The financial market this week was pretty quiet. Last week we saw a few decent prices in all the major pairs, which mostly came from the USD side. The USD became quite bearish in October, having been bullish for more than a year. But the deterioration of the U.S. economy, as the ISM report showed, turned the situation toward the USD. The Fed also cut rates for the last month and despite having ended up cutting rates for now, they left the window open for more cuts, instead of raising rates.
But the decline stopped in late October for the USD, and last week Buck turned around quite bullish. However, yesterday and today the markets were calm as we waited for US President Donald Trump to give a speech on trade later this afternoon at the New York Economic Club. He is likely to comment on Sino-US trade negotiations and a partial trade agreement. Although dealers also want to hear whether Trump will postpone tariffs on European car imports. Rumor has it he could postpone them again for another six months.
At the European session, we gave a published report on earnings and employment in the UK, which was a bit contradictory. The unemployment rate fell again to 3.8%, which is a fairly low level. But on the other hand, earnings for the second month in a row cooled by two points, while the new , which comes after another big drop in August. So it seems that the employment report is not as optimistic now as it was a few months ago.
European session
- ECB Coeure wants QE to continue – A member of the Governing Council of the ECB, Benoit Coeure, commented early this morning that we are committed to continuing QE for as long as necessary. This seeks to strengthen the adaptive effect of our policy rates. We could consider extending access to the ECB’s balance sheets. His comments sound awful, but they depend on who he means by “we.”
- UK earnings report – The UK earnings report was released earlier today, showing that earnings in the UK cooled again during September, falling to 3.6% from 3.8% expected, after falling in August from 4.0% to 3.8%. The previous figure was 3.8%, but was revised lower to 3.7%. Average weekly earnings without bonuses also fell to 3.6% 3m / gs 3.8% earlier.
- UK Employment Report – The ILO unemployment rate is also lower at 3.8% compared to the previous 3.9%. But the change in employment came at -58k to -102k as expected. October change in unemployment requirements 33.0k. So the unemployment rate fell last month, but employment fell again. This figure is the biggest drop in the three months to May 2015.
- Eurozone and German Economic Sense ZEW – Economic sentiment has been deteriorating in Germany and the eurozone for more than a year, falling to about -44 points in August. But in the last two months we have recorded an improvement, with this indicator reaching -23 points last month. Economic sentiment was expected to improve further to around -12 points this month, but improved further, with German sentiment at -2.1 points and in the eurozone at -1.0 points.
American session
- More support for the Chinese economy than the government – Chinese Prime Minister Li Keqiang commented through the state media. He said he would strengthen support for the real economy. The government will accelerate the upgrading of the manufacturing sector, keep macro policies stable to achieve the 2019 targets, and use countercyclical adjustment measures more effectively.
- The ECB’s De Guindos leaves the door open for further relief Mr – ECB member De Guindos made a few remarks to the Boersen-Zeitung some time ago, saying that we had definitely not exhausted all our options. We are aware of the side effects of our monetary policy, we will keep the side effects to an even greater extent in the future. Currently, the real threat is a prolonged phase of extremely low growth. Expectations of inflation have recently shown a significant decline, but are still not anchored. The adoption of the September policy package was and remains an absolutely correct decision.
- US President Trump talking about trade – US President Donald Trump will discuss the country’s trade policy in his speech at the New York Economic Club. There is no certainty whether it will touch on trade relations with China, but expect markets to stick to every word it utters in speech, regardless.
He trades in sight
Poput bika
- The trend turned bullish this week
- The policy is in favor of the GBP
- MAs previously held as support
Today, the 50 and 200 SMAs provided solid support for GBP / USD
GBP / USD has been quite bullish in recent weeks, as the outlook for the Brexit scenario without a deal has plummeted. But the trend shifted last week when attention turned to the USD. But yesterday we saw a sharp rise and today this pair remains bullish after rejecting 50 SMA (yellow) and 200 SMA (purple) on the H1 scale. Nigel Farage is doing everything in his power to help the Conservative Party, so for now the policy for GBP is strong.
In conclusion
GBP / USD were driving under emergency shocks today, falling after reports of soft employment, especially after falling new jobs. But it was reversed after Nigel Farage’s comments regarding the election. The other couples still remain fairly calm, as we later approach Donald Trump’s scheduled speech.