The AUD/USD pair got momentum in the last hour and eliminated their failures to be optimistic the day around the 0.6800 mark, as trade headlines once again affected their action. The pair increased daily to 0.6796 by 0.18%.
US President Donald Trump said the trade agreement with China "potentially very close" during an interview with Fox News on Friday which rekindled optimism from the parties that ended phase 1 of the agreement to escape the December tariff increase and helped trade-sensitive antipodeans seek demand.
Commenting on the latest market response to reports around the trade dispute between the US and China, "six weeks have elapsed since in theory the phase one agreement was not reached, ' strategists at Westpac stated. "The markets are displaying indications of the constant drip-feeding of the US officials ' up-to-date statements and no possible signs of a Final Deal."
Later in the US meeting, the IHS Markit Preliminary Manufacturing Purchaser Index (PMI) for November will look out for indications of vulnerability in the US manufacturing sector. The PMI data on Services and the Consumer Confidence Assessment from the University of Michigan will also be identified in the economic context.
Eventually, the USD/CAD pair broke down from their daily consolidated trading range and slumped to new session lows, about mid-1.3200 post-Canadian macro results.
The pair expanded prior session pullback from multi-week highs and experienced some follow-through selling on Friday preceding the announcement of Canadian monthly retail sales figures for the second straight week.
In the meantime, the decline appeared relatively unaffected by weaker oil prices, which tend to erode demand for currency-linked currency loonie, although it may turn out to be the only factor that could provide some support.
With main Canadian data out of the path for Friday, market attendees are now looking forward to the US economic docket, including the launch of flash Manufacturing PMI and the Michigan Consumer Sentiment Index, for a new boost.
Golden oscillates well over the last one week and is kept capped under SMA for 100 days, with the use of some knee sharp spikes. The trading activity in the range of fields consisted of the formation of a rectangle on time charts which is generally shown as a pattern of continuity that forms during a trend break.
Despite the latest rebound and subsequent fall from multi-year highs under 100-day SMA, it stays in favor of bearish traders. This combined with the lower trend of the commodity along a two-month-old downward trend indicates a well-developed downtrend, strengthening the Bearish bias.
In addition, the daily technical indicators have failed to rebound and improve expectations for the expansion of the latest multi-year pullback from the adverse territories. Therefore, a certain follow-up vulnerability in the $1457-55 support zone in routes continues to be a distinct possibility monthly move all over the $1445 area.
On the other hand, instant resistance is close to the area $1481-82 (100-DMA), over which the commodities will probably return to the main psychological mark of $1500 before eventual resistance is challenged by the upper end of the trend-channel, presently close to $1509-10.
The NZD is the strongest as the North American session starts, and the GBP is the weakest. With most movement in the GBP, the USD is close to the middle of the rankings. The GBPUSD dropped on the back of weak PMI data less than its 100-hour MA. The 100-hour MA arrives at 1.28965. The low rose to 1.2850. At 1.2861 we are presently trading.
The bids against the safe haven of the Japanese yen weigh on the EUR/JPY and so it falls to 119.90, where he found support.
The pair drops for the second consecutive day at the end of the week and is under pressure to sell in response to rising demand for the safe haven.
The trade problems between the US and China have worsened recently, and in addition to the unrest in Hong Kong, resulting in an overall increase in demand for the Japanese yen and bonds.
From the economic calendar, we still expect US November Consumer sentiment and Markit PMI results. The PMI PMI was a surprise in November, but the PMI service fell, indicating a slowdown in the region as a whole.
Currently, the pair's daily loss is -0.05% at 120.04 and next support is 119.53 (55-day SMA), 119.24 (14-month low) and 117.07 (7-month low) ). On the other hand, resistors are at 120.68 (high November 18), 121.47 (month high October 31) and 121.74 (200 day SMA).
The GBP/USD remains weak on Friday's European afternoon on Friday, despite a break of 20 pips from the week low and trading is currently trading at 1.2880/85.
A sustained break below the 1.2900 where the 200-hour SMA is located was an important development for the bear, after which the UK November PMI results were weaker than expected.
That the pair failed again before the psychological mark of 1.30 and it came under the above level of acceptance, deteriorates the short-term technical prospects.
A decline towards 1.2800 is quite possible, but the slightly oversold conditions on the hourly chart should be a warning sign to the bear.
A recovery attempt over 1.2900 will encounter resistance at 1.2925/30 and only if it is overcome can it move towards 1.30.
The EUR/USD failed to maintain its initial optimism and came under pressure on Thursday with the rebound from the weekly high, in the range of 1.11.
Weekly highs are compounded by the 100-day SMA, which today stands at 1.1086. Ideally, this level should be overcome in the short term to open the door for further gains.
If the sellers on the other side can gain the upper hand, is to be counted on a test of 1.1040 support. A break below this important area will lead to technical negative prospects.
Karen Jones, Head of FICC Technical Analysis at Commerzbank, notes that the European pair's bullish attempts at 0.8635 and 0.8802 will meet resistance.
“EUR/GBP has another 13 count on the daily chart PLUS divergence of the daily RSI and I think this will bounce near term. Rallies will find a minor downtrend at .8635 ahead of the 3 month downtrend at .8802. Overhead resistance is reinforced by .8786 the mid-September low”.
“Beyond this there is scope for the slide to extend to the .8465 2019 low. We note the TD support at .8485 and we look for the market to hold here”.
The common currency remains positive at the end of the week, with EUR/USD rising to the daily high of 1.1075/80. After two days of pullback, the pair made a profit on the last trading day of the week as offers rose against the greenback and there was positive PMI performance in the Eurozone.
