The Fed is ready to start tapering in November. Since the markets were expecting this and it wasn’t a surprise, the USD slumped allowing risk-on currencies and gold to rally up.
Vaccine hopes vs. Covid-19 resurgence
The market sentiment is mixed, and the US dollar is trading near the lowest levels for over two years. Let’s have a look at the main market movements today.
- Pfizer held the final trial and announced that its vaccine is 95% effective. The company will apply for the first US regulatory authorization this week.
- However, the tug-of-war between vaccine hopes and the Covid-19 resurgence continues. Europe and the USA have imposed fresh social distancing restrictions. Just yesterday New York shut down schools, and that pushed the S&P 500 even lower.
- Australia’s labor market is on the way to recovery. Employment change and the jobless rate were better than expected. However, AUD/USD is dipping, despite the optimistic data.
- Good news for the UK: EU Trade Commissioner claimed that the Brexit deal is in the last moments to be reached. Elsewhere, UK’s inflation data beat estimates yesterday and that added tailwinds to the GBP as well.
- Pay attention to the releases of the US data and Lagarde’s speech as it will impact most of the pairs!
EUR/USD has been nicely supported by the 50-period moving average so far, so we can assume that the pair can bounce off it and jump higher to the 1.1890-1.1900 area, where we can await the pullback. If it manages to break it, the way to 1.2000 will be clear. In the opposite scenario, if it drops below the 50-period moving average of 1.1835, it may fall to the next support of 1.18000.
Fundamentals are positive for the pound, and GBP/USD is approaching the support of the 50-period moving average, so perhaps it should reverse and rally up. There is a strong resistance at the 1.3290-1.3300 zone. If it manages to break it, the way to the next round number of 1.3350 will be clear.
XAU/USD is trading near the strong support of $1 860, which it has failed to cross several times already. Therefore, gold may turn to the upside and rise till it reaches the resistance of $1 880. However, if it breaks through $1 860, it may fall to September’s dips of $1 850.
The S&P 500 has fallen below the 50-period moving average, and now it’s trying to regain its losses. If it jumps above the resistance of 3 590, the way up to 3 630 will be open. Support levels are 3 560 and 3 460.
US Retail Sales will be out on October 15 at 15:30 MetaTrader time (GMT+3).
The crypto market keeps recovering. Bitcoin has broken above $57,000. The way up to $60,000 is open now!
The US dollar is heading to close the seventh day in the red as it remains under selling pressure. The US data at 15:30 GMT+3 (jobless claims and Philly Fed Manufacturing Index) may support the greenback if it's strong.
Canada will publish the Retail Sales and Core Retail Sales on October 22, at 15:30 MT time (GMT+3).
The United States will release the weekly Unemployment Claims on October 21, at 15:30 MT time (GMT+3).