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MORNING BRIEF
It has been an eventless day yesterday as the currency market didn’t produce any major developments. The Euro remained range-bound between 1.3550 and 1.3600 while the British Pound rebounded from the support level of 1.6000. We had no news events over the day to provide direction to the market so investors remained focused on discussions in Washington. Yesterday President Obama expressed his optimism that there are enough votes in Congress to pass a “clean” bill to raise the debt limit, while House Speaker John Boehner said on Sunday he wouldn’t bring funding or debt-limit bills to the House for discussion unless they were linked to broader deficit talks. Treasury Secretary Jack Lew was also quoted on Sunday saying that Congress is “playing with fire” if it doesn’t raise the debt limit by Oct. 17, after which the U.S. wouldn’t be able to borrow money to pay its bills. This uncertainty is hurting both the US Dollar as well as the market in whole as investors remain cautious and undecided, however we remain confident that a solution is bound to come sooner than later.
No major announcements scheduled for today
Several second tier news events are scheduled to be announced today but none of them can be considered a potential market mover. Early in the day at 7.00 the German Imports and Exports are to be announced and we will read this figure as an indication on how Europe’s strongest economy is doing while at 11.00 the German Factory Orders will act as a similar indicator. Later at 13.30 the US Trade Balance is expected to be announced and we are curious to see whether the announcement is made on schedule and if so, assess US import/export ratios that play a factor on Fed deciding to continue providing stimulus to the economy.
Economic Calendar
|
Time |
Currency |
Event |
Importance |
Forecast |
Previous |
|
7.00 |
EUR |
German Imports |
Low |
0.7% |
0.3% |
|
7.00 |
EUR |
German Exports |
Low |
1.1% |
-1.1% |
|
11.00 |
EUR |
German Factory Orders |
Medium |
4.0% |
2.0% |
|
13.30 |
USD |
US Trade Balance |
Medium |
-$39.3B |
-$39.1B |
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TECHNICAL ANALYSIS & LEVELS
EUR/USD
Euro remained primarily range-bound yesterday briefly popping above the 1.3575 level and triggering our long entry. Later on the currency however didn’t find enough demand to reach our targets and retraced inside the range it holds for a couple of days. We remain optimistic that the Euro will look for higher levels as the situation in Washington hurts Dollar’s outlook. We will keep our stops firmly placed below the 1.3525 area and wait for momentum to pick up once again.
GBP/USD
The Pound retraced higher yesterday bouncing off the 1.6000 area of support before settling around the 1.6060-00 area. We feel that for the time being Sterling will look to retest higher levels in an effort to remain in a sideways movement for some time. We prefer a long entry just above the 1.6100 area with targets coming at 1.6120 and 1.6160 and a stop placed below the 1.6050 mark. However if the currency breaches below the 1.6050 level then our scenario is cancelled as the Pound will probably look to bounce back higher from lower levels.
FTSE 100
The FTSE 100 punished us yesterday for entering on a trade on a late Friday afternoon and opened aggressively lower hitting our stops at the 6,415 points area. We believe that the UK index will once try and settle in a range as before, a range between 6,400 and 6,475 points. We will stay clear from the index today as we would like to verify this scenario prior to making any suggestions. However, in the remote chance that the index breaks out of this range today we will cautiously follow the move higher or lower and you can see our targeted levels in the chart above. We need to stress though that this breakout will probably not come today but it’s better to be prepared that to be caught off guard.
Gold
Gold still tries to find direction and yesterday triggered our long entry just above the $1,325 level but failed to gain momentum to reach higher. We will remain patient and stay with the trade but we will move our stops a bit higher to reduce our potential losses if the yellow metal fails again to gain momentum, we will place them just below the $1,307 mark. Gold has been also hurt from the instability in the US thus the extremely volatile behavior of the last days.
All charts have been created using FXCM’s Trading Station platform.
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