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Dollar falls against other majors as markets’ attention turns to the US Retail Sales, FOMC minutes’ releases for guidance
MORNING BRIEF
The US Dollar had a mild retreat yesterday against its major counterparts as investors are preparing for today’s important news releases. The Euro rose versus the buck at 1.3580 while the Pound continued to hover around the 1.6100 area looking for direction. It has been a quiet week so far regarding news coming from the US and market participants were guided by the delayed tapering chatter. But all that changes now this the Retail Sales and FOMC minutes release scheduled for today. The Retail Sales is an important announcement to focus on as it will play a major role on assessing whether tapering this year is still an option. Analysts are citing a slight increase in Sales and if they prove to be correct Dollar will receive some support ahead of the FOMC minutes release. We would like to take a look at the minutes from the recent FOMC meeting and compare the recent views expressed from Janet Yellen and other policymakers calling for a delayed tapering with what the current Fed voters discussed over this matter. On the Euro front, the Single currency was lifted yesterday following a positive printing of the ZEW survey and this is still the first of the three major news releases we’re expecting this week. Should the IFO survey and PMI reports prove to be positive as well then we expect the European currency to clear above the 1.3600 barrier and look for even higher levels. Last, the Pound remained range-bound against the Dollar forming a sideways pattern around 1.6100. With no Pound related news this week the UK currency is mostly influenced by Dollar flows and it appears unwilling to take a direction at this point. The exit from this sideways formation will show us what’s next for the Pound and we’re very eager to see what’s that.
US Retail Sales and FOMC minutes to provide direction to the markets
the US Advance Retail Sales are scheduled for release and analysts are calling for a steady or slightly positive printing. If this proves to be right then we could see the Dollar getting a moderate relief rally but we always need to be prepared for a surprise printing that could send the buck either way. Later in the day, the minutes from the recent FOMC meeting are also set for release and they will provide very useful information for us. We remind you that during the recent meeting the FOMC members sounded open to the idea of early tapering even within 2013 and the Dollar skyrocketed on these news. After that, Yellen’s speech downplayed such a possibility but still we’d like to see for ourselves how much optimism was shared among the voting members during their meeting. Lastly, the BoE minutes are also scheduled for release early this morning but we’ve left this event for last as we expect nothing new to come out of this reading as all the important information were also released with the Bank’s Inflation Report.
Economic Calendar
|
Time |
Currency |
Event |
Importance |
Forecast |
Previous |
|
9.30 |
GBP |
Bank of England minutes |
High |
||
|
13.30 |
USD |
Advance Retail Sales |
High |
0.0% |
-0.1% |
|
13.30 |
USD |
Consumer Price Index |
High |
1.0% |
1.2% |
|
19.00 |
USD |
FOMC Oct.29-30 meeting minutes |
High |
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TECHNICAL ANALYSIS & LEVELS
EUR/USD
Euro tested the 1.3500 support area yesterday only to climb higher during the US and Asian sessions. Our stops placed at the 1.3490 area were nearly hit but thankfully the currency stopped its retreat a few pips above our stop orders and moved on to hit our second target placed at the 1.3550 area completing our last trade suggestion. For today, we’d like to stand aside and let the currency breathe a bit before we enter again. We predict that a moderate retracement might occur as the pair has been on an extended uptrend for some time now. We’d like to see whether this occurs and if so we’d like to rejoin the trend upwards if it prints new highs.
GBP/USD
The Pound remained unchanged yesterday and was capped below the 1.6150 resistance. As mentioned yesterday, if the UK currency prints a new high above the 1.6150 area we’d like to enter long and target the 1.6190 and 1.6250 marks with a stop placed below the 1.6080 support. However, this sideways formation could prove to be a reversal pattern thus we’d like to be prepared for the chance that the Pound breaks downwards. The critical level here is the 1.6055 and a breach below that will lead us towards the 1.6000 and 1.5920 marks, with a stop placed above the 1.6150 resistance. On either case please be careful and wait for a clear break of either level prior to placing a trade.
FTSE 100
The FTSE 100 appears to be pointing lower and we’d like to try and get on this trend. We favor a short entry just below the 6,670 area with targets coming at the 6,650 and 6,620 areas and a stop placed above the 6,710 resistance. The UK index seems to have concluded its retracement higher and we believe that a new swing lower is approaching.
Gold
Gold settled around the $1,275 area and has formed a sideways formation. The exit from this formation will lead us to our next targets thus we have two scenarios planned: a breach above the $1,279 resistance will open up targets at the $1,284 and $1,294 areas and this trade should be protected with a stop placed below the $1,269 support. On the other hand, a break below the $1,269 area will be followed with a short trade targeting the $1,263 and $1,254 areas, a stop needs to be placed just above the $1,279 resistance.
All charts have been created using FXCM’s Trading Station platform.
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