BOJ to maintain its ultra loose monetary policy.

BOJ Governor Ueda, stated earlier on today that the bank’s “basic stance is that we must patiently maintain monetary easing”, implying that the bank may not be abandoning its ultra loose monetary policy anytime soon, which could weigh on the JPY. Minneapolis FED President Kashkari, stated on Friday that “Consumer spending continues to exceed our expectations” per Reuters. The statement may be implying that the bank may have to hike, despite remaining on pause during their last monetary policy meeting, a view which apparently was supported by FED Governor Bowman, who also stated on Friday that “Inflation is still too high, and I expect it will likely be appropriate for the Committee to raise rates further”,  which may support the greenback.

On a political level, we note that the US is nearing a government shutdown, which could be as early as October 1^a. with the clock ticking for Republicans and Democrats to reach an agreement. Should the US Government default on its debt, we may see the greenback weakening. Over in China, embattled property developer Evergrande, stated on Sunday that it was unable to meet qualifications for the issuance of new notes under its debt restructuring plan, hinting that China’s property woes may be far from over.

GBP/USD appears to be moving in a downwards fashion, as it appears to be aiming for the 1.2185 (S1) support level. We maintain a bearish outlook for the pair and supporting our case in the RSI indicator below our 4-Hour chart which is currently running along the figure of 30, implying a bearish market sentiment, in addition to our downwards moving trendline. For our bearish outlook to continue, we would like to see a clear break below the 1.2185 (S1) support level, with the next possible target for the bears being the 1.2045 (S2) support base. On the other hand, for a bullish outlook, we would like to see a clear break above the 1.2310 (R1) resistance level, with the next possible target for the bulls being the 1.2485 (R2) resistance ceiling.

EUR/USD appears to be moving in a sideways fashion. We maintain a neutral outlook for the pair and supporting our case is the narrowing of the Bollinger bands which implies baixa market Volatilidade in addition to the RSI indicator below our 4-Hour chart currently being near the figure of 50, implying a neutral market sentiment. For our neutral outlook to continue, we would like to see the pair remaining confined between the 1.0635 (S1) and the 1.0735 (R1) support e ainda resistance levels. On the other hand, for a bearish outlook, we would like to see a clear break below the 1.0635 (S1) support level, with the next possible target for the bears being the 1.0515 (S2) support base. Lastly, for a bullish outlook we would like to see a clear break above the 1.0735 (R1) resistance level, with the next possible target for the bulls being the 1.0835 (R2) resistance ceiling.

Other highlights for the day:

Today we note the release of Germany’s Ifo indicators for September and UK’s CBI Distributive trades for the same month while in the American session we get the Dallas Fed manufacturing Business index for September. On the monetary front we note that ECB’s Lagarde, Schnabel and De Galhau are scheduled to speak, while on a rather easy going Asian session tomorrow, Minneapolis Fed President Kashkari speaks.

As for the rest of the week:

On Tuesday, we note the US Consumer Confidence figure for September. On Wednesday, we note Germany’s Gfk Consumer sentiment figure for October and the US durable goods rate for August. On Thursday, we highlight Australia’s retail sales rate for August, the Eurozone’s economic sentiment figure for September, Canada’s business barometer figure for September, followed by Germany’s Preliminary HICP rate for September, the US Final GDP rate for Q2 and finishing off the day is the US Initial Jobless claims figure. Finally, on a packed Friday, we make a start with Japan’s Tokyo CPI rate for September, the UK’s GDP rate for Q2, France’s Preliminary CPI rate for September, Switzerland KOF Indicator for September, the Eurozone’s Preliminary HICP rate for September, the US Consumption adjusts rate for August, the US Core PCE rate for August, Canada’s GDP rate for July and finally the US Final University of Michigan sentiment for September.

GBP/USD H4 Chart

Support: 1.2185 (S1), 1.2045 (S2), 1.1930 (S3)

Resistance: 1.2310 (R1), 1.2485 (R2), 1.2655 (R3)

EUR/USD 4 Hour Chart

Support: 1.0635 (S1), 1.0515 (S2), 1.0445 (S3)

Resistance: 1.0735 (R1), 1.0835 (R2), 1.0940 (R3)

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