The market sentiment is mixed, but there are still interesting movements on the market.
Fundamentals
- The UK government prolonged the deadline for the end of Brexit talks, which previously was scheduled for October 15. EU-UK negotiators haven’t made any progress so far, but a spirit of compromise and the expectation for a soon agreement underpinned the pound.
- US Core Producer Price Index came out better than analysts expected: 0.4% vs. the forecast of 0.2%.
- The morning Australian labor data was encouraging. The unemployment rate rose by 6.9%, which was less than the anticipated 7.0%. However, the aussie dipped on dovish RBA expectations as the central bank is planning to cut rates to 0.10% from the current record low of 0.25%. In addition, Goldman Sachs forecasted the RBA will ease the stimulus package at the November 3 meeting.
- The Chinese CPI and PPI came out worse than analysts expected, pushing USD/CNH upwards.
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Technical tips
EUR/USD
EUR/USD is headed up after a huge slump. The move above the 38.2% Fibonacci retracement level of 1.1765 will push the price to the 200-period moving average of 1.1790, which coincides with the 50 moving average on the daily chart. On the flip side, the move below the 100-period moving average of 1.1730 will push the euro lower to the 23.6% Fibo level of 1.1705. Keep an eye on EU news as there will be today the EU summit meeting and a speech of ECB’s President Lagarde.
Gold
XAU/USD has been trading in an ascending channel since late September. Now gold is touching its bottom, that’s why we may expect the price to reverse from it and move upwards. If it closes above $1 900, the way towards the resistance of $1 920 will be open. Support levels are $1 890 and $1 875.
S&P 500
The stock index is sharply falling. It has just crossed the support of $3 470, clearing the way towards $3 445. The move below this level will open doors to the key psychological mark of $3 400, which S&P 500 has failed to break a few times in September. Resistance levels are $3 500 and $3 520.
GBP/USD
The British pound is trading sideways around 1.3000. If it bounces off it, it may jump to the 50.0% Fibonacci level, where the pair may meet the strong resistance. On the flip side, the move below the area of 1.2980-1.3000 will push the price to the 100-period moving average of 1.2900.
Follow up:
- US Philly Fed Manufacturing Index and unemployment claims will be out at 15:30 MT time.
- ECB’s Lagarde will speak at 19:00 MT time.