Yen the Week’s Strongest as Global Markets Mixed The highlight of today’s market session is likely to be data from the UK’s GDP report in the third quarter, and supplementary news from the United States regarding durable goods orders and PMI data for the services sector. EURUSD managed to climb back from losses late last week, closing out the day at 1.1050 up from a 10-week low near 1.1000. Tough conditions in the dairy market have contributed to a widening deficit in New Zealand’s trade deficit, as reported for the month of September. The deficit currently sits at over NZD $1 billion after a period that saw exports decline 8.00%. What is not counted in the numbers is a rebound for the GDT price index, which will be counted in November’s report instead. While imports did decline, it was only by 5.5% and outweighed by the steep drop in exports. NZDUSD has been trading sideways since early October when prices hit brief highs of 0.6870, with the Reserve Bank of New Zealand expected to make a decision concerning interest rates in the country on the 28th. It is anticipated that the RBNZ will hold rates steady and leave policy unaltered.
The current winning currency in terms of weekly gains is the Yen, which has ascended 0.71% against the dollar since Monday. October 30th will see a meeting between the voting members in the Bank of Japan, who will make a decision on the future path for monetary policy. Japan has been hesitant to alter policy recently, yet analysts are divided on the upcoming meeting with some saying to expect further easing to be announced. BoJ Governor Haruhiko Kuroda does not see the need for an expansion and has remained positive that Japanese economic metrics can recover without intervention, and he expects inflation to hit its target by 2017. USDJPY has been trading flat after prices briefly saw 125.85 while trying to break range, but has since sunk down to its current level at 120.56.
Economists are widely expecting to see a slight slowdown in third quarter GDP growth in the UK. Today’s 09:30 report is anticipated to show 0.60% growth down from 0.70% in the previous quarter, while some analysts say the metric may be as low as 0.50%. A weak services sector that has traditionally been a large contributor to domestic expansion is likely to blame, though for the first time in four sessions the GBPUSD pair managed a bullish close around 1.5348. Current patterns in the currency have indicated that the pair as recently broken a major trend line and has its sights on resistance at 1.5460 with current support at 1.5300. Any deviation up or down from present movement could see the new resistance being tested or a possible return to previous support at 1.5210.
S&P 500 Descending Triangle Trading Opportunity
The rapid appreciation in the Yen combined with the outlook for expanded monetary stimulus have hit equity benchmarks across the globe after the optimism fueled by the Chinese rate cut waned. USDJPY is a strong barometer of risk sentiment and the recent losses in the pairs indicate that risk-aversion might be experiencing a pickup following the recent gains in risk assets. The S&P 500 is currently consolidating between support at 2056 a downtrend line forming over the near-term. The descending triangle formation emerging as a result has a bearish bias with any move and close below support considered a triangle-based breakout to the downside to be confirmed by increased momentum and volume. A move above the trendline could indicate a breakdown in the pattern and potential resumption of upside momentum.