Currency analyst

Morning brief for October 18

The euro is taking revenge upon the US dollar. The EUR/USD has raised in the course of the last trading session, and now it continues its rally towards the new resistance level at 1.05. There is no fresh news for today from the eurozone. We will be waiting for the ECB press conference scheduled for Thursday for some clues on the bank’s monetary policy. The US consumer price inflation coming later this day might offer additional support to the USD. Alternatively, if the data are worse-than-expected, we will wait for the euro to rise.

AUD/USD has gained momentum on the Asian session, putting on about 50 points. We heard new Governor of the RBA Philip Lowe speaking yesterday. He didn’t send us clear signal about the rate cut in the upcoming board’s minutes. It seems that the RBA will be waiting for inflation data coming on October 26 to shape a stance of its future monetary policy. Today the RBA’s minutes has been released. We saw some concerns over the AUD appreciation and its impact on the economic growth. The board decided not change interest rate, because at that moment it was consistent with RBA’s inflation and growth targets.

Another mover of the Asian session is NZD. Kiwi rose on the better-than-expected inflation data for the Q3 and now it is trading around 0.718 and intermittently touches the higher levels. Despite all the attempts of the RBNZ, inflation rates are still extremely low and Kiwi appreciates as if nothing had happened.

USD/JPY was muddled a little bit at the beginning of the session falsely moving downward, but then, in a matter of time it awoke to surroundings and started to move back towards the key level at 104.

GBP/USD has raised during the last Asian session and touched the 1.2270 resistance line before sliding back to 1.222. Now it’s oscillating near the 1.223 level. The liquidity is perhaps the main factor that defines the current movement of this pair. Today, we expect the GBP to fall, if we get sour data on the UK inflation rate (Consumer Price Index, Retail Price Index, Producer Price Index). The depreciating pound, inflationary pressures and frustration of businesses’ investment plans exhibit a great challenge for the Bank of England. Policymakers cut interest rates to a record low of 0.25% in August. They were intended to cut them once again at the end of the year. But enduring strength of the incoming data showing that the economy managed to shrug off the shock of the “Brexit” vote and continuous depreciation of the pound could divert BOE’s officials from further monetary easing. 

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