The US dollar has broken through the key resistance, it failed to cross since March so far. Riskier assets are dipping. Let’s discuss it in detail.
News to trade on October 18
- Yesterday in Brussels the EU leaders declined the plans for the November summit as not enough progress on Brexit was made. Despite the British Prime Minister Theresa May's arguments, the EU started to prepare for a "hard" or "no-deal" Brexit. As a result, the GBP fell.
Today's focus is again on the British currency. The level of retail sales fell by 0.8%. At the moment GBP/USD is testing the support at 1.3094 (100-day MA). If there is more positive news concerning Brexit, the GBP will be supported. In that case, the pair can move up to the resistance at 1.3146.
- The unemployment rate in Australia was released today. It fell to 5.0%. However, employment change published at the same time showed a lower-than-expected level of 5600 people in September. For now, AUD/USD is trading in the green zone. The next target resistance is at 0.7152. If the USD is strong, the pair can move in the opposite direction. If it happens, the support is at 0.7096.
- The Bank of Japan (BOJ) Governor Mr. Kuroda made his speech at a branch manager's meeting today. According to his words, the short-term and long-term interest rates will be kept at the current lowest levels for as long as necessary. Consumer inflation keeps floating around 1%. The overall conditions of the financial system of Japan remain stable. The current targets of the BOJ include managing the yields to achieve the inflation of 2% and expanding the monetary base until consumer inflation is held above 2%.
In addition, the trade balance of Japan showed a surplus of 139.6 billion yen, while the deficit of -45.1 billion yen was expected. As a result, today USD/JPY is declining. The pair is moving downwards to the support at 111.90 (50-day MA). If there is any positive news concerning the USD, it will encourage the bulls to break the resistance at 112.65 and move up to the next resistance at 113.47.
- Yesterday the Federal Reserve made some hawkish comments during the Federal open market committee (FOMC) meeting minutes. In addition, the US Treasury did not consider China as a currency manipulator. According to the report, China does little to directly support the value of Chinese yuan. However, it listed the US trade war opponent on a watch list. At the time, USD/CNH is trading at its summer's highs. The next resistance is at 6.9522. If the USD weakens, the support is at 6.91.
Follow us for more news!
China's industrial rebound, progress in US fiscal stimulus and other important news in this article.
The market sentiment is mixed as investors weigh US stimulus package against the rising infections and worse-than-expected US unemployment claims. Jump in for fresh analysis of EUR/USD, USD/JPY, S&P 500 and gold!
US Initial jobless claims will be announced on Thursday at 15:30 MT time.