For a long time, traders considered American Non-farm Payrolls (NFP) the most important release in the market. However, the situation has changed. Now US CPI moves financial markets.
Trading plan for October 17
The main focus for tomorrow will be on the EU Brexit Summit. Although the British Prime Minister Theresa May is certain about reaching the deal, the opinions from different European policymakers are quite mixed. The Northern Irish border issue is still unclear. If the parties reach an agreement tomorrow, this will have a positive impact on the GBP. Otherwise, the price of the currency will fall. We will keep you updated on the situation.
In other news for the GBP, the level of CPI will be released at 11:30 Metatrader time. The expected level is 2.6%. If the actual data overcomes the forecast, the GBP will be supported. However, the Brexit tensions play more important role for the British currency for now.
The most important event for the USD will be the Federal open market committee meeting minutes. During the meeting, they will tell about the reasons for the previous decision and we can anticipate clues on the future rate hike. Recent talks about the "neutral rate" and Trump’s criticism of the Fed's policy make this meeting even more important for the USD.
From the charts:
GBP/USD traders anticipate tomorrow Brexit summit. On a daily chart, the pair is moving up to the resistance at 1.3263. In case of the positive outcome on Brexit, the price can cross this resistance and move upwards to the next target at 1.3375. If the decision is not made, the bearish pressure will move the price below the support at 1.3146 to the next support at 1.31 (100-day MA).
As for the USD index, on a daily chart, the price is testing the support at 94.68 (100-day MA). The next support will be at 94.45. Positive news concerning the USD will let the USD index stick above 94.68. The next resistance is at 95. In case of negative news, risks of the fall below 94.45 will increase.
EUR/USD rises due to the final approval of the Italian budget. For now the pair is testing the resistance at 1.1585 (50-day MA). If the USD is weak, the pair will be able to break the resistance at 1.1635. If the USD is supported tomorrow, the pair will move downwards to the support at 1.1533.
The higher prices seen today are generally related to the pandemic, that’s no doubt. US consumer prices jumped in October at the fastest pace in three decades putting the Biden administration on the defensive and increasing prospects that the Federal Reserve will raise interest rates next year. Jerome Powell says Fed will discuss speeding up bond-buying taper at the December meeting. What does it mean for markets?
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