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6 November Forex daily review

Sergiy Zlyvko
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On Wednesday the U.S. dollar closed in the red zone. EURUSD and GBPUSD currency pairs strengthened on strong statistics published in the European session. Euro/dollar has strengthened its position after strong service PMI indices in the euro area and factory orders report in Germany. In October, business activity in services sector improved in Spain, Italy, France, Germany and Eurozone. The volume of industrial orders far exceeded the expectations of the market, both in monthly and annual basis.

British pound rose to 1.6115 after the publication of the report on industrial production in the UK, which was also better than expected. By the end of the day single currency and pound slightly adjusted.

Today investors will be focused on the Bank of England and the ECB. Market participants expect that the outcome of the central bank meeting left interest rates unchanged. The interest for the financial markets will have press conference of Mario Draghi since Tuesday in a speech M. Draghi refrained from commenting on low inflation subject and the prospects of monetary policy further easing.

High volatility is expected after 12:45 GMT as at 13:30 GMT preliminary index of U.S. GDP in the third quarter will be published. Investors will be interested to see how a partial shutdown of the U.S. government for 17 days was reflected on GDP figures. If M. Draghi from the press conference did not inform about the hints of monetary policy easing, the dollar is expected to fall, as the labor market report publishes on Friday and the he expected worse October’s NFP than September’s value. We must be prepared for dollar’s decrease, although at the density of key economic indicators is not easy to predict dollar’s rate.

Euro/dollar in the U.S. session rose to 1.3545 and is currently trading at 1.3515. a difficult day. At 12:45 GMT ECB will announce interest rate decision and at 13:30 GMT and M. Draghi holds press conference. Along with the performance of M. Draghi, GDP report comes out in the U.S. If there won’t be hint of interest rates decline on Draghi’s press conference, given the forecast of NFP, the traders should be ready for EURUSD growth to 1.3590 level. It is better, of course, to be out of the market till Monday. The volatility after 12:45 GMT will jump and which direction the currency will move, we will learn in the evening.

GBPUSD has fulfilled basic scenario, albeit with a bias. Now, the pound is trading at 1.6082. Bullish trend for GBPUSD pair remains. Positive statistics coming out in Britain in recent days, today will support the bulls. A day is not easy, a lot of important data is planned for publishing, especially with a press conference of Draghi a report of the U.S. GDP is coming. The market can be broken before payrolls both downwards and upwards. In order not to fall under the hand to be out of the market today and tomorrow is the best position or to work with reduced volume.

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