28 October Forex daily review
On Monday, the U.S. dollar closed up to its competitors. The euro / dollar fell by 0.16% and the rate of the pound / dollar fell by 0.23%. U.S. data was came out mixed again. The volume of industrial production in the U.S. in September rose by 0.6% compared to 0.4% in August (consensus 0.5%). Pending sales in the secondary market in the U.S. in September declined by 5.6% versus a decline of 1.6% in August. Sales growth is expected at 0.1%. In addition to fundamental data, market participants take into account technical factors, which are now in many currency pairs give the favor to the U.S. dollar. The fall of the British pound in the U.S. session news agencies associated with St. Jude hurricane in the UK.
Traders remain focused on the results of the Fed’s Open Market Committee next meeting in the U.S., which will be announced on Wednesday. In Asia, the dollar has strengthened against the Australian dollar and the British pound. Sharp weakening of the Australian dollar was caused by comments of the Reserve Bank of Australia head Mr. Stevens. Speaking at the conference, Glenn Stevens said that Australian dollar current exchange rate is overvalued and does not correspond to economic conditions. Central Bank in the near future expects the depreciation of the national currency against lower prices of commodities exported from the country, due to boom slowing in the mining industry. Following AUD/USD, the pound has been broken. On Tuesday we guess another update of maximum for the dollar and then the rebound is expected (decline of the dollar) and the preparation for the meeting of the U.S. Federal Reserve.
EUR/USD downward movement is gaining momentum. At the moment, the bulls are supported by two cross-rates EURGBP and EUR/AUD. Considering how yesterday and today the British pound sank, the basic scenario for EURUSD is the drop to 1.3715 / 30. Today is the last day when sellers have the chance to drive away from euro bulls to 1.3730. In the evening, the market has already begun preparations for U.S. Federal Reserve meeting.
In Asia, GBPUSD has dropped from the maximum 1.6207 to 1.6063. The sharp increase of cross-rate EURGBP pushed the sterling to a new week low. There is an opinion that traders in the morning disrupted protective stops on long positions. Now the indicators are in buying area, so until the U.S. session the pound expect the flat and then the fall. Europe often does not support Asian direction, so be the traders should be ready for rebound. New sales of pounds are preferable when Stochastic is within range of 70%. If the cross will go to the rollback, then GBPUSD can be restored to 1.6120 / 30.
USD/CHF rate in the main scenario backed to Friday’s high. In the morning on the statements of RBA head, USDCHF head achieved new highs. After a slight decline to 0.8950, USDCHF is forwarded to increase to 0.8988. Tomorrow there should be flat on announcement of U.S. Federal Reserve decision.
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