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During Tuesday's trading session, the British Pound was testing the support level of the weekly S1 at 1.2711 to end the trading day at the 1.2703 mark. On Wednesday morning, the rate was located at the 1.2740 mark.

In regards to the near-term future, most likely, the British pound will trade sideways due to support of the weekly S1 at 1.2711 and the resistance of the monthly S1 at 1.2778. The 55-hour simple moving average will try to catch up the rate during the trading session to give an additional resistance to push the rate below of the weekly S1 to trade at 1.2650 level.

Note, the US Dollar could depreciate against the British Pound during today's fundamental news which could force the rate to trade above the monthly S1 level.

During Tuesday's trading session, the currency exchange rate surged to the weekly R2 at 113.56 to end the trading day at the 113.04 mark. On Wednesday morning, the US Dollar was trading at the 113.09 mark.

In regards to the near-term future, the US Dollar will stay a the range between the weekly R1 at 112.73 mark and the weekly R2 at 113.56 mark. Most likely, the rate will move upwards to bounce off the resistance of the weekly R2 at 113.56.

On the other hand, the US Dollar could depreciate against the Japanese Yen during today's fundamental news which could force the rate to trade near the supports of the weekly R1 at 112.73 and the 61.80% Fibonacci retracement level.

During Tuesday's trading session, the yellow metal traded downside towards the monthly R1 at 1,209.98 to end the trading day at 1,221.21. On Wednesday morning, the gold was trading at the 1,217.90 mark.

In regards to the near-term future, the gold will keep trading downside towards the monthly R1 at 1,209.98 mark. The 55-hour simple moving average will try to catch up the rate during the trading session. Most likely, the yellow metal will meet the monthly R1 during Thursday's trading session.

However, today's fundamental news could break the prediction for the yellow metal. Watch out for the fundamentals!

The Swiss Franc has been depreciating against the Japanese Yen in a narrow descending channel since the middle of September. This gradual decline in price began when the currency pair reversed from the upper boundary of a long-term ascending channel at 117.96 on September 24.

The exchange rate breached the upper boundary of the narrow descending channel at 112.61 during the first part of Wednesday's trading session. The common situation would be a surge towards the monthly pivot point at 113.80.

However, technical indicators suggest that this scenario might not be immediate, as the currency exchange rate could face a resistance cluster formed by the 100-hour simple moving average and the weekly R1 at 113.26.

The CAD/JPY currency pair has been trading in a descending channel pattern since the beginning of October. This channel was formed when the pair made a U-turn from the upper boundary of a long-term ascending channel at 89.00 on October 3.

The exchange rate is trading near the upper boundary of the channel pattern at 86.18 during the morning hours of Wednesday's session.

If the currency exchange rate passes that upper border, the next for bullish traders will be at a swing high of 87.50.

However, a resistance cluster formed by the combination of the weekly, the monthly and the 200-hour SMA at 86.53 could hinder the price from reaching the target today.

Cable bounces from new ten-week low at 1.2695 on Wednesday, consolidating after strong fall on Mon/Tue, with stronger recovery on profit-taking after nearly 3% monthly fall, not ruled out.

Overextended daily techs support scenario but so far lacking firmer signal as oversold daily slow stochastic and momentum studies are in sideways mode.

Overall bears remain intact on bearish techs and persisting fears over stalled Brexit talks, with additional negative tones from warning that no-deal Brexit would keep the UK economy in prolonged recession.

The BoE MPC is meeting on Thursday with wide expectations for unchanged policy, which could keep the pound under pressure, with US labor data, due on Friday, expected to provide fresh signals.

Weaker than expected readings would deflate dollar and give breather to pound's bears, but limited recovery could be expected while falling 10SMA (1.2879) caps upticks.

Res: 1.2752, 1.2778, 1.2811, 1.2852
Sup: 1.2695, 1.2661, 1.2638, 1.2588

On Wednesday morning stock markets are developing a rebound. However, the currency markets still demonstrate a demand for dollar.

Futures on S&P500 have added 0.3% after the growth by 1.9% the day before. Japanese Nikkei225 has grown by more than 1% after 3.2% in the “green zone” the day before. Key Chinese indices are also in the black, developing a rebound from the local lows.

At the same time, there are a few points that do not allow us to fully surrender to the power of optimistic moods.

The demand for the dollar is often a good indicator of investors' concern. And this trend is still in force. The USDX rose by Wednesday morning to 96.80 and returned to the highs area from June 2017, where it rose briefly in August. It is worth highlighting the weakening of the single currency due to political problems in Europe (falling support for Merkel and budgetary disputes in Italy).

