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Wednesday, October 11th
The EUR/USD pair remains better bid on Wednesday, mostly ignoring uncertainty surrounding Spain. Yesterday Catalonia’s President Carles Puigdemont and other regional politicians signed a document declaring Catalonia's independence from Spain. Moreover, Mr. Puigdemont also delivered a speech, begging Spanish government for a dialog. However, the Spanish government keeps its position clear and does not recognize actions of the Catalan leader. On the other hand, ongoing weakness of the US dollar, additionally boosted by yesterday’s dovish comments of Dallas Fed Chief R.Kaplan, pointing on a postponement of Fed rate hike this year, also collaborates with pair’s upside in the middle of this week. Today all traders’ attention will remain focused on the FOMC Sept meeting minutes, which will be able to bring fresh insight on further Fed monetary policy path, while data from the US labor market and developments from the Spanish political field will also be able to provide the pair directional impetus in the day ahead.
The GBP/USD pair struggles to determine its direction and remains in the vicinity of 1.3200 mark, following broad market sentiments on Wednesday. An absence of any direction could be explained by increased cautiousness across the market, as investors remain in anticipation of another market-moving event – the FOMC meeting minutes, which could be able to set up pair’s further trajectory. However, the pound manages to keep a smile lately, as upbeat fundamentals and UK PM T.May’s intentions to maintain strong economic post-Brexit partnership with EU keep sentiments around the UK currency underpinned. Adding to this, ongoing decline of the US dollar, accelerated by yesterday’s dovish comments of FOMC member R.Kaplan, who stated that the Fed could afford to be patient on rate hikes, is also limiting pair’s further losses. On the data front, today the UK calendar won’t offer anything important, while the US will publish the FOMC minutes from the latest meeting, which will hog the limelight during the NA afternoon.
The NZD/USD pair trades without clear direction at the equator of this trading week, as sentiments around both currencies remain subdued. Yesterday the US dollar received another bearish impetus after FOMC member R.Kaplan suggested being a little bit more patient and gradual on rate hikes. On the other hand, lingering worries surrounding New Zealand political environment, triggered after general election failed to identify a clear winner, are still limiting NZD gains. Moreover, classic cautiousness across the market ahead of the FOMC minutes will also keep the pair capped within its daily range, as investors will seek for additional clues on another Fed rate hike this year. Besides the Fed protocols, the US economic calendar also contains the JOLTS Job Openings report, which will also be able to bring some short-term trading opportunities during the NA session.
The dollar/yen pair follows broad market trend on Wednesday and remains directionless, awaiting for fresh movement catalysts. Yesterday the pair managed to recover after moderate drop on the back of decreasing demand for safety, as lack of news from Korean Peninsula and easing concerns surrounding political climate in Spain are forcing investors to take a closer look on more risky assets. On the other hand, continuing sell-off of the US dollar, additionally boosted by yesterday’s dovish talks of Fed member R.Kaplan, who noted that the Fed might need to see more evidence of progress in inflation for further monetary policy tightening, is limiting further gains of the pair. Today all eyes will remain glued to the FOMC minutes, which will be able to influence the US dollar price dynamics in short-term projection, while the JOLTs Job Openings report will also attract traders’ attention during the NA session.
The main events of the day:
US JOLTs Job Openings – 17.00 (GMT +3)
FOMC Meeting Minutes – 21.00 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1701 R. 1.1879
USDJPY S. 111.57 R. 113.25
GBPUSD S. 1.3091 R. 1.3281
USDCHF S. 0.9698 R. 0.9826
AUDUSD S. 0.7722 R. 0.7824
NZDUSD S. 0.7038 R. 0.7102
USDCAD S. 1.2445 R. 1.2589
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