In an interview with CNBC, White House economic adviser Larry Kudlow said on Thursday that he sees "much momentum" to complete the trade agreement between the United States (USA) and China.
"Phase one of US and Chinese trade involves reducing non-tariff trade barriers for agriculture, not just for purchases," Kudlow added, saying that the phase one deal with China was "real."
The 10-year US Treasury yield rose 1.1% to 1.760% on a daily basis and S & P 500 futures gained 0.32% on a daily basis, suggesting that Wall Street's major indexes had the day positive area.
The downward correction from the recent two-month high does not change the bids of the EUR/USD , which remains above 1.11.
The pair's rally remains intact for another session, allowing gains to be raised to the new multi-week high in the 1.1140 range where the 100-day SMA is located.
A continuation of selling pressure in the greenback is the main driver behind the pair's recovery from the 2019 low from the 1.0880 range (October 1) by nearly 300 pips.
The pair also benefited from the announced EU-UK Brexit agreement as it improved risk sentiment.
The US Philly Fed index fell short of the forecast this month with a score of 5.6 , while construction permits surprised positively and disappointed housing starts in September.
Interest in buying sterling dropped EUR/GBP below 0.8600 on Thursday, to a more-than-month low.
The European couple are suffering from the increasingly positive sentiment against the British pound, especially after the UK / EU negotiators reached an agreement on European morning.
The focus is now on the 2-day EU summit in Brussels, which will begin today before the UK Parliament votes on the deal on Saturday. UK PM Boris Johnson will likely question the EU after an extension of Art. 50.
UK retail sales remained flat on a monthly basis, worse than expected, but core sales were up more than expected at 0.2% on a monthly basis.
Karen Jones, Head of FICC Technical Analysis at Commerzbank, notes that the USD/JPY has moved close to the 200-day MA of 109.07, which should withstand a first test.
“Beyond some near term consolidation however, the market is well placed to try the topside once more. Above the market lies the 55 and 200 week moving averages at 109.85/110.18 and the 2015-2019 downtrend at 111.05. Dips will find initial support at the 20 day ma at 107.78 ahead of the 106.48 October low.”
“Failure at 106.47 will target 106.00, then 105.32/78.6% retracement which is the last defence for the 104.46 August low.”
Karen Jones, Head of FICC Technical Analysis at Commerzbank, notes that GBP/USD has reached the 61.8% retracement of this year's 1.2838 move.
“We are seeing some slight consolidation here, but provided dips lower hold over 1.2582 (20th September high) an immediate upside bias is maintained. There is scope for further strength towards the 200 week ma at 1.3156.”
“Immediate support lies at 1.2582 the 20th September high ahead of the 1.2382 17th July low and the 1.2248 uptrend. The near term uptrend guards 1.2196/94.”
“Below the current October low at 1.2194 lies the early and mid-August lows at 1.2091/15 and major support lies at the 1.1958 September low.”
The NZD/USD pair climbed over 30pips and climbed over the 0.6300 handle in the last hour to reboot session peaks.
A reduced US dollar demand, driven by weaker sentiment all over the US treasury bond yields, was one of the major factors that helped the Fed.
Data published on Wednesdays revealed that retail sales in the United States dropped for the very first time in September in seven months, which raised concerns that demand decline would expand to the wider economy.
It will be important to see whether the pair is able to build upon the optimistic strength or collide with new levels of supply, as investors look forward to a new catalyst for second-tier US economic data.
The single currency can maintain its rally this week, with EUR/USD hovering around the month high at 1.1080. The pair climbs on Thursday for the third consecutive session, extending the recovery from the 1.0880 floor for the third week in a row.
The weakness against the greenback is the exclusive driver of the sustained positive momentum, along with rising hopes for a Brexit deal. This morning and tomorrow, the EU summit will take place in Brussels, which will deal with the negotiations between the EU and the UK.
From the economic calendar , the euro zone do not expect any important data today, while in the afternoon from the US the Philly Fed will be index and the production of industrial and manufacturing sectors.
The upward correction remains intact and it has been upgraded to the 55-day SMA, so the next target is the September high above 1.11. The pair recorded a profit for the third week in a row, mainly due to the weakness of the US dollar.
