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Market Insight Commentary – 31 October 2017

31 Oct

Market Insight Commentary – 31 October 2017

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After spending most of last week on the front foot, this week was always going to be about whether last week was a flash in the pan or if the greenback is slowly losing its lustre. There were fundamental rather than technical factors that weighed on the dollar yesterday, there was some risk aversion on the back of the Manafort and Russian collusion story. Secondly, there was news on the wires that Fed member Powell will likely be named Fed Chair on Thursday, this would have disappointed the market as he has similar views to Yellen. The major driving force however come on the news that the corporate tax cut to 20% would be phased on over 4 years – this is not what the US voters had signed up for and the market was clearly not happy with the news.

On a rather subdued day, it was cable that caught the eye as GBPUSD moved from 1.3110 to 1.3210 yesterday. There is a feeling that the market can shift its attention from the impending Brexit negotiation and instead concentrate on the BOE decision later this week. I think this shift in focus may be a little premature, the pair has battled for direction 1.3205 and I suspect that this may be the make or break level for the buyers, if it can’t build some momentum up here the sellers may drive price down towards 1.3110 again.

Another rally on the oil price was not enough to light the fire of the CAD, after 3 months of hawkish behaviour, the BOC rather disappointed the market last week. They were substantially more dovish than expected, the market had in my opinion priced in a rate hike in December and I suspect that the market may start pricing that hike back out. Despite the 4H charts suggesting an overbought market, I think that there will be a consolidation up here and possibly another move higher this week.

There is a lot of event risk for the rest of the week, so it is going to be some volatile. There will be some opportunity, albeit in a fundamental form – but that won’t take away from the fun.

Market Insight Commentary – Forex

In the Zone


Market Insight Commentary – Indices

Important Economic Data out today

  • 08:30                                         JPY                                              BOJ Press Conference Consensus:                             NoneEffect:                                        More hawkish than expected is good for the JPY

Noteworthy News

The White House suggested that the tax reform bill will be passed by Thanksgiving, for an administration that has not passed a single bill, this is a little bit optimistic and would be rather surprised if anything gets through before 2018.