TRADERS AWAIT CENTRAL BANK SPEECHES TOMORROW
Investors are reluctant to open new positions ahead of the central bank speeches during the 20th Euro Finance Week in Frankfurt. Tomorrow’s panel policy discussion features Mario Draghi from the ECB, Janet Yellen from the Fed, Haruhiko Kuroda from the Bank of Japan and Mark Carney from the bank of England. Volatility is expected to increase for the forex markets as investors digest statements by the central bankers. Traders are also waiting for the preliminary report on Eurozone’s GDP and industrial production in the monetary union that will also be published tomorrow.
The preliminary machine tools orders in Japan grew to 49.9% from 45.0% according to the report released earlier today. If we see a rise in geopolitical tensions, or a fall on the stock markets, the demand for the yen as a safe haven asset will increase.
The British pound has been hit by political headwinds for Prime Minister Theresa May, who is losing support of her party members. 40 parliamentarians from the Conservative party previously stated that they do not trust the current head of executive power.
The Australian dollar was under pressure from weaker than expected figures on new loans in China. The indicator was only 663 billion US dollars against the 781 billion dollars expected and 1270 billion dollars in September. The amplitude of price fluctuations is likely to remain wide thanks to the release of the National Bank of Australia’s business conditions index at 00:30 GMT, and the industrial production and retail sales in China at 02:00 GMT.
The EUR/USD quotes keep moving upwards along the inclined resistance line. The closest objectives within the current rising dynamics will be at 1.1730 and 1.1825. The RSI on the 15-minute chart is close to the overbought zone which points to a possible price retreat due to technical correction with possible targets at 1.1650 and 1.1620. Volatility levels are likely to increase tomorrow.
The USD/JPY was not able to overcome the upper limit of the descending channel and resumed the fall within the limits of the channel. We are likely to see the price testing the support level at 113.00 and fixing below it is likely to become a trigger for the bears to pull the quotes down to 111.00 and 110.30. On the other hand, in case of opening long positions with the targets at 114.00 and 114.70, the stop should be set under 113.00.
The AUD/USD reached the strong horizontal support line at 0.7635 and its breaking may lead to a massive selloff with possible falls to 0.7600 and 0.7565. On the other hand, quotes may continue the movement within the limits of the sideways range, 0.7635-0.7700, to its upper limit. The RSI is near the oversold zone and that is an additional factor that may support the bulls.