chairman Clarida also spoke, saying that the Fed will not “even begin to think about lifting off [rates]… until we actually get observed inflation… equal to 2%,” and that the Fed could keep rates at the current level beyond that. He emphasised that the improvement in inflation is likely years away and that they don’t want just a fleeting glimpse above the target. He also said that additional fiscal support will likely be needed. We also heard from Boston Federal Reserve Presedent Eric Rosengren who was particularly pessimistic:Fed Rosengren: Likely to face a credit crunch toward the end of this year if banks come under stressSP 500 levels      
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