- FOMC and RBNZ monetary policy meetings
- US Core durable goods orders
- UK Q2 final GDP
Key market events for the week will be FOMC rate decision. We expect the Fed to hike another 25bps to the range 2.00-2.25%. We also expect the market is fully priced this week’s 25bps. We continue to favor being long EURUSD as an expression of weakening risk aversion and recommend adding a stop loss at 1.1650.
Besides, RBNZ is expected to leave the OCR unchanged at 1.75%. We also expect the language is to be painted dovish to neutral.
Besides we also focus on ECB President Draghi testimony in Brussels and BOE Deputy Governor David Ramsden due to speak in London.
Turning to macroeconomic data for the week includes, Sep German Ifo Business Climate (Mon), NZ August Trade balance (Tue), NZ Sep ANZ Business Confidence (Wed), US Durable goods orders (Thu), UK Current (Fri), Sep EA flash CPI (Fri) and Canada GDP (Fri).
On the EZ economic data front, we see limited or low impact data releases. As an expression of limited dollar strength from the FOMC meeting, the risk-reward favors long EURUSD.
Looking at the EA flash CPI y/y, we expect a small uptick from 2.0% in August to 2.1% in September.
Overall, once again it will be quiet in terms of market-moving data releases from the euro and US.
Turning to UK data front, we see current account and GDP for Q2 (Fri). We expect UK Q2 GDP to remain at 0.4%.
Besides on the political front, annual labor party conference from Sunday 9.00am to Wednesday 5.00pm to focus on. On top of it, Brexit headlines could swing the sterling widely.
On the US data front, we see August core durable goods orders. We expect the durable goods orders expected to rise from -1.7% to increase by 1.9 %. The dollar traders more focusing on the US-China trade war headlines, the last week market reacted favorably to the trade-related news.
Besides, the 10-Y Treasury yields broke above 3.00% and settled at 3.07%. Based on the past six years data from the U.S. DEPARTMENT OF THE TREASURY, we learned that the yield curve chart had completed a double bottom reversal pattern aiming around 4.5%.
Looking at the dollar index daily chart, the parallel support finds at 93.15 below here 92.40 its 200MA and coincides with the 50.0% fib reaction of 88.15-96.80.
Chart of the week: EURUSD
As long as 1.1650 is support look for 1.1950.
A Breakout above the last week’s high 1.1800 would point to a new acceleration of the uptrend towards 1.1850, 1.1900 and 1.1950. Flips side, a daily close below 1.1600 could open to 1.1550 and 1.1500.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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