The EUR/USD remained unchanged trading around the same levels after the release of the FOMC Meeting Minutes.
Although, the euro strengthened slightly after the release of the European Zone economic sentiment which increased to 11.0 last month (previous 4.1, expected 4.3).
The U.S. Commerce Department announced that the number of building permits issued last month increased by 4.8% to 1.080 million units from September's revised total of 1.031 million. This prevented the USD from continuing its rally.
For the time being, the EUR/USD pair is trapped between uncertain U.S. economic data and the possibility of the recession threatening Europe.
Below are the major Resistance (R) & Support (S) levels of the EUR/USD:
S2 1.2404
S1 1.2478
Pivot Point 1.2535
R1 1.2606
R2 1.2655
Today is a very busy business day full of major releases. Starting with China, the Chinese HSBC Manufacturing PMI is scheduled for release. It’s a composite indicator designed to provide an overall view of the activity in the manufacturing sector and acts as a leading indicator for the whole economy.
When the PMI is below 50.0, this indicates that the manufacturing economy is declining, while a value above 50.0 indicates an expansion in the manufacturing economy.
The Chinese HSBC Manufacturing PMI is concluded from a monthly survey of about 430 purchasing managers; asking respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries and inventories.
Forecast: 50.3
Previous: 50.4
A higher than expected reading should be taken as positive for the CNY, while a lower than expected reading should be taken as negative for the CNY.
Moving to Europe, especially to Germany, the economic engine of Europe, the German Manufacturing Purchasing Managers' Index (PMI) will be released; measuring the activity level of purchasing managers in the manufacturing sector.
Traders watch these surveys closely as purchasing managers usually have early access to data about their company’s performance, which can be a leading indicator of the overall economic performance.
Forecast: 51.5
Previous: 51.4
A higher than expected reading should be taken as positive for the EUR, while a lower than expected reading should be taken as negative for the EUR.
As for the UK, the Retail Sales announcement is scheduled for release today; measuring the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of the overall economic activity.
Forecast: 0.4%
Previous: -0.3%
A higher than expected reading should be taken as positive for the GBP, while a lower than expected reading should be taken as negative for the GBP.
And from the U.S., the Core Consumer Price Index (CPI) will be released; measuring the changes in the price of goods and services, excluding food and energy, from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.
Forecast: 0.2%
Previous: 0.1%
A higher than expected reading should be taken as positive for the USD, while a lower than expected reading should be taken as negative for the USD.
Staying in the U.S., the Existing Home Sales report will be released; measuring the change in the annualized number of the existing residential buildings that were sold during the previous month. This report helps to gauge the strength of the U.S. housing market and is a key indicator of the overall economic strength.
Forecast: 5.15 M
Previous: 5.17 M
A higher than expected reading should be taken as positive for the USD, while a lower than expected reading should be taken as negative for the USD.
We will also be awaiting the release of the Philadelphia Federal Reserve Manufacturing Index, which rates the relative level of general business conditions in Philadelphia. A level above zero indicates improving conditions, while a level below zero indicates worsening conditions. The data is compiled from a survey of about 250 manufacturers in the Philadelphia Federal Reserve district.
Forecast: 18.5
Previous: 20.7
A higher than expected reading should be taken as positive for the USD, while a lower than expected reading should be taken as negative for the USD.
The U.S. Consumer Price Index (CPI) is also scheduled for release later today. It measures the change in the price of goods and services from the perspective of the consumer. It is a key way to measure the changes in the purchasing trends and the inflation in the metropolitan area of Cleveland.
The impact on the currency may go both ways; a rise in the CPI may lead to a rise in the interest rates and the local currency; on the other hand, during recession, a rise in the CPI may lead to a deepened recession and therefore a fall in the local currency.
Forecast: N/A
Previous: 0.1%
Finally, the U.S. Treasury announcement will be released; issuing Treasury Inflation-Protected Securities (TIPS) since 1997. The TIPS provide investors with protection against inflation, as the principal consists of increasing the TIPS with inflation and decreasing it with deflation. The Treasury sells these securities at regularly scheduled auctions. Competitive bids at these single-price auctions determine the interest rate paid on each issue, which remains fixed.
Forecast: N/A
Previous: 0.610%
We wish you luck in your trading activities. For any further assistance, please do not hesitate to contact us at analysis@ICMCapital.co.uk
Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance.
Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader.
Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.
Engaging in CFDs or Spot FX carries a high risk to your capital. You should not engage in this form of investing unless you understand the nature of the Transaction you are entering into and the true extent of your exposure to the risk of loss.
Your profit and loss will vary according to the extent of the fluctuations in the price of the underlying markets on which the trade is based.