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Daily Market Report
31 Oct 2019

EURUSD

A busy day in the US is finishing as expected, with the US Federal Reserve cutting rates by 25bps, the third cut this year to a 1.50%-1.75% range. The accompanying statement hinted a pause in rate cuts, as the Fed will weight more incoming data before making any other adjustment. The news, while positive, was neither a surprise. Fed’s Chief Powell, in his press conference, offered quite a hawkish stance, saying that the “risks to the economic outlook seem to have moved in a positive direction.” Nevertheless, the dollar was unable to hold on to initial gains, ending the day lower against most major rivals.

 Earlier in the day, US preliminary Q3 Gross Domestic Product beat the market’s expectations, printing 1.9% against the market’s forecast of 1.6%, while the ADP survey showed that the private sector added 125K new jobs in October, better than anticipated, although September reading was downwardly revised from 135K to 93K. In Europe, on the contrary, the October Economic Sentiment Indicator contracted more than anticipated to 100.8, while Consumer Confidence fell to -7.6 as expected. On a positive note, October preliminary German harmonized inflation came in better than expected, up by 0.1% monthly basis and by 0.9% when compared to a year earlier.

This Thursday, Germany will release September Retail Sales, seen up by 0.2% MoM, while the EU will release the preliminary estimate of October Inflation, with the core reading seen steady at 1.0%. The Union will also unveil its Q3 GDP, seen up by a modest 0.1% following a 0.2% advance in Q2. The US will publish September PCE inflation and minor employment-related data, relevant ahead of Friday’s Nonfarm Payroll report.

The EUR/USD pair fell to 1.1079 within Powell’s presser, although ti bounced from the level quickly afterward to reach fresh weekly highs. The pair is currently trading at around 1.1140, bullish according to technical readings in the 4-hour chart, as it’s well above all of its moving averages, while technical indicators aim sharply higher within positive levels. The pair has now scope to defy October high at 1.1179, with further gains likely toward 1.1245 should the dollar remain under pressure.

Support levels: 1.1115 1.1080 1.1065  

Resistance levels: 1.1180 1.1210 1.1245

USDJPY

The USD/JPY pair flirted with August monthly high, trading as high as 109.28 within the Fed event, trimming part of its gains ahead of Wall Street’s close. The pair changed course as the dollar ended up falling with Powell’s pressers, despite generally encouraging, also despite substantial gains in Wall Street.

Japan published this Wednesday, September retail sales figures, which surprised to the upside. According to the official release, Retail Trade surged 7.1% in the month and by 9.1% when compared to a year earlier. Larger Retailer’s Sales was up by 10.0%, largely surpassing the expected 1.7% decline.

During the upcoming Asian session, the focus will be on the Bank of Japan, as policymakers will unveil its latest decision on monetary policy. Policymakers have hinted that they are willing to add to their massive stimulus program as inflation remains stagnated far below their 2.0% goal. Still, it’s unclear whether they will act this time, or wait to see the effects of the Fed’s decision. The country will also release September Industrial Production and housing data, and the October Consumer Confidence Index, this last foreseen at 35.5 vs the previous 35.6.

 The USD/JPY pair is trading at around  108.75, and the 4 hours chart shows that the pair is ending the day just below a mild-bullish 20 SMA that lend support ever since the previous week. Technical indicators turned south, entering negative territory, although lacking momentum enough to confirm further slides ahead.  The level to watch is 108.60 as stops are suspected below it, and if those got triggered, chances are of a continued decline throughout the Asian session.

Support levels: 108.60 108.25 108.00

Resistance levels: 109.00 109.35 109.70

GBPUSD

The GBP/USD pair has remained in consolidative mode this Wednesday, advancing up 1.2907. The UK House of Commons voted in favor of a general election on December 12. Meanwhile, EU’s Chief Barnier said that the risk of a no.deal Brexit still exists, noting that it could happen at the end of January. Late in the US afternoon, reports made the rounds indicating that the Brexit Party is considering pulling out of hundreds of seats to boost Tories. Also, the House of Lords debated the General Election Bill, approving the first hurdle for PM Johnson’s early election bill, as expected. The latest headlines helped GBP/USD to bounce from the 1.2850 area back toward daily highs.

