Comentário Diário | 07/10/2019

USD weakens against JPY on headlines about China

USD/JPY opened with a negative gap today, albeit corrected somewhat during the Asian session, as headlines emerged about the US-Sino negotiations. The two economic super powers are to resume negotiations on Thursday and Friday, with Chinese officials visiting Washington. Media headlines stated that China is signalling more reluctancy in agreeing a broad trade deal as pursued by the US. It should be noted that the situation may be even more complicated should the US President restate his desire for China to probe his rival Biden and his son. Analysts tend to expect the effect of the headlines to pass over quite quickly, as the negotiations draw near. Also please bear in mind that the negotiations are taking place before the US is about to impose new tariffs on Chinese imports on the 15th of October. Should there be some positive news about the issue we could see the USD strengthening. USD/JPY opened with a negative gap today, aiming for the 106.60 (S1) support line, yet corrected higher later on. We could see the pair maintain a sideways movement today between the 107.20 (R1) resistance line and the 106.60 (S1) support line, as the market may expect more clues about the US-Sino relationships, in order to make up its mind. Should the pair find fresh buying orders along its path, we could see it aiming if not breaking the 107.20 (R1) resistance line. Should the pair come under the selling interest of the market, we could see it breaking the 106.60 (S1) support line and aim for the 106.00 (S2) support level.

Pound remains steady amidst Brexit storm.

The pound remained rather stable on Friday and during today’s Asian session, as the UK tries to navigate in a Brexit storm. Brexit’s deadline on the 31st of October is nearing and UK PM Johnson is trying to achieve substantial alterations on the existing Brexit deal. Negotiations are to be intense and UK PM Johnson once again stated that he is prepared to pull the UK out of the UE without a deal if necessary. UK’s proposals had a rather cold inception in Brussels as the EU and Ireland stated that the UK proposals are unlikely to yield a deal. Should there be further negative headlines about Brexit we could see the pound weakening. Cable maintained a sideways motion in the past two sessions testing the 1.2310 (S1) support line. Should there be adverse developments on Brexit, we could see the pair turning south, however we maintain as a main scenario that cable could maintain its sideways motion. Should the bears take over the pair’s direction, we could see it breaking he 1.2310 (S1) support line and aim for the 1.2205 (S2) support level. Should the bulls take over, we could see the pair, breaking the 1.2400 (R1) resistance line, aiming for higher grounds.

Other economic highlights today and early tomorrow

In today’s European session, we get Germany’s industrial orders growth rate for August, UK’s Halifax house prices for September and Eurozone’s Sentix Index for October. During tomorrow’s Asian session we get from Japan the all household spending growth rate and the current account balance, both for August. As for speakers please note that the Minneapolis Fed President Neel Kashkari speaks.

As for the rest of the week

On Tuesday, we get Germany’s Industrial output growth rate for August and the US PPI rate for September. On Wednesday, the Fed will be releasing the minutes of its last meeting. On Thursday, we get Japan’s Corporate Goods Prices for September, Germany’s trade balance, UK’s GDP rate for August, and the US inflation measures for September. On Friday, we get the Canada’s Employment data for September and the preliminary US Michigan Consumer Sentiment for October.

GBP/USD H4

• Support: 1.2310 (S1), 1.2205 (S2), 1.2110 (S3)
•Resistance: 1.2400 (R1), 1.2510 (R2), 1.2665 (R3)

USD/JPY H4

• Support: 106.60 (S1), 106.00 (S2), 105.50 (S3)
•Resistance: 107.20 (R1), 107.75 (R2), 108.35 (R3)