The spotlight on Fed Chairman Powell

Fed Chair Powell is due to speak later on today, with market participants potentially looking out for any indication that the Fed Chair, may re-iterate or hint that the Fed may remain on pause, as was implied by Philadelphia Fed President Harker yesterday. In the event that Fed Chair Powell, appears to lean on the dovish side during his speech today, it may weigh on the greenback, as anticipations of another rate hike by the Fed during their November meeting, may diminish. On the other hand, should the Fed Chair sound, hawkish we may support for the greenback, as market anticipation of another rate hike may increase. On a political level, we note that House Representative Jordan (R) failed to garner enough votes for the speakership during yesterday’s session. The US Congress continues to be leaderless, and should we see a prolonged period of voting before a new speaker is elected, we may see the political instability weighing on the dollar. Tensions in the Middle East continue to be elevated which could support commodities such as gold and oil, yet we may be seeing the initial shock of the conflict, easing in the markets and volatility gradually return to normal levels. Australia’s Employment data provided mixed signals, with the Employment change figure coming in much lower than expected, yet the Unemployment rate declined. In the Equities markets, we note that AT&T (#T) is due to release its earnings later on today. In Japan, the nation’s trade balance which came in earlier on today, vastly exceeded expectations at 62.4B compared to the -425.0B last month, with a higher than expect export rate and a lower important rate than last month. The data implies that Japan’s economy, remains resilient and demand for its exports has ticked up since last month.

WTICash, appears to be moving in a downwards fashion. We maintain a bearish outlook for the commodity despite the upwards moving trendline which was incepted on the 12^a. of October and the RSI figure below our 4-Hour chart, currently remaining above the figure of 50, which may imply a residual bullish sentiment. For our bearish outlook to continue, we would like to see a clear break below the 83. 50 (S1) support level, with the next possible target for the bears being the 79.50 (S2) support base. On the other hand, for a bullish outlook, we would like to see a clear break above the 86.95 (R1) and the 90.55 (R2) resistance levels, with the next possible target for the bulls being the 93.60 (R3) resistance ceiling.

USD/JPY appears to be moving in an upwards fashion, with the pair currently aiming for the 150.10 (R1) resistance level. We maintain a bullish outlook for the pair and supporting our case is RSI indicator below our 4-Hour chart which currently registers a figure above 50, which implying a residual bullish market sentiment. In addition, the pair is currently at the upper range of the Bollinger bands, implying a bullish market sentiment. For our bullish outlook to continue, we would like to see a clear break above the 150.10 (R1) and the 151.90 (R2) resistance levels. On the other hand, for a bearish outlook, we would like to see a clear break below the 148.00 (S1) support level, with the next possible target for the bears being the 146.10 (S2) support base.

Other highlights for the day:

In the European session we get France’s business climate for October, while ECB policymaker Valinakis speaks. In the American session, we get from the US the weekly initial jobless claims figure, the Philly Fed Business index for October and the existing home sales figure for September. On the monetary front we highlight Fed Chairman Powell’s speech yet also note that Fed Vice Chair Jefferson, Chicago Fed President Goolsbee, Fed Vice Chair Barr and Atlanta Fed President Bostic are scheduled to speak. During tomorrow’s Asian session, we get new Zealand’s trade data and Japan’s inflation metrics, both being for September, while Philadelphia Fed President Harker and Dallas Fed President Logan. 

WTICash H4 Chart

Support: 83.50 (S1), 79.50 (S2), 75.00 (S3)

Resistance: 86.95 (R1), 90.55 (R2), 93.60 (R3)

#USD/JPY H4 Chart

Support: 148.00 (S1), 146.10 (S2), 144.55 (S3)

Resistance: 150.10 (R1), 151.90 (R2), 153.50 (R3)

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