The dropping of the fraud charges against #Pravin dominated local news. The Rand responded strongly and the FX market sold the USDZAR pair heavily. This morning we have had the RBA (Reserve Bank of Australia) leave rates on hold and so this has responded to the upside.
Dean's Daily FX Update – 01 November 2016
In the Zone
- AUDUSD
- USDCAD
- USDZAR
Noteworthy News
- The NPA decided to withdrawal charges against Finance Minister Gordhan. It is not the end of the farce though as opposition parties now call for the resignation of Shaun Abrahams. I certainly don’t think we have seen the end of this.
Recap
The forex market anxiously awaited to hear from BOE Governor Carney over weekend rumours that he was planning to resign from his post. His statement reads that he will lead the BOE through 2019 and certainly “navigate the ship” through the murky waters of Brexit. The market breathed a sigh of relief as sterling rallied by 60 pips to trade around 1.2250. This is around the same levels that the market found resistance last week and it will be interesting to see if GBPUSD is able to push through, or if the market will continue to sell into the rallies.
The EURUSD has a little bout of Jekyll and Hyde syndrome at the moment, it seems to take a slow dip during Asia and then find a bid during the London and US session. It is encouraging that 1.0900 support now seems a little more entrenched and we probably are building support levels higher up. We are going to need a strong push to trade through 1.1000 later on in the week though.
The USDJPY was rather subdued, it did test 105.20 but couldn’t trade higher as we eventually drifted lower to 104.80, even the BOJ announcement could not move the market this morning. The pivot levels are at 104.83 and I find it interesting that price is leaning on that level, this market seems a little edgy and perhaps we are waiting to see what happens on the FOMC decision tomorrow.
For the most part the commodity pairs were unchanged, the AUDUSD did pop nicely this morning however, the RBA left rates on hold as expected and the statement had no surprises – a bit boring in fact. This could keep those levels inflated today and could perhaps present an opportunity tomorrow.
Oil spent most of the day flat but was met with a tsunami of selling late last night, doubts over OPEC ability to cut production, month end flows and a break of a key technical level was to blame. This had a material effect on USDCAD which gave back all the day’s gains to trade back above 1.3400, I am enthused that the pair didn’t run away though and I am hoping to see a rally in the Loonie today.
If anyone doubted the importance of Pravin Gordhan in the battle to beat the credit downgrade, the price action in the USDZAR would have removed any doubt. On the back of the news that charges against him were to be dropped, the ZAR strengthened by a staggering 400 pips. We are itching towards the 2016 lows at 13.34 – 13.22 and it could be interesting to see if price finds massive support down there.
Daily FX Ranges
EURUSD
Resistance 1.0980 – 1.0999
Support 1.0940 – 1.0927
GBPUSD
Resistance 1.2245 – 1.2277
Support 1.2170 – 1.2150
AUDUSD
Resistance 0.7660 – 0.7700
Support 0.7586 – 0.7575
NZDUSD
Resistance 0.7164 – 0.7179
Support 0.7130 – 0.7115
USDCAD
Resistance 1.3410 – 1.3435
Support 1.3380 – 1.3358
USDJPY
Resistance 105.15 – 105.35
Support 104.70 – 104.48
USDCHF
Resistance 0.9915 – 0.9930
Support 0.9870 – 0.9850
USDZAR
Resistance 13.6590 – 13.7050
Support 13.4000 – 13.3000
Important Economic Data out today
- 11:30 GBP Manufacturing PMI
- 14:30 CAD GDP
- 16:00 USD ISM Manufacturing
- 18:00 CAD BOC Governor Poloz Speaks
- 23:45 NZD Employment Change
- 23:45 NZD Unemployment Rate
- Tentative NZD GDT Prices
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