The pair ignored the market’s sentiment and upbeat US data, retreating just modestly from the mentioned high. The UK didn’t release any relevant data, and this Thursday, it will publish the GFK Consumer Confidence Survey for October, seen at -13 from the previous -12.

The GBP/USD pair is trading at the upper end of its recent range, battling to sustain gains above the 1.2900 level. The technical picture didn’t change much, with the pair developing above the 23.6% retracement of its latest bullish run, but unable to post solid gains beyond it. In the 4-hour chart, the pair has hell above a flat 20 SMA, while technical indicators barely advanced within positive ground. The risk remains skewed to the downside, despite the lack of follow-through.

Support levels: 1.2850 1.2810 1.2785  

Resistance levels: 1.2920 1.2965 1.3000

AUDUSD

The Australian dollar was among the best performers over the last 24 hours, rising toward its monthly high against its American rival. The pair is currently trading at around  0.6875, as Australian inflation ticked higher in Q3, while equities edged higher post-Fed, lending support to the pair. Australia released quarterly inflation figures at the beginning of the day, with the cost of living up by 1.7% in the three-month to September, meeting the market’s expectations and slightly above the previous. HIA New Home Sales were up by 5.7% in September, worse than the expected 33.7% and below the previous 7.3%.

In the US-China trade relationship front, hopes faded after Chilean President announced the cancellation of the APEC meeting. Nevertheless, US President Trump later said that he still hopes to sign a trade agreement with Chinese President Xi Jinping next month.

This Thursday, Australia will release Private Sector Credit and Building Permits for September. More relevantly, China will release the official October Manufacturing PMI, seen at 49.8, and the Non-Manufacturing index, seen at 53.9 from 53.7 previously.

The AUD/USD pair is trading at 0.6891, its highest since last May. The short-term picture for the pair is bullish, as, in the 4-hour chart, it bounced sharply from a bullish 20 SMA, while technical indicators maintain their strong upward slopes, now nearing overbought levels. The 0.6900 figure won’t be an easy bone to break, yet the pair could challenge sellers around it on better-than-expected Chinese data.

Support levels: 0.6840 0.6800 0.6770  

Resistance levels: 0.6900 0.6930 0.6965

 

 

GOLD

FED finally delivered what the markets expected cut its interest rate by 25 bp from %2 ,00 to %1,75. This rate cut is the third leg of the change in FED’s monetary policy which was highly criticized by President Trump. While no extra rate cut is expected for the rest of the year, the first possible rate cut of 2020 is expected in the March meeting. On the other hand, the US GDP  in the Q3 expanded 1.9% on a yearly basis following the 2% recorded in the second quarter and beat the market expectation of 1.6%. While the markets focused on the FOMC and the Q3 GDP in the US, also developments on the trade wars side were on the headlines. The US Treasury Sec. Mnuchin told to Reuters today that no trip planned to Beijing for more in-person talks and phone calls have been productive and will continue. He also stated that they are encouraged by the Chinese vice commerce minister's comments on planned market openings, removal of certain investment restrictions.

Gold is trying to test and break important physiological level at 1.500$ at the time of writing, although the yellow metal reacted the much-awaited rate cut from FED with a test of 1.482$. The daily RSI(14) is still hovering around 50 zone.  On the topside, the resistances are lined at 1.496$ (1.557$-1.459$ %38.2) and 1.508$ (1.557$-1.459$ %50.0) while below 1.488$ (1.266$-1.557$ %23.6), the first support can be watched at 1.482$ (1.557$-1.459$ %23.6).

