FUNDAMENTAL OUTLOOK
Chinese officials said on Wednesday that China and France signed trade contracts of up to 15 billion US dollars during a visit by President Emmanuel Macron to Shanghai where he attended an international import expo fair. Aeronautics, energy and agriculture were among the fields Chinese President Xi Jinping signed the contracts with Macron.
Minutes released on Wednesday from the Bank of Japan’s September policy meeting showed that board members discussed whether expanding stimulus was a feasible option. Some of the board members urged the need to begin brainstorming ideas regarding the stimulus. However, some other members warned that more caution was needed to review the disadvantages of long-running ultra-low interest rates.
“A comprehensive examination was needed on the chance that financial institutions’ profitability will decline further, and an increasing number of them would take excessive risks,” the minutes quoted a member as saying during the meeting when the BOJ kept its policy and interest rates on hold but gave signals of near-term easing by warning against risks stemming from the trade wars.
The ISM non-manufacturing sector index, a survey on the US service sector released on Tuesday showed that business sentiment in the world’s largest economy improved in October compared to the three-year low in September. The index rose to 54.7 from 52.6 in September in a move much better than the expectations.
Iranian President Hassan Rouhani confirmed on Tuesday that Tehran will restart injecting uranium gas into centrifuges at its vast underground Fordow nuclear enrichment facility. The move came despite calls otherwise from the European nations not to further breach the 2015 nuclear deal with the world powers.
Crude oil inventories in the US increased by 4.3 million barrels in the week that ended on November 1 to 440.5 million barrels, data from the American Petroleum Institute (API) released on Tuesday showed. The figure is almost three times higher than analysts’ forecasts. The Energy Information Administration (EIA) is due to release its own data later on Wednesday.
UK Prime Minister Boris Johnson told US President Donald Trump to reverse the tariffs on British goods including Scotch whisky, a statement by Number 10 said. In a phone call to Trump, Johnson also urged him not to impose tariffs on car exports. Washington put in place 25 percent-high tariffs on EU goods, including Scotch whisky last month in response to EU subsidies to the aircraft-maker Airbus.
EURUSD
The euro dropped almost 0.50 percent on Tuesday and hit a three week low, falling off the lower band of the rising channel. The sharp move was induced by the US ISM non-manufacturing sector index that demonstrated an unexpected increase in the service businesses’ sentiment. The common currency is now aiming to correct the losses by reaching up for 1.1100. Once there, the next target will be 1.1125 at the 50 pct Fibonacci retracement. For a further fall in pricing, 1.1050 and then 1.1030 should be followed.
Support: 1.1050 -1.1030
Resistance: 1.1100- 1.1125
GBPUSD
The British pound holds largely steady, resisting the strength in the US dollar that pushed down other currencies’ value. With the election campaigns now underway in the UK, markets are a lot more relaxed about the Brexit prospects that for months worried investors that a no-deal EU-UK divorce could take place. With the pricing largely undecided, we must watch 1.2900 and then 1.2930 and 1.2950 should be designated for upwards targets. An apparent bearish tendency could land the price at 1.2860 and then 1.2830.
Support: 1.2860 -1.2830
Resistance: 1.2900 -1.2930 -1.2950
USDJPY
The dollar held the upper hand against a majority after the increase in ISM non-manufacturing sector index of 54.7 in October. The Yen incurred gradual sharp losses as the US data compounded with the optimism in China-US trade talks decreased the appeal for the safe-haven currency. The pair price is entering what appears to be a corrective move to the last three trading days’ increase. For the time being 108.75 at the 61.8 Fibonacci retracement. 108.60 remains in position to provide support, should the fall extends lower. In the event of a continued rise, then 109.25, the recent top and then 109.40 a seven-month high can be watched.
Support: 108.75-108.60
Resistance: 109.25-109.40
GOLD
Precious metal prices further eased in the wake of strong US data that meant higher confidence in non-manufacturing sector. The optimism surrounding Sino-US trade talks was the first factor that pushed gold price down, back below the 1500 line. However, 1480 line has so far provided hardline support. Still below, 1475 can be followed if the former level is broken. In the event of a shift in geopolitical picture, then 1490 and 1495 should be watched. 1500 should put up resistance.
Support: 1480-1475
Resistance: 1490–1495 -1500
BRENT
Oil prices dropped on Wednesday after data by the API showed a larger-than-expected build-up in US crude inventories. The oil had been gaining on rather optimistic messaging by officials engaged in Sino-US trade negotiations as markets await an imminent deal later this month that could ease fears of a fall in demand. The brent price is currently trying to break 71.00 resistance. Once lower, we will watch 70.70 and then 70.40. Still below 70.00 near the upper band of the descending channel will be followed. A reversal in pricing could take us first to 71.50 and then 71.70.
Support: 70.70-70.40 -70.00
Resistance: 71.50- 71.70
DAX
Having come close to the levels last seen in early 2018, the German index remained undecided on Wednesday open. The optimism from the Sino-US trade talks is good incentive for investors to buy as the Dax marches on towards 13 200. Still above 13 250 and then 13 300 can be targeted. For a reversal in this week’s gains, we will watch 13 100 and then 13 050 must be watched.
Support: 13 100-13 050
Resistance: 13 200- 13 250 -13 300
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