EXPERT / MORNING BRIEFING

TODAY'S MORNING BRIEFING

MARKET RECAP

XAUUSD0.66%1289.55
EURUSD0.55%1.1852
AUDUSD0.41%0.7878
USDCHF-0.54%0.9763
CRUDE OIL-1.25%51.59
NZDUSD-1.71%0.7031
Prices as of previous session instrument closing.

▶︎ DJIA and S&P500 made another record close while the Nasdaq Composite closed in negative territory. US indices did not start well yesterday session but they closed off their intraday lows as the DJIA recovered 100 points and closed for the second consecutive session above the psychological threshold 23,000. The gauge gained 7.3 points or +0.03% at 23,164.9 and the S&P500 rose 0.83 points or +0.03% at 2,562.1 . Nasdaq Composite slid 19.15 points or -0.29% to 6,605.06. AAPL slid -2.37% and AMZN lost -1.04% while GOOGL dropped -1.08%. The negative performance of heavyweight tech stocks explains Nasdaq weakness.

▶︎ In the FX market, the USD dollar was a bit weak against EUR, JPY, and AUD. The greenback rose against the British Pound and the Kiwi dollar. the UK retails sales data disappointed the financial community and in New Zealand the Labour Party, that was at the opposition, is forming a government that could put some pressure on the Reserve Bank of New Zealand as policymakers of the new government would like to change the mandate of the central bank and add the full employment commitment. The RBNZ was the first monetary authority to adopt an inflation targeting mandate, in December 1989.

▶︎ XAUUSD and XAGUSD rose but the rally that was seen at the beginning of the month lost momentum. Gold did not manage to stay above 1,300$/oz and below this month low 1,260 $/oz more weakness is expected. EIA Natural Gas storage change data at 51B was below the consensus 55B and the event was a catalyst where intraday volatility soared.


CHART OF THE DAY


The ratio is below its 2012 spike but it is above the average between 1992-2010. Both Crude Oil and Natural Gas industries have evolved with new demand and supply structures and imbalances. However statistically it seems that the ratio could go near its long-term average but upside periods could last several years.


ECONOMIC CALENDAR AND TODAY SESSION (CET TIME)

TIME (CET)MARKETEVENTFORECASTPREVIOUS
08:00GEGerman PPI (YoY) (Sep)2.9%2.6%
08:00GEGerman PPI (MoM) (Sep)0.1%0.2%
08:35JPYBoJ Governor Kuroda Speaks
14:30CARetail Sales Ex Auto MOM(AGU)0.3%0.2%
14:30CARetail Sales MOM(Agu)0.5%0.4%
14:30CACPI (YoY) (Sep)1.7%1.4%
14:30CACPI (MoM) (Sep)0.3%0.1%
16:00USExisting Home Sales (Sep)5.30M5.35M
16:00USExisting Home Sales (MoM) (Sep)-1.0%-1.7%
20:00USFOMC Member Mester Speaks


During the Asian session, the US Senate passed its fiscal year budget resolution. It was an important condition for the implementation of the tax reform bill. US Index futures suggest a positive opening on Wall Street for the last session of the week. UK Retail sales suffered an unexpectedly sharp fall of 0.8% in September, reversing a jump in August, according to the Office for National Statistics. The UK's key inflation rate hit its highest in more than five years in September, driven up by increases in transport and food prices.

European leaders are gathered in Brussels on Friday for a summit, part of which is devoted to Brexit negotiations. The afternoon we will be following Retail Sales data from Canada and Us Home Sales data. Cleveland Fed President Master speaks at a global finance and technology conference in New York.

FED Chairwoman Janet Yellen will hold a speech at the National Economists Club Herbert Stein Memorial Lecture and Annual Dinner in Washington, D.C.


TECHNICAL ANALYSIS

USDJPY (Daily timeframe)


The pair is trying to make a bullish breakout of its recent highs. In case it will be successful USDJPY could test 114.5. Below today lows USDJPY could test the lower side of the range in area 111.82.


XAGUSD (Daily timeframe)


UThe commodity is without a trend as all the most relevant MA are almost overlapped. Is expected however that volatility will come back. The recent failed breakout of the supply line could increase selling pressure and the commodity could slide to 16.5 $/oz. Beneath this level is expected another bearish wave. Buyers will be in control above 17.5 $/oz.


NATURAL GAS Active Contract (Daily timeframe)


Natural Gas rebounded from its July lows and rose above the 61.8% Fibonacci retracement of the February- May rally. Above the supply line that links lower highs the commodity could test its 2017 top near 3.42 $/BTU. Below yesterday lows it may drop to 2.5.


CRUDE OIL Active Contract (Daily timeframe)


The commodity is trading above its most relevant moving average. Above 52.90 $/barrel Crude Oil could test 55 area. Beneath 50.2 it could test the demand line near 48.5. Only below the dynamic trendline selling pressure would accelerate and Crude Oil could test area 46.


NZDUSD (Daily timeframe)


The pair went intraday below the lower side of the bullish channel. End of the day confirmation is needed to assess the probability of a bearish wave. A more conservative approach would require considering a pullback. Only above the daily 200 MA, now at 0.7150, the rate could decrease selling pressure. Next support near 0.6830.




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