Support Levels: 1.488$ 1.482$ 1.459$

Resistance Levels: 1.496$ 1.508$1.519$

 

SILVER

Apart from the macroeconomic developments, Silver continues to shine after the uptrend retraced back to 17$ zone. Along with Gold, Silver also has a big demand physically in India and the import of Silver jumped 72% from a year earlier to 543.21 tons in August, according to the latest available data from India’s trade ministry while Gold crashed by an amount to 32.1 tons, which is the lowest in three years, as the record-high Gold prices cut the demand in the world’s second-biggest consumer of the metal. On the other hand, Silver is more affordable than Gold which makes the metal more tradeable on the markets. 

With the first reaction to FED’s final rate cut for 2019 Silver tested 17.80 level. Still eager to break the 18$ psychological level, with a clear break Silver can test 18.38$ (%23.6 14.29$-19.65$) and 18.70$. Below17.60$ which is the %38.20 level of 14.29$ and 19.64$ move, the first support is located at  16.97$ (%50.0 14.29$-19.65$) and 16.33$ (%61.8 14.29$-19.65$).

Support Levels: 17.60$ 16.97$ 16.33$

Resistance Levels: 18.38$ 19.00$ 19.64$

 

CRUDE WTI

While the markets were busy with the US Q3 GDP and FOMC, WTI continued its strong downtrend ignoring the better than expected API and rise in oil supplies for the US crude. The weekly Crude Oil Stock report from the American Petroleum Institute (API) survey resulted that the inventory figure for the week ended on October 25 dropped from 4.45 million barrels to 0.592 million barrels. On the other hand, the US crude oil supplies unexpectedly went up by nearly 5.7M barrels last week. Also, Weekly Distillate Stocks shrunk by 1.032M barrels and Gasoline inventories dropped by 3.037M barrels, bettering forecasts. Furthermore, inventories at Cushing rose by 1.572M barrels, adding to last week’s 1.506M barrels build. The news circulating that Saudi Arabia might cut its oil output due to a report published by the IEA also put extra selling pressure over WTI. On Friday driller Baker Hughes will publish its weekly report on the US oil rig count.

Oil is keeping its losses for the third consecutive day below 55$ with a -%1.45 daily loss at the time of writing. The daily RSI(14) lost its momentum and now testing 50 mark with a clear downtrend. The first support stands at 53.98$ (63.33$-51.03$ %23.60) and below that, a test of 50.54$ (76.88$-42.40$ %23.60) can be followed as this level is tested a couple of times since June. Above 55.57$ (76.88$-42.40$ %38.20), the first resistance can be followed at 57.13$ (63.33$-51.03$ %38.20).

Support Levels: 53.93$ 51.03$ 50.54$

Resistance Levels: 55.57$ 57.13$ 58.63$

 

DOW JONES

While the markets are focused on the big headlines today, the third rate cute from the FED was nothing more than just an already priced event. As expected, the FED cut rates by 25 bp from %2,00 to %1,75. Earlier today the US Bureau of Economic Analysis' first estimate on Wednesday showed that the economy is expected to expand by 1.9% in the third quarter, compared to analysts estimate of 1.6%, following the second quarter's reading of 2%. Despite better than expected growth data, the markets failed to give a positive reaction. Next up, the markets will focus on the US labour data set with personal consumption expenditures and non-farm payrolls data on Friday.

Dow Jones kept its trading range as the FED outcome was highly-priced in the markets. Trying to hold 27.000 mark, the index is waiting for another catalyst to continue its move up to an all-time high level.  With a close over 27.000, the index can first try to break its all-time high level at 27.398. On the top side, 27.770 and 28.400 can be followed as new record highs. Below the 26.757 (24.680-27.398 %23.60) the supports can be found at 26.360  (24.680-27.398 %38.20) and 26.000 (24.680-27.398 %50.00).

Support Levels: 26.757 26.360 26.000

Resistance Levels: 27.398 27.770 28.400

 

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* All the Moving Average support and resistance levels are dynamic by nature. Means when the price approaches the Moving averages, slight variation occurs in the forecasted Moving Average support and resistance levels. Previous few days’ intraday levels are also signicant while trading the current day as the price tend to hover around these levels for some time. Levels in red indicate strong, critical or vital.

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