Focus on USD to intensify

The USD seems to have stabilised over the past few days setting its upward trajectory in risk. Fundamentals surrounding the greenback tend to be dominated by the US elections next Tuesday, as both the uncertainty factor and the stakes, not only for the US economy, are high. At the same time, the market importance for the Fed’s intentions seems to have eased a bit given also the statement moratorium imposed on Fed policymakers ahead of the bank’s interest rate decision on Wednesday next week. Yet there are some solid financial data scheduled to be released in the following days as we get another inflation test for September’s US economy, preliminary GDP rate for Q3 and October’s employment data for October. Overall, the next few days are expected to intensify market volatility. Today we expect USD traders to focus on the release of the US October consumer confidence and September JOLTS job openings figure.

USD/JPY edged lower in today’s Asian session, as the pair seems to be stabilizing. For the time being we maintain our bullish outlook for the pair as long as the upward trendline incepted since the 4^a. of October remains intact. Furthermore the RSI indicator continues to run along the reading of 70, implying a strong bullish sentiment for the pair yet at the same time may also imply that the pair may be reaching overbought levels and thus be ripe for a correction lower. Should the bulls maintain control over the pair we may see USD/JPY breaking the 155.20 (R1) resistance line and open the gates for the 158.45 (R2) resistance level. Should the bears take over, we may see the pair breaking the prementioned upward trendline in a first signal that the upward movement has been interrupted, breaking the 152.00 (S1) support line and aiming for the 149.40 (S2) support barrier.     

Across the world we note that the Aussie seems to have maintained its downward motion. The uncertainty surrounding the markets tends to weigh on the riskier commodity currency and on another fundamental level for Aussie traders, we highlight the path of China’s economic recovery, given the close Sino-Australian ties. On a monetary level, we highlight the RBA’s hawkish stance which in turn tend to widen interest rate differentials with other major central banks in AUD’s favour. In tomorrow’s Asian session, we highlight the release of Australia’s CPI rates for Q3. Inflation is expected to have eased over the past quarter and if so could enhance market expectations for an easing of RBA’s hawkish stance and thus weigh on the AUD. On the flip side any upside surprises could deliver asymmetric support for the Aussie as it could harden RBA’s stance and force the market to reposition itself.

AUD/USD continued to fall, breaking the 0.6575 (R1) support line, now turned to resistance. We maintain our bearish outlook for the pair as long as the downward trendline incepted since the beginning of the month, continues to lead the pair. Furthermore we note that the RSI indicator reached the reading of 30, highlighting the strong bearish sentiment of the market for the pair, while it may also imply that the AUD/USD is nearing oversold levels. Should the bears maintain control over the pair, we may see the pair aiming if not breaking the 0.6475 (S1) support line. For a bullish outlook we would require the pair to reverse direction, break the 0.6575 (R1) resistance line, break the prementioned downward trendline in a first signal that the downward movement has been interrupted, and continue to reach the 0.6715 (R2) resistance level.   

Other highlights for the day:

Today we note the release of Sweden’s preliminary GDP rate for Q3 and from the US October’s consumer confidence, September’s JOLTS job openings figure and API’s weekly crude oil inventories figure. On the monetary front, we note that BoC Governor Tiff Macklem and Senior Deputy Governor Rogers are to appear before the Canadian Parliament. During tomorrow’s Asian session, we highlight the release of Australia’s CPI rates for Q3.    

USD/JPY Daily Chart

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

AUD/USD Daily Chart

• Support: 0.6475 (S1), 0.6365 (S2), 0.6270 (S3)
• Resistance: 0.6575 (R1), 0.6715 (R2), 0.6825 (R3)

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