Israeli conflict continues to hold its grip over the markets

The conflict in Israel appears to have no end in sight, as tensions continue to escalate on a daily basis. The potential continuation of the conflict, could maintain volatility in the commodities markets. However, with the high-level discussions taking place and the potential for humanitarian aid to be allowed for the impacted civilians, we may see a temporary easing of market worries, for now. Over in Europe, ECB Chief Economist Lane , stated that “the inflation shocks possible, the ECB must be open o doing more”, implying that the ECB may need to increase rates in their next monetary policy meeting, in order to combat inflationary pressures.

In the US, Philadelphia Fed President Harker, implied that the Fed “should not at this point be thinking about any increases”, implying that the Fed may remain on hold during their next monetary policy meeting which is due to take place at the beginning of November.

On another note, the US House of Representatives, is expected to vote on a potential speaker today, yet news sources appear to be indicating that the nominee, Representative Jim Jordan (R), may not have the votes required in order to be elected, as Speaker. In the US Equities markets, we note the earnings releases by Goldman Sachs (#GS) and LockheedMartin (#LockheedMT). Lastly, the RBA’s meeting minutes according to media outlets, hinted that the bank considered raising hikes in its October meeting. According to CNBC the decision to not alter the bank’s monetary policy was due to the lack of data and as such, should inflationary pressures appear to persist in the Australian economy, we may see the case for another rate hike intensifying.

EUR/USD appears to be moving in a sideways fashion. We maintain a neutral outlook for the pair and supporting our case is the RSI indicator below our 4-Hour chart which currently registers a figure near 50, implying a neutral market sentiment, in addition to the narrowing of the Bollinger bands which imply low market volatility. For our neutral outlook to continue, we would like to see the pair remaining confined between the 1.0500 (S1) and the 1.0610 (R1) support and resistance levels respectively. On the other hand, for a bullish outlook, we would like to see a clear break above the 1.0610 (R1) resistance level, with the next possible target for the bulls being the 1.0735 (R2) resistance ceiling. Lasty for a bearish outlook, we would like to see a clear break below the 1.0500 (S1) support level, with the next possible target for the bears being the 1.0385 (S2) support base.

GoldmanSachs (#GS), appears to be moving in an upwards fashion, despite the RSI indicator below our 4-Hour chart appearing to be poised to break above the figure of 50, implying a switch from bearish market sentiment to a bullish market sentiment. For our bullish outlook to continue, we would like to see a clear break above the 318.95 (R1) resistance level, with the next possible target for the bulls being the 330.50 (R2) resistance ceiling, On the other hand, for a bearish outlook, we would like to see a clear break below the 308.30 (S1) support level, with the next possible target for the bears being the 292.95 (S2) support base.

Other highlights for the day:

Today we note the release of Germany’s ZEW indicators for October, while on the monetary front we note the planned speeches of BoE rate setter Djingra and ECB board member Af Jochnik. In the American session, we get the US retail sales industrial production as well as Canada’s inflation metrics, all being for September while NY Fed President Williams, Fed Board Governor Bowmans and ECB Vice President De Guindos are scheduled to speak. Oil traders may be more interested in the release of the weekly US API crude oil inventories figure. During tomorrow’s Asian session, we note the release of China’s GDP rates for Q3 and industrial output for September. Also please note that Minneapolis Fed President Kashkari, RBA Governor Michelle Bullock and RBA’s Smith are scheduled to speak.

EUR/USD H4 Chart

Support: 1.0500 (S1), 1.0385 (S2), 1.0225 (S3)

Resistance: 1.0610 (R1), 1.0735 (R2), 1.0865 (R3)

#GS H4 Chart

Support: 308.30 (S1), 292.95 (S2), 278.95 (S3)

Resistance: 318.95 (R1), 330.50 (R2), 342.25 (R3)

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