It’s going to be a very busy dayfor traders

The USD enters a busy Wednesday, remaining relatively stable against its counterparts. Today we highlight for USD traders the release of the US GDP advance rate for Q3. The rate is expected to remain unchanged at 3.00%yy and if so could provide some support for the greenback as it would support the Fed’s narrative for a possible soft landing of the US economy. At the same time, we get October’s ADP national employment figure, which gains on importance as on Friday, October’s US employment report is to be released. Should the figure drop as expected or even more, we may see some bearish tendencies being exercised on the greenback as the market may perceive the release as an indication of a loosening US employment market. 

European data to shake the common currency

Across the pond, EUR traders are to focus on the high number of financial data due out today. We highlight the preliminary GDP rates for Q3 of France, Germany, the Eurozone as a whole, the Eurozone’s sentiment indicators and Germany’s preliminary HICP rates for October. The releases are to provide preliminary clues regarding growth and inflation in the Eurozone or member states. Specifically, the HICP rate of Germany is expected to accelerate, which tends to corroborate ECB President Lagarde’s expectations and may provide some support for the EUR as it could ease the bank’s dovishness, while the major issue of anemic growth for the Zone is expected to be confirmed which could weigh on the single currency.   

EUR/USD bounced on the  1.0775 (S1) support line yesterday, yet largely maintained its sideways motion. We tend to maintain our bias for the sideways motion to continue yet note also that the RSI indicator remains below the reading of 50 implying a bearish predisposition of the market for the pair. For a bearish outlook we would require the pair to break the 1.0775 (S1) support line and aim for the 1.0670 (S2) support level. Should the bulls take over we may see EUR/USD breaking the 1.0890 (R1) resistance line, paving the way for the 1.1000 (R2) resistance barrier.

BoJ’s expected to remain on hold yet hawkish surprise could be in the works

From Japan we get during tomorrow’s Asian session BoJ’s interest rate decision and the bank is widely expected to remain on hold. Currently JPY OIS imply a probability of 90% for the bank to maintain its rates at 0.25%. Yet JPY OIS also implies that the market may be expecting a rate hike in the December meeting.  Should the bank remain on hold as expected, attention is expected to be placed on the accompanying statement and the bank’s forward guidance. Should the bank maintain a relatively hawkish tone about its intentions, thus also stressing its independence from political authorities, given the current post-election uncertainty in Japan, we may see JPY getting some support as the market may have to reposition itself and its expectations for a rate hike before the end of the year may intensify.    

USD/JPY yesterday and during today’s Asian session, remained relatively stable between the 152.00 (S1) support line and the 155.20 (R1) resistance line. Yet technically the upward motion may not have lost its momentum entirely, as the upward trendline guiding the pair since the 21  of October remains intact, despite being put to the test by the pair’s stabilisation. Furthermore, the RSI indicator continues to run along the reading of 70, implying the existence of a strong bullish sentiment among market participants for the pair. Hence we tend to maintain our bullish outlook for the time being. Should the bulls maintain control as expected, we may see the pair aiming if not breaching the 155.20 (R1) resistance line, thus opening the gates for the 158.45 (R2) resistance base. A bearish outlook seems to be remote currently, yet still plausible if the pair’s price action drops, breaks initially the prementioned upward trendline in a first signal that the upward motion has been interrupted and continue to break the 152.00 (S1) support line, while even lower we note the 149.40 (S2) support base as the next possible target for the bears.

In the UK the first Labour Budget could weigh on the pound

In the UK, we highlight that Finance Minister Rachel Reeves is to deliver the first budget, since the Labour party came into office. The budget could have an effect on the pound on a fiscal level, as it would show the new UK Government’s intentions. Should the budget include increased taxation and cut spending implying a tightening of fiscal policy, we may see the event having a bearish effect on the pound in today’s late European session.

Chinese and Australian data to grab attention

In the land of the down under, Aussie traders are expected to keep a close eye on the release of Australia’s building approvals growth rate for September in tomorrow’s Asian session. The rate is expected to accelerate and if so could provide some support for the Aussie while on the flip side Australia’s retail sales rate which is also due out in tomorrow’s Asian session is expected to slow down and thus could weigh on the AUD. Yet Aussie traders are also expected to keep a close eye on the release of China’s NBS PMI figures for October, with special interest on the manufacturing sector’s indicator in an effort to gauge economic activity. Yet the indicators are also to provide clues regarding the pace of China’s economic recovery. Should the PMI figures show that economic activity in China’s manufacturing sector decreased further or even deeper, we may see the release weighing on the Aussie and a more cautious market sentiment emerging.

US stock markets’ mega-cap tech week

Last but not least we highlight today’s earnings reports. Given the enthusiasm created by the release of Alphabet’s earnings reports that topped Wall Street expectations, we may see the release being supportive for a more risk oriented sentiment. Its to be a mega-tech week in US stockmarkets, as today we also get Microsoft’s (#MSFT) and Meta’s (#FB) earnings releases in the after market hours. Hence interest is expected to be ongoing for the tech sector, especially as Apple (#AAPL) and Amazon (#AMZN) are to release their earnings reports tomorrow. Given the sector’s size and the role for US stockmarkets, we define the releases as possibly market moving. Should the positive buzz initiated by the release of Alphabet’s earnings results be continued in the coming days we may see the support for US stock markets intensifying.

Autres faits marquants de la journée :

Today we get the preliminary GDP rates for Q3 of the Czech Republic as well as Switzerland’s October KOF indicator. Oil traders on the other hand may be more interested in the release of the weekly EIA crude oil inventories figure, especially after the unexpected drawdown reported by API yesterday. Should also EIA take the markets by surprise and report also a drawdown, it would imply that oil demand levels in the US surpassed aggregated oil supply, thus that the US oil market is tightening, which could provide some support for oil prices.  

EUR/USD Quotidienne

• Support: 1.0775 (S1), 1.0670 (S2), 1.0530 (S3)
• Resistance: 1.0890 (R1), 1.1000 (R2), 1.1100 (R3)

USD/JPY Daily Chart

• Support: 152.00 (S1), 149.40 (S2), 146.00 (S3)
• Resistance: 155.20 (R1), 158.45 (R2), 161.90 (R3)

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