However, the recent slowdown in the region is leading to expectations of a prolonged easing of ECB monetary policy and this should weigh on the single currency for months. Advances in Brexit will also impact price performance. Add to that the rumors about German stimulus packages.
The USD/JPY pair expanded their combined trading activities to the side during the Asian session on Thursday to a small trade band beyond mid-108.00.
The specified area represents a breakthrough in resistance and corresponds to the 50% Fibonacci level of the drop of 112.40-104.45 and is a major factor for traders of the intraday.
In the meantime, daily oscillators retained their bullish preference and also boosted their favoring short-term bullish traders by marginally overbought conditions on the 4-hour graph.
On the other hand, any reverse pullback under the above-stated resistance can still be seen as a buying chance and helps to monitor the downside around the support region from 109.00 to 108.90.
US dollar rose up against its counterpart in Canada and assisted the USD/CAD pair get away from the weekly lows of the prior session.
The pair persisted to display resilience underneath the 1.3200 mark and on Thursday it gained some positiveness in the Asian meeting with conjunction of supportive factors. When investors stared at the misleading US monthly retail figures on Wednesday, a slight US dollar recovery from about a month-long decline has offered the main a certain amount of support.
The commodities-linked currency – the Loonie – was, on the other hand, measured down by a drop in prices for crude oil and large rises in US stockpiles. On Wednesday, the American Petroleum Institute (API) announced that stocks rose by 10.5 million barrels to 432.5 million barrels for the week ending on 11 October, adding new fears about an intensification of the trade war between the USA and China.
Since market players have already begun pricing in October possibilities of further interest rates cut by the Fed, any further upward move in front of a very critical SMA for 200days may continue to face fresh supply. It will be therefore interesting to see whether the pair will be able to focus on the uptick or stay well restricted to a wider trade area held since the start of the week.
Karen Jones, Head of FICC Technical Analysis at Commerzbank, notes that the EUR/USD eroded the 55-day MA of 1.1050 and reached the 38.2% retracement of the June June move down to 1.1083.
“Near term dips should ideally be contained by 1.0990 and given that that we view the 1.0879 recent low as an interim low, we look for recovery to initially the mid September high at 1.1110.”
“A close above here would trigger another leg higher to the 200 day ma at 1.1211. Longer term the critical resistance to overcome is the top of the one year channel at 1.1396 and the 200 week ma at 1.1353.”
“Below 1.0879 we have the January 2017 low at 1.0829 and the 78.6% Fibonacci retracement of the 2017-2018 advance at 1.0814.”
As investors are continuing to seek new guiding to conclude the week, Japanese equities near the day near flat with a blended reception in Asian trade. The Hang Seng rose by 0.5%, and the Shanghai Composite decreased by 0.1%, as traders were indescribable because of the absence of new catalysts after overnight trading.
The AUD/USD is under selling pressure for the third consecutive session today, dropping to 0.6725 on Wednesday, close to the 1-week low.
The sustained decline in the 200-hour EMA was a welcome invitation for the bears and so selling pressure increased on Wednesday.
The recent pullback in the range over 0.6800 (last Friday) is accompanied on the 1-Stundenchart with a sinking trend channel formation.
In addition, the fact that the oscillators on the daily chart have begun to develop a negative dynamics, which speaks for further losses.
A sustained break below the lower end of the aforementioned trend channel, which is currently in the range of 0.6720, would confirm the bearish outlook.
A decline below the psychological level of 0.6700 would lead to a test of 0.6670, where at the beginning of this month the more than 10-year low was formed.
On the other hand, recovery attempts at 0.6755/60 will encounter resistance where the 100-hour EMA is located.
The buying interest against sterling dropped the EUR/GBP below 0.8600, where the new 5-month low was formed.
The European pair recorded a loss on Wednesday, while it now reports the fourth consecutive daily loss in the last five trading days.
Promising Brexit headlines support the sterling rally and the pair fell below the 78.6% Fibo retracement of the May to August rally (0.8667).
The latest news is that UK PM B. Johnson could postpone Art. 50 to 31 January 2020 if there is no deal before Saturday. The focus is now on the critical EU summit on Thursday and Friday, where Brexit is high on the agenda.
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