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Technical Analysis for 19/10/2016

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Technical Analysis for 19/10/2016

October 19
09:00 2016

EUR / USD – Euro US Dollar

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On the eve the pair showed the decline in quotations after the publication of the release on the inflation in the US in September. I expect the continuation of the downward trend as the market weakly reacted to the strong report. The inflation in the US has raised the highest peak since November 2014, and the index of core CPI has been kept higher than 2% for the 11 consecutive months. This pattern allows the Fed to raise interest rates at one of the two remaining meetings in 2016. If to look at the index differential of CPI of the Euro zone and the US, by the end of September it has expanded by 0.2%. Investors always consider such changes in the short term because the inflation is indicator №1 for Forex. In the credit markets, the yield spread on the 10-year German and the USA government bonds continues to decline, which is also in favor for the bears. In general, the index of the dollar basket USDX is aimed at testing the high of February- 98.59, which implies a decline in the euro quotes in the area of Figure 9.

GBP / USD – British Pound Dollar

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At present, a mixed background is forming. On the one hand, we can expect the moderately positive macroeconomic statistics from the UK regarding the labor market. This is indicated by the consumer confidence index Gfk as well as the rise of housing prices, which is closely correlated with the dynamics of wages. The ignoring of the strong US data on the inflation on Tuesday is another positive factor for the pound. This situation may indicate the presence of a large number of customers, but the picture will become clear today if the pound again ignores the negative. One day is not enough to judge the mood of the market. Negative factors include the dynamics of the credit markets, where there is a fall of the yield on the10-year UK government bonds relative to their counterparts from the US and Germany.

In this regard, during the day we should expect the flat within the range of 1,2240-1,2340.

USD / JPY – US Dollar Japanese Yen

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At present, a mixed background is forming. On the one hand, we can expect the moderately positive macroeconomic statistics from the UK regarding the labor market. This is indicated by the consumer confidence index Gfk as well as the rise of housing prices, which is closely correlated with the dynamics of wages. The ignoring of the strong US data on the inflation on Tuesday is another positive factor for the pound. This situation may indicate the presence of a large number of customers, but the picture will become clear today if the pound again ignores the negative. One day is not enough to judge the mood of the market. Negative factors include the dynamics of the credit markets, where there is a fall of the yield on the 10-year UK government bonds relative to their counterparts from the US and Germany.

In this regard, during the day we should expect the flat within the range of 1,2240-1,2340.

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