Markets In Place For A Busy Week Ahead

Oct 25 21, 09:17 GMT

The USD weakened against its counterparts on Friday as Fed Chairman Jerome Powell stated that a tapering of the Fed’s QE program should start yet rate hikes should not start yet. The Fed’s Chairman said that employment is still at low levels, while inflationary pressures are expected to ease next year, while it should be noted that the comments are the last from a Fed Policymaker before the Fed’s next meeting on 2-3 of November. It should also be noted that the greenback weakened the most against JPY and EUR while today EUR traders are expected to keep an eye out for the release of Germany’s Ifo indicators for October. The pound tended to weaken against the USD, EUR and CHF on Friday after UK’s retail sales for September missed their target and remained in the negatives while fundamental market worries for the UK economy remain present. TRY reached new record lows against the USD during today’s Asian session, as Turkish President Erdogan ordered the expulsion of the ambassadors of ten western countries and major commercial banks are reported to have passed on CBRT’s last rate cut to their loan interest rates, thus could accelerate inflationary pressures in the Turkish economy. The US Equities markets sent out mixed signals on Friday with the tech sector’s Nasdaq retreating, while S&P 500 and Dow Jones tended to gain, as market focus now turns to the release of Q3 earnings reports for Facebook (#FB) today, Microsoft (#MSFT) and Alphabet (#GOOG) on Tuesday and Apple (#AAPL) and Amazon (#AMZN) on Thursday, among a plethora of releases. WTI prices rose reaching multiyear highs as supply is expected to remain tight and demand seems to be on the rise.

The USD index continued to drop placing some distance between the 93.70 (R1) resistance line and its price action. We maintain a bearish outlook for the index as long as it remains below the downward trendline incepted since the 13th of October. Should the selling interest be maintained as expected, we may see the index reaching if not breaching the 93.20 (S1) support line. Should the bulls take over, we may see the index breaking the prementioned downward trendline, the 93.70 (R1) line and aim for the 94.10 (R2) level.

Nasdaq dropped breaking the 15365 (S1) support line before correcting higher. The index’s movement tended to reaffirm our current sideways bias for it around the 15365 (S1) level. Should the bulls take over we may see Nasdaq aiming for the 15715 (R1) resistance line which has not seen any price action since the 6th of September. In case the bears are in charge we expect the index to break the 15365 (S1) line and aim for the 15125 (S2) support level.

Today’s events and expectations

Today we get from Germany the Ifo indicators for October, while BoE’s MPC Tenreyro speaks.

As for the rest of the week

On Tuesday, we highlight the release of the US consumer Sentiment also for October. On Wednesday we get Australia’s CPI rates for Q3, the US durable goods rates for September and BoC’s interest rate decision. On Thursday, we note BoJ’s and ECB’s interest rate decisions as well as Germany’s preliminary HICP rate for October, while from the US we highlight the release of the GDP advance rate for Q3 and the weekly initial jobless claims figure. On a packed Friday during the Asian session, we get Japan’s Tokyo CPI rates for October as well as Japan’s preliminary industrial output for September, as well as Australia’s final retail sales growth rate for September. In the European session we get from France, Germany and the Eurozone the preliminary GDP rates for Q3 as well as the France’s and Eurozone’s preliminary HICP rates for October. In the American session we get from the US the Consumption rate for September and the final University of Michigan consumer sentiment indicator for October while from Canada we get the GDP Rate for August.

US Index H4 Chart