The US Dollar Index declined for the second week after breaking the opening range for October, and new data releases coming out of the US may keep the Dollar under pressure as indications of a slowing recovery weakens speculation for an looming shift in the Federal Reserve policy.
After a few weeks out of the limelight for major central banks, the BOC, BOJ, and ECB meet to discuss monetary policy on Wednesday and Thursday respectively.
In addition, politics return to the spotlight as the UK releases its autumn budget and the US tries to hash out the final details of Biden’s proposed $3.5 billion social spending plan. And although always imminent in the background, the coronavirus is making headlines once again.
Stock earnings will also be head and centre this week as all the FAANGs release earnings, except for Netflix, which knocked-out expectations last week. The following are a list of potential market movers releasing earnings this week: FB, HSBC, MMM, GOOGL, LLY, AMD, GE, LMT, WTB, MSFT, V, PINS, TXN, TWTR, UPS, AAPL, BMY, BA, KO, F, GSK, SPOT, MCD, GM, EBAY, EAD, LLOY, RDS, SHOP, AMZN, X, SBUX, CAT, MA, XOM, CVX, AIR, NWG
It’s also end of month and markets will get their first look at the US Advanced Q3 GDP which will certainly give some momentum to the US Dollar.
Major Currencies Performance and Signals
EUR/USD
The euro now has no clear trend and its trading within a range of 50 pips. This week’s ECB meeting will end with all the Eurozone central bank’s monetary levers left where they are and the Eurozone’s central bank will be delighted if Thursday’s statement and the subsequent press conference by its President Christine Lagarde end with no movement in the Euro.
FORECAST: NEUTRAL
Resistance: 1.1650, 1.1700, 1.1750
Support: 1.1600, 1.1550, 1.1500, 1.1450
GBP/USD
The Cable has surged at the start of the week but on Friday is went down to the Monday levels. We expect the British pound to appreciate more this week.
FORECAST: BUY
Resistance: 1.3800, 1.3850, 1.3900
Support: 1.3750, 1.3700, 1.3650
AUD/USD
The Aussie ended the week in gains despite the last two days closed in negative. Bullish gold prices and Wall Street helped the Aussie to gain further. US 10-year bond yields dropped, providing no room for the Greenback. We expect the Aussie to continue its bullish trend.
FORECAST: BUY
Resistance: 0.7500, 0.7550, 0.7600
Support: 0.7400, 0.7350, 0.7300
USD/JPY
The US Dollar may face a larger correction going into the end of the month as the US GDP report is anticipated to show a slowing recovery, but speculation for a shift in Fed policy may keep the Greenback afloat as it lifts longer-dated Treasury yields.
FORECAST: NEUTRAL
Resistance: 114.00, 114.50, 115.00, 115.50
Support: 113.50, 113.00, 112.50
USD/CAD
Canadian Dollar upside momentum slowed this past week. Hawkish BoC bets this week leave room for disappointment. Fundamentals seem solid, but earnings season is a wildcard this week. We expect the bearish trend to continue.
FORECAST: SELL
Resistance: 1.2400, 1.2450, 1.2500
Support: 1.2350, 1.2300, 1.2250
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