News on October 10

The US will impose tariffs on additional $267 billion of Chinese goods if China retaliates, according to Trump's words. It seems like countries are not ready for a trade deal as several meetings of China and the US have already been canceled. In addition, White House CEA Chair Mr. Hassett compared tariffs with taxes. He also said the budget deficit of the US is higher than anyone would expect.

In other news for the USD, Trump said he did not like the Fed policy concerning rates. In his opinion, the interest rate hikes are not necessary as the country does not have problems with inflation. However, he did not talk to Fed Chair Powell on this topic.

As a result of this news, the USD index dropped yesterday to the support at 95.23. Up to now, the currency is stabilizing. The level of PPI which will be released today at 15:30 MT time can affect the currency too. It's expected to increase by 0.2%. If the actual data overcomes the forecast, the USD will be supported. In that case, the resistance is at 95.85. If the released figures are lower, the USD will fall back to the support at 95.23.

The UK Brexit minister Mr. Raab made a speech yesterday. He said that the negotiations with the EU have taken a new level. He also added that an agreement could be reached by the end of autumn. However, a no-deal scenario is also possible, according to his words. Britain is planning to protect its interests and is not signing any agreement on the customs union with the backstop. As expected, the deadline for the decision was set on the October EU summit.

At the same time, Irish foreign minister added confidence of a Brexit deal on the border. He thinks that evidence on the deal become more certain in the next 6 weeks. As a result, the British pound rose. Monthly GDP growth and manufacturing production that were released today moved GBP/USD down a little as the figures came out lower than expected. On H1, the pair declined immediately after the release. However, the Brexit deal has a stronger impact on the pair. As a result, the pair managed to recover. If there is more news or statements, concerning the Brexit decision on the Irish border, the GBP will be supported. In that situation, the resistance is at 1.3182. If the US dollar is stronger after the economic release, there are risks of the fall to the support at 1.31.

Producers in the Gulf of Mexico decreased their production yesterday. After the news, Brent managed to cross the resistance at $84.43, while WTI tested the resistance at $74.71. According to the US Energy Information Administration’s (EIA) ‘Today in Energy’ report, the US continues to increase its crude oil production. This news affected the oil, as Brent fell down to the support at $84.43 and WTI is struggling to cross the resistance at $74.71. Crude oil inventories release tomorrow at 18:00 MT time may determine the direction of crude’s prices.

Financial minister of Italy Giovanni Tria said the government bad forecasts for the economy were approved by the budget commission. His comments brought uncertainties to EUR/USD, which resulted in doji candlestick. Today bulls tried to move the pair to the resistance at 1.1535, however, the strong US dollar did not allow it to increase. For now, the pair is moving down to the support at 1.1446.

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FBS Analyst Team

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