Note that this is my current view, but if market conditions change my view can change too. Generally I will trade in alignment with what I have noted here, though I will wait for a set-up before I enter. I base my view on technical and fundamental information. This is my beliefs and you are welcome to have opposite ones. Having a plan is more important than the actual direction for me.
- Wait DXY.– MT is sideways normal. In the US while the overall economy is still growing, the month of September saw a decline in PMI numbers. The ISM Manufacturing report hit a 10year low and the services sector showed a pace of expansion which was slower than expected. Unemployment fell to 3.5%, a level not seen since December 1969, but new jobs numbers were down and wage growth was flat which prompted Chair Powell to highlight, in a speech just ahead of the release of the FMOC minutes, that the labour market is weaker than previously thought. However, the seeming progress toward a trade deal with China might have diminished the chances of a further rate cut at the end of October. Consumer Confidence so far has remained high and this week will see the release of Retail Sales data and a host of Fed Speak ahead of the blackout starting on October 19. After failing to break through the early September high the Dollar Index has now retreated and is approaching an area of support.
- Buy GBP/USD. – MT is bull normal. The pair rose strongly from support at 1.22 as a path to a Brexit deal finally emerges. The move faded slightly at the top of the resistance zone at 1.27 and next week is indeed critical for the Pound if the upward momentum is to continue. The European Council meets on the 17 to discuss the state of play regarding Brexit. Assuming the EU then accepts the proposal currently under secret revision, it will still need to be ratified by the UK Parliament. So, the risks of a reversal are still high. Weaker inflation and disappointing retail sales figures are showing that the protracted political drama is having a real impact on the economy and recent PMI data confirmed that all sectors of the economy are now in contraction territory which was also reflected in a disappointing GDP. There’s plenty of macro releases in the coming week with Employment, Inflation and Retail Sales as well as speeches by BOE’s Carney but Brexit remains the main driver.
- Buy USD/JPY. – MT is sideways normal. The break higher of the inside period formed at the end of last week was followed by the formation on the chart of a second inside period indicating mounting pressure in the pair – a clear reflection of the uncertainty and conflicting reports surrounding the upcoming high-level trade talks in Washington. The pair is now testing recent resistance at 108.50 but with stronger momentum than in the previous two occasions. If price manages to get through 109 we could see the pair starting to move toward the next resistance level at 112 over the coming weeks.
- Wait AUD/USD. – MT is sideways normal. Following this month’s rate cut the Aussie has put in place a fourth rejection of 0.67 indicating that the pair might have found a bottom. The catalyst to potentially justify higher prices came at the end of last week in the form of the U.S. – China positive trade talks. But given that the fundamentals are mostly negative for Australia we remain cautious. In the coming week we will pay attention to the RBA Minutes and the employment report.
- Sell EUR/USD. – MT is sideways normal. While conditions remain dire for the European economy the Euro managed to lift above 1.10 resistance mainly on the back of USD weakness. The downtrend however is still intact and in the absence of a positive catalyst for the European currency we maintain a bearish bias, at least whilst trading below 1.11. On the data front in the coming week we have the German ZEW Economic Sentiment Survey and final CPI for the EZ.
- Wait NZD/USD.– MT is sideways normal. The economic outlook for New Zealand continues to remain weak with business confidence plunging lower. As it is the case with Australia, the only positive sign is a pick-up in turnover in the housing market. Together with the Aussie the Kiwi has benefitted from the recent improvement in risk sentiment following the positive U.S. – China trade talks but we remain cautious and maintain a bearish bias for now. In the coming week we have the release of CPI data.
- Wait USD/CHF. – MT is sideways normal. After failing to break through parity the Swissie pulled back only slightly this week still trading above 0.99. The improvement in risk sentiment is supportive of the pair and we are likely to see another attempt to rise above 1.00.
- Sell USD/CAD. – MT is bear normal. Market type for the Loonie has turned from bull normal to bear normal. The previous move up had stalled at the August resistance levels and then stronger than expected Employment figures sent the pair sharply down just ahead of the Canadian Thanksgiving long weekend. Whilst we have a general USD bullish bias there is no denying that data has been showing a strong Canadian economy. To pay attention to there is support nearby at 1.3150 and Canadian CPI data is released this coming week.
- Sell EUR/GBP. – MT is bear normal. The Market Type has change from sideways to bearish. The downtrend which kicked off in mid-August resumed strongly after a 2 week pause thanks to the emerging Brexit deal. The pair on Friday sliced through support at 0.88 and stopped at 0.87. Next level of support is at 0.85.
- Wait EUR/CHF. – MT is sideways normal.
- Wait AUD/JPY. – MT is sideways normal.
- Wait NZD/JPY. – MT is sideway normal.
- Buy GBP/JPY. – MT is bear normal.
- Wait EUR/JPY. – MT is sideways normal.
- Wait CAD/JPY. – MT is sideways normal.
- Wait CHF/JPY. – MT is sideways normal.
- Buy GBP/NZD. – MT is bull normal.
- Wait EUR/NZD. – MT is sideways normal.
- Wait AUD/NZD. – MT is sideways normal.
- Wait EUR/AUD. – MT is bull normal.
- Buy GBP/AUD. – MT is bull normal.
- Wait AUD/CAD. – MT is sideways normal.
- Wait GBP/CAD. – MT is bull normal.
- Wait EUR/CAD. – MT is sideways normal.
- Wait NZD/CAD. – MT is sideways normal.
- Buy GBP/CHF. – MT is bull normal.
- Wait CAD/CHF. – MT is bull normal.
- Wait NZD/CHF. – MT is sideways normal.
- Wait AUD/CHF. – MT is sideways normal.
- Wait Gold. – MT is sideways normal.
- Wait Oil. – MT is bear normal.
- Wait S&P 500. – MT is sideways normal.
- Buy DAX. – MT is sideways normal.
- Buy Nikkei. – MT is sideways normal.
- Wait T-Notes. – MT is sideways normal.
(MT = Market Type: Click for more information on market types.)
About the Author
Massimiliano Andrighetto is a currency trader and member of the team at FxRenew. If you like his writing you can follow it here. You can also get Free access to the Advanced Forex Course for Smart Traders.