Daily Key points: USD stabilises after hawkish comments

The USD tended to stabilise, halting its drop after Fed Governor Waller made some hawkish comments late last Friday. Fed Governor Waller practically stated that the Fed is not to soften its stance against inflation, which tended to create second thoughts among investors that the sell-off of the greenback after a weaker than expected inflation report for October, may have been an overreaction of the market. On a more fundamental level we note that the count of votes for the US midterm elections is still on, and the Democrats seem poised to retain control over the Senate, while Republicans may be able to get control over the House of Representatives, but in both cases the race is too close to call. US stockmarkets were in the greens once again on Friday, yet there is still a certain degree of uncertainty present, especially given the turmoil in riskier classes of assets. Despite allready a wide number of high-profile companies allready having issued their earnings reports for Q3, we would note the release of Walmart (#WMT) and Home Depot (#HD) on Tuesday, Bidu (#BIDU) and NVIDIA on Wednesday, Ali Baba (#BABA) on Thursday and finally on Friday we note the release of the earnings report for Q3 of JD.com. In the FX market we tend to maintain our worries for the UK economic outlook given the release of the GDP rates for Q3 last Friday as we also do for the Eurozone, while China seems to intensify the efforts to boost growth. 

EUR/USD was on the rise on Friday, yet seemed to hit a ceiling at the 1.0365 (R1) resistance line and corrected slightly lower. During the correction lower the pair broke the upward trendline guiding it since the 10^th of November, hence we switch our bullish outlook in favour for a bias of a sideways movement for now. Should the bulls regain control over the pair we may see the pair breaking the 1.0365 (R1) resistance line and aim for the 1.0460 (R2) resistance level. Should the bears take over we may see EUR/USD breaking the 1.0290 (S1) support line and aim for the 1.0195 (S2) support level.

USD/JPY slid lower on Friday yet seems to have halted its drop just before the 138.30 (S1) support line. As the pair has broken the downward trendline guiding it since the 10^th of November, hence we switch our bearish outlook in favour of a bias for a sideways movement initially. Should the selling interest be renewed, we may see USD/JPY breaking he 138.30 (S1) support line and aim for the 136.20 (S2) support level. Should the pair find buying orders along its path we may see it breaking the 140 (R1) resistance line and aim for the 141.60 (R2) resistance level. 

Other highlights for the day:

Today during the European session, we note the release of Eurozone’s industrial production growth rate for September, while just before the American session starts BoC’s Governor, Tiff Macklem is scheduled to make some statements. During tomorrow’s Asian session, we note the release of Japan’s preliminary GDP rates for Q3, and China’s industrial output  and retail sales growth rates for October, while on the monetary front RBA is to release the minutes of the November meeting.    

As for the rest of the week:

On Tuesday we note the of UK’s employment data for September, Eurozone’s preliminary GDP rate for Q3, Germany’s ZEW indicators for November, the US PPI final demand rate for October and Canada’s Manufacturing sales for September. On Wednesday we get Japan’s machinery orders for September, Australia’s wage price index for Q3, UK’s CPI rates, the US retail sales, Canada’s CPI rates and the US industrial production, all being for October. On Thursday we get Japan’s trade data, Australia’s employment data and Eurozone’s final HICP rate all being for October and in the American session we get the US weekly initial jobless claims figure as well as the Philly Fed Business index for November. On Friday, we note the release of Japan’s CPI rates, UK’s retail sales and Canada’s producer prices, all being for October.

EUR/USD H4 Chart

Support: 1.0290 (S1), 1.0195 (S2), 1.0095 (S3)

Resistance: 1.0365 (R1), 1.0460 (R2), 1.0535 (R3)

USD/JPY H4 Chart

Support: 138.30 (S1), 136.20 (S2), 134.70 (S3)

Resistance: 140.00 (R1), 141.60 (R2), 143.50 (R3)

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