FUNDAMENTAL OUTLOOK

China’s commerce ministry said on Thursday that Beijing and Washington agreed in the past two weeks to simultaneously cancel existing tariffs imposed during much of the months-long trade war in different phases as talks progress.

The ministry’s spokesman Gao Feng said the tariffs would be lifted to reach the so-called Phase-1 trade deal. “The trade war started with tariffs, and should end with the cancellation of tariffs,” Gao told media.

The positive news came hours after news came that a long-hoped summit between US President Donald Trump and his Chinese counterpart Xi Jinping to sign a preliminary trade deal could be delayed to December.

An official from the Trump administration told Reuters on Wednesday the reason was continued discussions over the deal’s terms and venue, adding an agreement could still not be possible but reaching one was likelier. The news rebalanced the earlier optimistic mood in the markets.

The Bank of England (BoE) is meeting on Thursday to debate its monetary policy and interest rates amid unabated domestic and global trade risks. The BoE is most likely expected to keep its 0.75 percent rate on hold though eyes will be on the statements by the members to see if they want to follow the rate-slashing path their American and European counterparts have entered.

The Bank of Japan Governor Haruhiko Kuroda reiterated on Thursday that the central bank would go ahead with massive monetary easing program to achieve its 2% inflation target. Testifying in front of lawmakers at the Japanese Parliament he said reaching to inflation goal was taking time. 

The People’s Bank of China (PBOC) said in a statement Thursday that the use of blockchain technology was to solve the problems related to information asymmetry in trade financing. The PBOC that is pursuing a to launch its own blockchain technology hopes to reduce risks for financial institutions, and cut financing costs for importers and exporters.

Iran’s Atomic Energy Organisation (AEOI) confirmed Thursday that it resumed uranium enrichment at the country’s underground Fordow nuclear facility in line with Tehran’s policy of gradually breaking away from the 2015 nuclear deal.

“After all successful preparations, injection of uranium gas to centrifuges started on Thursday at Fordow. All the process has been supervised by the inspectors of the UN nuclear watchdog,” a AEOI statement said according to the Iranian media.

EURUSD

Data on Thursday showed that German industrial output fell by 0.6% in September, deeper than the expected -0.4% and 0.4% increase the previous month. The results proved once again that Europe’s powerhouse Germany’s manufacturing sector is slipping into recession. However, the common currency made gains largely on the news that China and the US reached understanding that existing tariffs be lifted gradually as talks progress. The pair price is marching on towards the lower band of the ascending channel with the 1.1100 level appearing to be the first hurdle to overcome. Still above, 1.1125 at the 50.0 Fibonacci retracement and 1.1140 should be followed. In the event of a fall, 1.1060 and then 1.1040 will come into focus.
Support: 1.1060 -1.1040
Resistance: 1.1100-1.1125- 1.1140

GBPUSD

Sterling is trading near a one-week low ahead of the Bank of England’s monetary policy meeting later today. No change in policy or rates is expected but some members of the central bank may warn against trade risks amid the ongoing Brexit uncertainties and campaigns for snap elections next month. The price is suppressed also by the rather strong dollar, causing the pair price to reach below 1.2850. A continued fall could take the price to 1.2820 at 23.6 Fibonacci retracement. Below there, we will watch 1.2800. In the event of a rise in the pair, 1.2880 and then 1.2900. Still above, 1.2920 should be followed.
Support: 1.2820–1.2800
Resistance: 1.2880-1.2900-1.2920

USDJPY

The dollar is rising again from the lows it fell to against the yen on Thursday. The safe-haven currency yen attracted investors’ attention after doubts rose whether the US and Chinese President will sign a deal later this month. However, positive statements by China’s commerce ministry once pushed the pair price up again. As such, the price has hit and stalled at 78.6 Fibonacci retracement at 109.00. If the prices surges above and persists there, we will follow 109.20 and 109.40, a six-month high. 110.00 remains a rather medium-term upper target. In the event of a resumption to the generally down market mood, then 108.75 at the 61.8 Fibo and 108.60 near the earlier low will be followed.
Support: 108.75–108.60
Resistance: 109.20-109.40- 110.00

GOLD

Precious metal prices fell on Thursday after Beijing said US and China reached an understanding to cancel existing tariffs gradually as talks over the Phase-1 deal progress. Gold prices were earlier rising in the wake of reports that a much-hoped Trump-Xi summit to sign the deal was delayed until December. Currently, gold’s fall is halted by 1482 near the lower band of the forward-looking triangle. If developments make it accelerate then 1478 at the 50 percent Fibonacci retracement will be followed. In the event, prices move up again, 1490 and then 1494 should be watched. 1500 level remains crucial for price movements.
Support: 1482-1478
Resistance: 1490 -1494 -1500

BRENT

Oil prices saw a rise on Thursday after losses in the previous session. The positive remarks by the Chinese ministry of commerce that Beijing and Washington agreed on lifting existing tariffs as the Phase-1 deal is being prepared for signing helped brent prices increase. The fall in price earlier was induced by the US crude oil stockpiles that showed an increase of 7.9 million barrels last week versus the analysts’ expectations of 1.5 million barrels rise. As the price marches up, 71.00 and then 71.40 can be followed. 71.80, a recent top remains crucial. For a reversal in pricing, 70.30 and then 70.00 levels must be watched.
Support: 70.30 -70.00
Resistance: 71.00 -71.40 -71.80

DAX

The German index jumped up on Thursday, opening a gap as stock investors rallied on the remarks by the Chinese commerce ministry that China and the US are to remove tariffs as trade talks make progress. The positive mood could not be stopped by the disappointing German industrial data that showed a 0.6 percent contraction. Dax has now reached a 21-month high above 13 200 points. The current risk-on take should help the index target 13 300 again, whose precinct it already tested during the initial buying frenzy. Still above keep an eye on 13 350. In the event of more caution, 13 200 and then 13 170 points must be watched.
Support: 13 200- 13 170
Resistance: 13 300- 13 350

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