Currency analyst

Morning brief for October 19

Aussie and especially Kiwi did their best in the course of the last trading sessions. Despite the fact that dairy auction results fell short of expectations, kiwi experienced a significant upsurge. It managed to test the resistance above 0.7225 and continued its rally towards the new hurdle at 0.725. But since NZD and AUD outperformed in last sessions, there could be slight roll backs from their current position.

In China everything is proceeding according to plan. GDP data, retail sales and fixed asset investment came out in line with expectations. But there is always something that goes wrong. This time industrial production data disappointed Chinese authorities having reached 6.1% instead of forecasted 6.4%.

USD is losing its momentum across the trading desk and depreciates in relation to yen, Aussie, EUR, NZD...Well, I guess you got the idea.

Pound is lagging again. It struggled to test the resistance at 1.231, but gave in very fast. Now it’s hovering around the 1.227 level. Today the monthly update on the UK labor market will show up. We’ll also see new numbers on US residential housing construction for September. The forecast for these data is neutral.

Today we expect USD/CAD to work in a sweat ahead and after the Bank of Canada’s rate statement and monetary policy report. Analysts say that there shouldn’t be any significant changes in the BOC’s monetary stance. Once the dovish tone is caught in the words of BOC, Canadian dollar could slide from its current position (the pair may rise in the direction of 1.317 level. If the BOC decides to keep rate on hold, Loonie may take it out on the US dollar (the pair could fall towards 1.306 – 1.301 area).  

Oil prices rose significantly on the report of a drop in U.S. crude inventories and declining production in China. Long-awaited OPEC statement on its planned output cut offers additional support to the oil market. A weaker dollar boosted oil as well. International Brent crude futures added almost 40 points from the opening of today’s session. Later on we will receive the U.S. Energy Information Administration’s official crude and fuel storage data. Analysts expect the reduction of oil inventories. It might lift oil prices again.  


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