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MORNING BRIEF
The US Dollar traded lower against most of its peers yesterday as fears that the government shutdown continuing for the third day in the US will push Fed’s tapering into 2014. According to Fed President Rosengren, a voting member of the FOMC the shutdown might affect the inflow of data from the government agencies and make the assessment of conditions in the US harder for policymakers. The Greenback lost ground against the Euro that climbed to 1.3600 after the outcome of the confidence vote that took place in Italy. This was a critical risk factor for the European region and the fact that it came to end did wonders for the Euro that broke above the 1.3560 resistance. On the same time the British Pound also pulled higher after positive comments from UK policymakers that acknowledged the improvements in the country’s economics. Bank of England Governor Carney and Markets Director Paul Fisher both made statements speaking about a brighter future for UK economic conditions that however have a long way still to go.
German and British PMIs, US ISM Non-Manufacturing today
It’s a light day today regarding economic announcements as there are no major events expected. Early in the day the German and British Purchasing Manager Indices are expected and we will look into the figures to better assess how the economic outputs of both Germany and UK are fairing. Later in the day, the ISM Non-Manufacturing Index is also expected and we are very keen to see the reading as this figure acts as the most accurate leading indicator of how Non-Farm Payrolls would come. Taking into consideration that the NFP might actually not be released due to the shutdown, this figure could be our only indication on the US labor market this week.
Economic Calendar
|
Time |
Currency |
Event |
Importance |
Forecast |
Previous |
|
8.55 |
EUR |
German PMI Services |
Medium |
54.4 |
54.4 |
|
9.00 |
EUR |
Euro-zone PMI Services |
Medium |
52.1 |
52.1 |
|
9.30 |
GBP |
UK PMI Services |
Medium |
60.5 |
60.5 |
|
13.30 |
USD |
ISM Non-Manufacturing |
Medium |
57.0 |
58.6 |
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TECHNICAL ANALYSIS & LEVELS
EUR/USD
Euro broke above the 1.3560 level following news that Italy has found a solution to its political crisis and climbed at 1.3615 that was our initial target on our analysis two days ago. We feel confident that with the continued weakness in Dollar the Euro is poised to reach higher thus we will wait for a possible pullback near the 1.3560 area where we would like to enter long. Should the pair reach as low as 1.3560 then we will enter long, place our stops below 1.3500 and target the 1.3615 area again at first and the 1.3700 level eventually. Please keep in mind that this trade needs a few days to come to a completion, if you’re more focused on the intra-day plays then we will need to see how the currency moves today prior to making a suggestion.
GBP/USD
The Pound moved as we suggested yesterday but failed to hit our first target for a few pips. At this point we suggest that you go ahead and liquidate half of your trade even for a few pips less and bring your stops to the breakeven price of just below 1.6160. We will remain patient as Sterling’s outlook remains bullish but we prefer to have cashed out some profits after this nice upwards move rather than being greedy and forfeit all our profits at this time. Our secondary target remains at 1.6320, the bias is bullish and we keep calm and wait for more gains.
FTSE 100
The FTSE 100 lost more ground yesterday dropping below 6,400 points before pulling back higher. Even though the index continues to drop lower we feel that a reversal higher could be near but we want to time our entry right. The MACD is showing a clear signal of divergence and we feel that a possible move above the 6,470 points might be our point of entry. In that case targets would come at 6,520 initially and 6,600 eventually, stops below the 6,380 points. Again, for a more intra-day scenario we need to see how the index opens for the day and whether it reaches for another low.
Gold
Gold pulled back higher aggressively yesterday after the radical drop it had two days ago. The situation in Gold is still uncertain and as you can see on the chart above the yellow metal is on a downtrend that can be easily monitored on higher timeframes, such as the 4h or above. To be able to suggest successful trades within the day as we did for the past couple of weeks we will need to let the instrument to calm down and find some consistency to its moves. Please remain patient as we repeat that it’s better to stand back and wait when you don’t think the market is suitable for trading rather than risk your hard-earned money on gut or luck.
All charts have been created using FXCM’s Trading Station platform.
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