The markets remained within a tight range yesterday and overnight as traders await the FOMC rate decision on Thursday. USD is holding near a 3 week low against a basket of most major currencies as investors bet the rates would be kept at their record lows until at least December. Although labor conditions are very strong, uncertainty from China keeps the possibility for a hike very low. Although some in the market believe that the FED could raise rates, the view that we will have a December liftoff is gathering support.
In Asia, the AUDUSD dropped from a 2 week high to 0.7130 following the minutes of the RBA September policy meeting which in combination with another Chinese stock market selloff, dragged the AUD lower.
In commodity markets, gold still remains under pressure. After rallying at the start of August, gold has now fallen for a 3rd straight week and has given back 3/4ths of those gains. Very important support level is at $1100. Further direction from the FED will be a make or break deal for the precious metal.
The economic calendar today is full. UK will release CPI and PPI inflation data. EZ will release the German ZEW, Eurozone trade balance and employment. In the US, retail sales, FED manufacturing and industrial production will be released. Main focus remains the FOMC decision on Thursday.
Trading Quote of the Day: “Volatility is greatest at turning points, diminishing as a new trend becomes established” George Soros.
USDJPY
Pivot: 120.65
Likely scenario: Short positions below 120.65 with targets @ 119.8 & 119.6 in extension.
Alternative scenario: Above 120.65 look for further upside with 120.95 & 121.3 as targets.
Comment: The RSI is mixed with a bearish bias.
USDCAD
Pivot: 1.321
Likely scenario: Long positions above 1.321 with targets @ 1.3285 & 1.331 in extension.
Alternative scenario: Below 1.321 look for further downside with 1.3175 & 1.315 as targets.
Comment: The RSI lacks downward momentum.
USDCHF
Pivot: 0.972
Likely scenario: Short positions below 0.972 with targets @ 0.966 & 0.964 in extension.
Alternative scenario: Above 0.972 look for further upside with 0.9745 & 0.9795 as targets.
Comment: A break below 0.966 would trigger a drop towards 0.964.
GOLD
Pivot: 1116
Likely scenario: Short positions below 1116 with targets @ 1098 & 1094 in extension.
Alternative scenario: Above 1116 look for further upside with 1126 & 1130.7 as targets.
Comment: As long as 1116 is resistance, likely decline to 1098.
OIL
Pivot: 44.9
Likely scenario: Short positions below 44.9 with targets @ 43.4 & 42.75 in extension.
Alternative scenario: Above 44.9 look for further upside with 45.45 & 46.05 as targets.
Comment: As long as 44.9 is resistance, likely decline to 43.4.
DAX
Pivot: 10230
Likely scenario: Short positions below 10230 with targets @ 9953 & 9881 in extension.
Alternative scenario: Above 10230 look for further upside with 10340 & 10525 as targets.
Comment: As long as the resistance at 10230 is not surpassed, the risk of the break below 9953 remains high.
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