Will the pound keep standing?
Services and Manufacturing PMIs are out on Wednesday at 11:30 MT time.
News to trade on October 24
- The Bank of Canada (BOC) is anticipated to increase the interest rate by 25 basis points today at 17:00 MT time. If it happens, it will be the third rate hike this year. One of the main goals behind this policy of the BOC is to return the nation’s low borrowing costs to the normal levels. In addition, the final trade agreement between the US, Mexico and Canada (the USMCA) ended uncertainty in the monetary policy course of the central bank.
At the moment, USD/CAD experiences strong tensions between buyers and sellers. The pair is trading above the 100-day MA at 1.3067. If the BOC approves the higher rate, the pair will fall below the Pivot support at 1.3050 to the next support at 1.3011 (50-day MA). Otherwise, the pair will move up to the resistance of the downward channel at 1.3117.
- The National Development and Reform Commission of China announced measures to support the Chinese economy and lift the local stock markets. These measures include stabilizations of the jobs in the regions affected by the US-China trade war and the approval of $100.6 billion in fixed asset investment projects at the beginning of 2019.
This news supported the Australian dollar. As a result, AUD/USD moved up towards the resistance at 0.7121. However, the strong US dollar pushes the pair back below the support at 0.7083, downwards to the next support at 0.7050.
- The European Union leadership declined the Italian draft budget proposal yesterday in Brussels. The Commission noted that Italy is moving against the commitments it made. Moreover, the European commissioner Pierre Moscovici expressed his opinion the high Italian public debt would not go down in the next 2 years. This news resulted in the fall of the EUR. For now, EUR/USD is testing the support at 1.1421. Further uncertainties may push the pair to the next support at 1.1331. If the EU makes some positive forecasts on the Italian budget, EUR/USD will rise to the resistance at 1.1521.
- According to the leaked version of the UK Prime Minister Theresa May Brexit plan, the transition period of the country could last until 2020. As the result, GBP/USD fell below the support at 1.2970. Further negative news on Brexit uncertainties will move the pair below the next support at 1.2877. If there are any positive comments regarding the solution on the Irish backstop, the GBP will rise above the resistance at 1.3013 (50-day MA).
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