Sterling also suffers, because as it approaches the deadline, lawmakers still did not approve the plan for Britain to leave the EU, which increases the risks of “no-deal Brexit”. The GBPUSD failed on Tuesday below 1.27, losing 0.9% in a day.

The Chinese yuan continues to slide to the mark of 7.0, despite the rebound in the stock markets. In debt markets, the yields of long-term U.S. government bonds are growing after a period of retracement from the local highs.

On the balance, it means that means that while the markets have moved away from the levels of extreme fear that they experienced last week, the negative trends stay hold. The main trend is still the growth of yields on US long-term bonds following the rise in interest rates in the United States, which reduces the attractiveness of investments in risky assets, such as currencies of developing countries and shares of high-growth companies. In turn, this pulls demand for the US currency and puts pressure on commodity asset quotes.

ECB Governing Council member Ardo Hansson urged not to read too much in to the weaker than expected Q3 GDP figure (0.2% qoq released yesterday). He said, "these were preliminary numbers, maybe they were a bit slower than some expected." And, "we have to wait and see what was behind this." Also, he said "as there have been no significant, material change in one way or the other I would not make major conclusions" regarding monetary policy or economic outlook. He also emphasized the need to look at ECB's own staff projections to be updated in December instead.

Separately, Daniele Nouy, chair of the Supervisory Board of the ECB, said that Eurozone has "reduced risks enough for the European Deposit Insurance Scheme to start.". And it's the right time to set it up and "consider some solidarity". Nouy also added creating cross border consolidation in the banking said can be a solution to the top risks of low profitability. She said "such cross-border mergers would also create a few large European banks – let us call them `European champions' – which could then successfully compete on the global stage."

Eurozone CPI accelerated to 2.2% yoy in October, up from 2.1% yoy and matched expectations. Core CPI accelerated to 1.1% yoy, up from 0.9% yoy and beat expectation of 1.0% yoy. Among the components, energy jumped 10.6% yoy (accelerated from 9.5%). Food, alcohol & tobacco rose 2.2% yoy (slowed from 2.6%). Services rose 1.5% yoy (accelerated from 1.3%). Non-energy industrial goods rose 0.3% yoy (up from 0.3%).

Eurozone (EA19) unemployment rate was unchanged at 8.1% in September, matched expectations, staying as the lowest since November 2008. EU28 unemployment rate was unchanged at 6.7%, lowest since January 2000. Among EU member states, lowest unemployment rate is found in Czechia at 2.3%, then Germany and Poland at 3.4%. Highest unemployment rate is observed in Greece at 19.0%, then Spain at 14.9% and then Italy at 10.1%.

EUR/USD breached 1.1335 temporary low a hour ago. While there is no follow through selling yet, bias is tentatively on the downside for 1.1300 key support.

The US currency kept strengthening against the basket of other currencies. It got a boost due to the publication of the Customer Confidence Index, which in October reached 137.9 instead of the expected 136.0. The USD index (#DX) updated the monthly maximums and closed in the positive zone (+0.45%). The prospects for growth remain.

The EUR is slightly weakened after the publication of the weak economic stats from the eurozone. The number of unemployed citizens in Germany lowered by 11K in October, but the experts expected it to lower by at least 12K. The preliminary quarterly Eurozone GDP reports indicate 0.2% growth instead of 0.4%. This means that the annual Eurozone GDP growth slowed to 1.7%, while the experts expected 1.9%.

Australian Customer Price Index for the third quarter was published during the Asian trading session today. It grew by 0.4%, while the experts expected 0.5%. The “Purchasing Manager” Index in China for October reached 50.2 instead of 50.6. The Bank of Japan, as expected, kept the basic parameters of the monetary policy at the same level.

The oil prices started to grow. At the moment, the WTI futures are at the 67 USD/barrel. At 16:30 (GMT+2:00) we can expect an API Weekly Crude Oil Stock report from the USA.

Market Indicators

Yesterday, the major US stock indices started to recover: #SPY (+1,48%), #DIA (+1,73%), #QQQ (+1,65%).

The 10-year US government bonds yield keeps lowering. Right now, it is 3,13-3,14%.

The Economic News Feed for 31.10.2018:

The Consumer Price Index (EU) – 12:00 (GMT+2:00);

ADP Non-farm Employment Change (US) – 14:15 (GMT+2:00);

GDP Report (Canada) – 14:30 (GMT+2:00).

We also recommend you keep an eye on Stephen Poloz – Governor of the Bank of Canada – and his speech.