There are many reasons behind this speculation, and weakening labor market or concerns about euro zone recession are just among a few of them.
The inflation report, delivered by Mark Carney shortly after the unemployment numbers yesterday, warned that inflation is likely to fall further and could move below one percent. If it were to do this, Mr Carney would need to write to the Chancellor explaining why this has happened – something his predecessor, sir Mervyn King had to do a lot when inflation was more than one percent above target – the governor and his team don’t believe that inflation will normalise at 2% until 2017 now, which takes all kinds or pressure off the Bank to raise rates.
Another pressure alleviator is news that the UK housing market growth has slowed to a 17 month low. Prices in London last month fell the most they have for four years, taking a lot of the heat out of the booming market and gently reducing pressure on buyers to get in whilst its still ‘affordable’.
From the land of freedom, US Treasury Secretary Jack Lew is set to warn Europe that they’re facing a ‘lost decade’, when he speaks ahead of the G20 this weekend. According to the FT Mr Lew is going to take his criticism of the European leadership public and warn that though the ECB is trying to play its role, “action by national authorities and other European bodies is needed”. Meanwhile, the IMF yesterday warned that their European growth forecasts face downside risks. We’ll find out on Friday morning just how bad it is when GDP numbers come out for a number of European countries
In Ukraine, the head of the Institute of International Finance has warned that the economy is in free fall and risks of implosion is very large, unless actions are taken. The IIF’s chief economist has said that the country needs at least $10-15bn more in international support than has been promised, if not people will start freezing, as there isn’t enough money to pay for gas supplies.
Russian Business
On the other side of the border, a close ally of Mr Putin has said that Asian finance can’t replace that lost from the West. “its over exaggerated that eastern financial institutions can replace western financial institutions because, objectively speaking, the loans we can raise from western financial markets are much longer term”. Russia has said it will start flying long range surveillance flights from the arctic circle down as far as Cuba in another hark back to the cold war era.
Oil & the Middle East
Saudi Arabia broker their silence over falling oil prices yesterday, dismissing that the recent fall was a price war. Their oil minister said that he is “working with other producers to ensure price stability for the interest of producers, consumers and the industry at large”. However analysts doubt that the price will stop falling even if we see output cuts from OPEC at their next meeting towards the end of the month, with expectations in the market that this could fall a further 10% from current levels.
Japanese Yen
Overnight we’ve heard from a number of Japanese business leaders who are urging Shinzo Abe to put off the next sales tax hike. An announcement will be made in due course according to officials, but we are likely to have a December election before that, according to various sources. The news of an election saw the currency weaken further and the Nikkei outperform all other regional share indexes.
Australia hasn’t ruled out Aussie Dollar intervention, according to RBA member Kent. The assistant governor said that the currency was over valued relative to fundamentals and that intervention is a consideration.
Upcoming Hot Market Moving Events
Taking a look at the major events in the forex world in the coming days, Thursday will bring with it the US Unemployment Claims results at 2:30 PM GMT which could give the US dollar the much needed volatility. Friday we have a number of important releases including the French and German Prelim GDP data early in the morning followed by Canada’s Manufacturing Sales Data and US retail sales at 2:30 PM. There are going to be discussions about oil and US natural gas storage that could move the US dollar at the end of the day.
Intraday Forex Technical Levels
EUR/USD 4-hour: Consolidating.
Invest Diva Likes: Short positions below 1.2487 with targets at 1.2363 and 1.2299 in extension.
If Pair Goes Nuts: Above 1.2487 look for further upside towards 1.2563 and 1.2624.
What’s up on the Forex Dance Floor: The pair is consolidating as it has formed the triangle chart pattern while entering the Ichimoku’s cloud. A break below the triangle’s lower level would open doors for more drops. The RSI is around the neutrality area.
Supports and Resistances
1.2624
1.2563
1.2487 Pivot Point
1.2363
1.2299
GBP/USD 4-hour: Dropping.
Invest Diva Likes: Short positions below 1.5719 with targets at 1.5655 and 1.5567 in extension.
If Pair Goes Nuts: Above 1.5719 look for further upside towards 1.5789 and 1.5892.
What’s up on the Forex Dance Floor: The pair broke below the previous bottom and is reaching our bearish target at 1.5719 below the Ichimoku’s cloud. The RSI is just above the oversold zone.
Supports and Resistances
1.5892
1.5789
1.5719 Pivot Point
1.5655
1.5567
AUD/USD 4-hour: Broke above the Ichimoku’s cloud.
Invest Diva Likes: Short positions below 0.8754 with targets at 0.8678 and 0.8544 in extension.
If Pair Goes Nuts: Above 0.8754 look for further upside towards 0.8829 and 0.8888.
What’s up on the Forex Dance Floor: The pair broke above the Ichimoku’s cloud and is teasing the resistance level at 0.8754. A break above this level would give further up-move signal. The RSI is above the neutrality area.
Supports and Resistances
0.8888
0.8829
0.8754 Pivot Point
0.8678
0.8544
USD/JPY 4-hour: Consolidating & potentially forming a Double Top Chart Pattern
Invest Diva Likes: Long positions above 115.60 with targets at 116.56 and 117.50 in extension.
If Pair Goes Nuts: Below 115.60 look for further downside towards 114.16 and 112.64.
What’s up on the Forex Dance Floor: The pair is on an overall uptrend but is now consolidating around the top level at 115.60 above the Ichimoku’s cloud, and potentially forming a double top. If confirmed, we will see a pullback before seeing more gains.. The RSI is moving above the neutrality area.
Supports and Resistances
117.50
116.56
115.60 Pivot Point
114.16
112.64
