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Dean's Daily FX Update – 19 October 2017
In the Zone
- EURUSD
- GBPUSD
- USDCAD
Noteworthy News
- Donald Trump is set to meet with Janet Yellen today, the fact that he will be making an announcement in the coming days suggests she will not be retained in her position. I am not sure how this will affect the dollar, it will depend on who he replaces her with.
Recap
There is nothing in the form of US economic indicators to move the market, which can be seen as both a positive and negative thing in my opinion. In one sense it is not ideal as it creates the bulk of the volatility and so our returns may not be as good, the other side of the argument is that is becomes easier to cherry pick our pairs to trade – and we have seen this play out this week as we have generally been able to focus our attention to one or two pairs per day.
It also means that we can eliminate certain pairs on the day, the USDJPY is getting dictated by the increasing risk appetite. We mentioned yesterday that 113.00 may be on the cards, now that we are there it will be interesting to watch, if the US stock market continues its relentless march higher – so will the USDJPY. This pair for me will start to move on fundamentals from today and so I will sit on the fence until next week, for those fundamental traders out there it is the Japanese elections on Sunday and Abe looks the clear favourite. If Abe does win the election, it will mean extended easy policy and the USDJPY should break through resistance, but considering the last 18 months – I am not prepared to have open positions over political event risk.
The EURUSD enjoyed a steady climb higher yesterday, I have highlighted 1.1800 on my charts as a make or break level, and I suspect that sellers may start building offers up here with stop losses placed at about 1.1850. If 1.1800 breaks higher then I will wait for stops to be triggered before placing offers but I do think this will be a nice set up soon.
As mentioned earlier in the session, I will eliminate the AUDUSD because of economic data, I will eliminate NZDUSD because of parliament set ups which could create movement. I am hesitant to trade cable because of Brexit which means that for now, I am focused on only the USDCAD and EURUSD.
Important Economic Data out today
10:30 GBP Retail Sales
Consensus: -0.1%
Effect: Actual higher than expected is good for the GBP
14:30 USD Unemployment Claims
Consensus: 240K
Effect: Actual lower than expected is good for the USD
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