Fed Chair Powell held a speech at the Economic Club of New York on Thursday. His views did not differ much from the September`s FOMC meeting notes, stressing once again that Fed's target continues to be a 2% inflation level. Whether interest rates will be increased for one more time, he refused to comment directly, noting that it will depend on the inflation development. Still he noted that a fight with inflation will mean that economic growth and the labor market would have to slow down. As for other important data posted during the previous week were the US Retail Sales, which were standing at 0.7% in September, much higher from market estimate of 0.3%. Such strong retail sales have heated market expectations over potential for increasing inflation in the coming period. The US Building Permits preliminary for September were 1.473M, a bit higher from market expectation at 1.45M.
The Euro Area ZEW Economic Sentiment Index for October was standing at level of 2.3, much better from market estimates of minus 8, while the same index for Germany was at level of minus 1.1, still better from minus 9.3 expected by the market. Euro Area inflation rate for September was standing at 0.3% on a monthly basis, in line with the market estimate, while core inflation remained elevated and reached a level of 4.5%.
Fed Chair Powell's speech on Thursday had a much higher influence on the price of Treasuries, than on the value of the USD. The currency pair started the previous week slightly above 1.05 level and moved to the highest weekly level at 1.0610. The pair is finishing the week at level of 1.059. After reaching a clear oversold side, RSI moved slowly to the level of 50. It seems that the market is slowly getting ready to head toward the overbought side. Moving average of 50 days continues with its divergence from MA200, confirming further the so-called “dead cross” occurred as of the end of September.
Current charts are showing a higher probability for the support line at 1.055 to be tested for one more time. It would be just a short reversal from current levels. Testing of 1.055 level might be a starting point for further reversal to the upside and level of resistance at 1.067. At this point on charts, there is no indication that the currency pair might reach levels above the resistance line in the week ahead.
Important news to watch during the week ahead are:
Euro: GfK Consumer Confidence for November for Germany, HCOB Manufacturing PMI Flash for October for Germany, IFO Business Climate for October for Germany, ECB Interest Rate Decision,
USD: Fed Chair Powell Speech, Durable Goods Orders for September, GDP Growth Rate for Q3, PCE Price Index for September, Michigan Consumer Sentiment Final for October.
The Euro Area ZEW Economic Sentiment Index for October was standing at level of 2.3, much better from market estimates of minus 8, while the same index for Germany was at level of minus 1.1, still better from minus 9.3 expected by the market. Euro Area inflation rate for September was standing at 0.3% on a monthly basis, in line with the market estimate, while core inflation remained elevated and reached a level of 4.5%.
Fed Chair Powell's speech on Thursday had a much higher influence on the price of Treasuries, than on the value of the USD. The currency pair started the previous week slightly above 1.05 level and moved to the highest weekly level at 1.0610. The pair is finishing the week at level of 1.059. After reaching a clear oversold side, RSI moved slowly to the level of 50. It seems that the market is slowly getting ready to head toward the overbought side. Moving average of 50 days continues with its divergence from MA200, confirming further the so-called “dead cross” occurred as of the end of September.
Current charts are showing a higher probability for the support line at 1.055 to be tested for one more time. It would be just a short reversal from current levels. Testing of 1.055 level might be a starting point for further reversal to the upside and level of resistance at 1.067. At this point on charts, there is no indication that the currency pair might reach levels above the resistance line in the week ahead.
Important news to watch during the week ahead are:
Euro: GfK Consumer Confidence for November for Germany, HCOB Manufacturing PMI Flash for October for Germany, IFO Business Climate for October for Germany, ECB Interest Rate Decision,
USD: Fed Chair Powell Speech, Durable Goods Orders for September, GDP Growth Rate for Q3, PCE Price Index for September, Michigan Consumer Sentiment Final for October.
