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Trader, analyst and instructor with a 6-year experience

Trading plan for Nov. 6

Demand for the US dollar remains supported after the Republicans won control over the US Senate. Strong non-farm employment data from ADP (230K vs. 214 expected) have also added to market optimism, setting a positive tine ahead of the headline NFP data on Friday.

EUR/USD slipped back below the 1.2500 mark as euro zone’s retail sales unexpectedly contracted by 1.3% in September. Recovery attempts were limited by the 1.2570 area, while next support to watch lies at 1.2440. Market volatility will likely increase tomorrow: the European Central Bank will announce its monetary policy decision on Thursday at 12:45. Some economists expect the central bank to usher in a QE policy, while other doubt whether the dovish ideas will get enough support among the ECB members. Don’t miss the ECB press conference that follows at 13:30 GMT.

GBP/USD spent October in a sideways range which was located roughly at the same levels as in Oct. 2013. On Wednesday pound moved to the bottom of this range on lower data from Britain and better figures from the US. Support is at $1.5870, and it looks like this level will be challenged tomorrow. The next target on the downside is at $1.5750. Resistance is at $1.6050 (Sep. minimum). The Bank of England is expected to keep policy unchanged and we don’t expect hawkish comments as data releases in October were mostly disappointing and inflation slowed down.

USD/JPY is very persistent on the upside. It has become overbought. There’s divergence on H1 and H4, so a correction is likely. Support is at 113.70 and 113.00.

AUD/USD hit a fresh 4-year low of 0.8585 on Wednesday despite the recent upbeat retail sales data and the neutral RBA. Australia is scheduled to release labor market data tonight at 00:30 GMT. According to the consensus forecast, unemployment rate remains unchanged 6.1%, while employment increased by 10.3K.

 

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