The second half of yesterday’s trading session passed without any major news. The market is still adjusting to the Fed’s decision taken on Wednesday evening (21st of September).
Day’s news (GMT 3):
- 10:00 France: Markit services PMI (Sep), Markit manufacturing PMI (Sep).
- 10:30 Germany: Markit services PMI (Sep), Markit manufacturing PMI (Sep).
- 11:00 Eurozone: ECB President Mario Draghi’s speech, Markit manufacturing PMI (Sep), Markit services PMI (Sep).
- n/a UK: British Prime Minister Theresa May’s speech.
- 13:00 UK: CBI industrial trends survey – orders (Sep).
- 15:30 Canada: retail sales (Jul), CPI (Aug).
- 16:45 USA: Markit manufacturing PMI (Sep), Markit services PMI (Sep).
Today, our attention will be focused on the PMI indicators from Markit for the Eurozone and US. HIS Markit is set to publish its preliminary forecasts for GDP growth in the European and American economies for the third quarter of 2017. The effects of the hurricanes to have hit the Southwest coast of the US will be taken into account in this preliminary rating.
British Prime Minister Theresa May is set to make a speech today in Florence on the subject of the UK’s future relationship with the European Union post-Brexit. Remember that over the course of the last year, we’ve seen very high intraday volatility on the pound while speeches of this nature have been taking place.
On Saturday the 23rd of September, New Zealand will hold its parliamentary elections, and on the 24th, Germany will hold its federal elections. Volatility on the Kiwi dollar and the euro could be significantly higher before and after the weekend.
On the 4-hour timeframe, the EURUSD pair is trying to recover its upwards trend:
On the hourly timeframe, the EURUSD is moving towards the centre of its potential range:
Although there is a weak buy signal on this pair, I’m going to refrain from trading. First of all, elections are being held in Germany over the weekend. In theory, the market could open with a gap after the weekend. While elections only have a small influence on national currency rates in the long term, volatility can increase in the short term. Secondly, on the hourly timeframe, the EURUSD pair is trading within a range, which in itself indicates that growth on the euro has stalled. Thirdly, the pair has yet to renew the “key top” of the correctional movement on the hourly timeframe. It’s for these reasons that I’m just going to watch the market from the sidelines today.
At the time of writing, the EURUSD pair is trading at 1.1969.
On the 4-hour timeframe, the GBPUSD pair is trading around the resistance line of the upwards trend:
I don’t think it’s worth buying GBPUSD at the moment. What’s more, we could see some potentially chaotic behavior on the pound during Theresa May’s speech today. At the time of writing, the GBPUSD pair is trading at 1.3590.
The USDCHF pair is continuing to move in a downwards trend on the daily timeframe:
We can see on the chart, however, that the price is approaching the resistance line of the trend. In my opinion, if US economic growth picks up thanks to the Fed’s looser monetary policy, the USDCHF could break through the trend line. Still, I’d like to stress that the USDCHF pair is still caught in a downwards trend and we’re talking about the daily timeframe here. That is to say that if there is a breakout, it won’t be instantaneous.
At the time of writing, the USDCHF pair is trading at 0.9681.