The euro received bids, after which the preliminary production PMI results of France and Germany turned out better than expected. The activity of the producing sector of Germany, however, is declining. The service sector is experiencing a downward trend, but is still above the critical level of 50.0.
The lack of progress on US-China trade negotiations is a stress test for the dollar, especially after President Trump recently threatened to raise tariffs.
The ECB President C. Lagarde said the euro zone would benefit from fiscal impulses while monetary policy continues to support the economy and the ECB is closely monitoring developments.
From the economic calendar we still expect the US PMI service and production results as well as the final U-Mich index.
The pair encountered strong resistance at 1.1080/90, while the price action depended on the USD momentum and the US-China trade headlines. Despite occasional positive headlines from the Eurozone, the region's slowdown remains omnipresent, causing the ECB to maintain its loose monetary policy for a longer period of time, which should lead to negative outlooks for the single currency in the longer term. The recent PMI production results show some bottoming, but the deterioration of the service sector seems to have room to move down.
Currently the pair's daily gain is 0.01% at 1.1072 and next resistance is 1.1097 (high 21st November), 1.1173 (200-day SMA) and 1.1179 (high for the month 21st October) , On the other hand, supports are at 1.0989 (low 14th November), 1.0925 (low 3rd September) and 1.0879 (2019 low 1st October).
The USD/JPY pair battled to obtain significant momentum and were kept contained in a 15-pip tight trade band by the early European Session of Friday, just over the middle of 108.00s.
The pair attempted to make the most of the attempted one-week recovery at the last sitting because investors opted to stay sideline in the midst of conflicting trade news and no clear indications of any advancement in trade negotiations between the US and China.
In the meantime, a modest US dollar demand did not give much meaning, although the only factor to reduce the drawback at least now was a follow up on the US Treasury Bond yield.
Going on to the US economic docket on Friday, including the announcement of the flash PMI and updated index for UoM Consumer Sentiment, some short-term trading prospects will now be reviewing.
Danske Bank analysts note that the PMI releases on Friday from Eurozone, US and UK can be market mover today. Meanwhile, first speech of ECP President Lagarde may dominate the market as well.
“The overarching market focus today will be the November PMI releases in the US and the euro area, including Germany. Last month, both the German and the euro area PMIs stabilised around the previous levels and this month's print will show whether this was an actual trough or whether further slowdown lies ahead.”
“Recent further increases in indicators such as ZEW and Sentix seem to support the trough view. However, external demand is still the main driver of the euro area manufacturing sector and due to lingering global political uncertainties we do not expect a real trough in the euro area manufacturing cycle until early 2020.”
“For November, we expect the euro area manufacturing PMI to hold stable at 45.9 and the service index to fall slightly to 51.9 in light of the recent deteriorating business expectations.”
“In the US, we expect the preliminary manufacturing PMIs for November to be broadly unchanged. Markit PMI orders-inventory balance suggests stronger PMI manufacturing in November, but ISM manufacturing has been below 50 the past couple of months. We believe that both PMI and ISM surveys should be monitored together in order to get a clear picture of the manufacturing activity.”
“We think UK flash PMIs for November will remain rather weak and in turn support our call for a cut by BoE in January and thus for a higher EUR/GBP.”
“New ECB President Lagarde will give a key note speech at 9:00 CET, which may reveal more about her view on the euro area economy and monetary policy. In Sweden, Riksbank's Vice Governors Per Jansson and Henry Ohlsson will also speak about the economic outlook and monetary policy.”
UOB Group analysts have evaluated the FOMC minutes published for October meeting.
“In the latest minutes, most Federal Reserve policy makers “believed that a reduction of 25 basis points in the target range for the federal funds rate would be appropriate” in the October decision, “in light of persistent weakness in global growth and elevated uncertainty regarding trade developments” but not everyone was on board with the October rate cut decision as some “participants favored maintaining the existing target range for the federal funds rate at this meeting”.
“As for the policy direction going forward, most participants believed that after the cut in October, the policy stance is appropriate and “would be well calibrated” and “likely would remain so as long as incoming information about the economy did not result in a material reassessment of the economic outlook”.
“The FOMC minutes helped reinforced expectations for a Fed policy cycle pause after three sequential 25bps rate cuts in July, September and October but provided little else in terms of new information”.
“Without further new insights to the Fed policymakers’ rate trajectory preferences, we maintain our expectations for the Fed to stay on pause in the 10/11 December 2019 FOMC decision. We expect the Fed to implement the next 25bps rate cut in 1Q 2020, and thereafter to stay on pause again for the rest of 2020. The caveat is that if trade tensions persist well beyond 2019 and into next year, then we think the Fed will have to take on more easing in 2020, especially if it leads to material downside impact to US and global growth”.
According to UOB Group FX analysts, EUR/USD will extend its consolidation phase in the coming weeks.
24-hour view: “Expectation for EUR to “edge higher” did not materialize as it traded sideways within a 1.1051/1.1081 range before ending the day largely unchanged at 1.1072 (-0.05%). The underlying tone still appears to be slightly positive and we continue to see chance for EUR to edge higher towards 1.1095. The strong resistance at 1.1115 is not expected to come into the picture. Support is at 1.1060 followed by 1.1040”.
Next 1-3 weeks: “EUR traded in a tight 22 pips range yesterday (between 1.1061 and 1.1083), the second smallest 1-day range so far this year. The quiet price action offers no fresh clues and we continue to hold on to the same view from Monday (18 Nov, spot at 1.1055). The current price action is still viewed as part of a 1.1010/1.1115 sideway-trading range even though the near-term bias is on the upside. Looking forward, if EUR were to crack 1.1115, the focus would shift to 1.1150. All in, the current mild upward pressure is expected to remain intact unless EUR drops back below 1.1040 within these few days”.
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