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Dean's Daily FX Update – 20 October 2017
In the Zone
- GBPUSD
- NZDUSD
Noteworthy News
- Rumours are that Trump is leaning towards FOMC Governor Powell to take over from Yellen. I think that Powell is much like Yellen and so nothing much would change. I will wait on this appointment, because I am not convinced by this rumour.
Recap
Yesterday was the 30 year anniversary of “Black Monday,” on that day in 1987 the US stock market dropped by a staggering 23%. The market subsequently created new circuit breakers so that this type of thing never happens again, the good thing is that there was no repeat of this today as equity markets closed at record highs once again. Much like 1987 the equity markets in my opinion are forming a bubble and the reason that I reinforce my stance to sit the markets are out are in lessons from 30 years ago. I certainly am not looking to take shorts as this market is relentless and I don’t want to be the person trying to dictate the top, at the same time I don’t want to take longs because once this bubble pops it is going to get messy.
News of a coalition government in New Zealand send the NZDUSD sharply lower, although most of the damage was done in the morning session. It is really too soon to make any judgement, but I really believe yesterday was a knee jerk reaction – the markets hate change and yesterday was the perfect example. Today, the key level to watch will be 0.7000 which is a major psychological level for this pair and will possibly be the land in the side. I may wait until Monday to make a call on this pair.
The EURUSD got to our resistance level at 1.1860 last night, this level stalled and failed at this level almost every day last week. Once again, this pair failed at this level which is the also the 200 hour MA and the buyers will need to see a break above this level if any momentum is going to be seen. I think that 1.1825 is the level for the sellers and the fact that we are already lower means that I would be inclined to look for shorts rather than longs leading into next week.
We have had a good week, we have been able to focus our attention to only one or two pairs per day, watch the morning video to see if the same is true today.
Important Economic Data out today
14:30 CAD CPI
Consensus: 0.3%
Effect: Actual higher than expected is good for the CAD
14:30 CAD Retail Sales
Consensus: 0.3%
Effect: Actual higher than expected is good for the CAD
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