Forex trading plan for October 20
The market’s risk sentiment was influenced by China. The nation’s Q3 GDP growth slowed down from 7% to 6.9%, the lowest reading since 2009, though slightly above expectations of 6.8%. China’s industrial production growth pace decline from 6.1% to 5.7% (forecast: 6.0%). Fixed asset investment also disappointed. Still, there was no rush in safe havens as the market expects the People’s Bank of China to step in with additional monetary stimulus.
On Tuesday pay attention to the US housing data at 12:30 GMT (USD will benefit from a good reading) and the speeches of the FOMC members at 13:00-13:15 GMT and Janet Yellen (15:00 GMT).
EUR/USD slid towards 1.1300. The upcoming meeting of the European Central Bank on Thursday creates negative pressure on the euro. We prefer short positions on the euro. Support is at 1.1300, 1.1260 and 1.1215.
GBP/USD is once again testing resistance in the 1.5490 area (100-day MA). Support is at 1.5415/00 and as long as it holds we can’t rule out a thrust up to further resistance is at 1.5545 and 1.5600. Below 1.5400 support will be at 1.5380 and 1.5235. The Bank of England’s MPC member McCafferty will speak at 09:45 GMT and Governor Carney will take the stage at 10:00 GMT. Expect more volatility to come. UK labor market data last week were not very bad, so it’s interesting how Carney will comment on that. On Friday MPC member Forbes claimed that a rate hike in Britain would come sooner rather than later.
USD/JPY is little changed in the 119.30 area. The expectations of an increase in the Bank of Japan’s monetary stimulus this month have declined and the pair’s recovery will likely be limited. Support is at 119.00, 118.70 and 118.05. Resistance is at 119.65, 120.00 and 120.90.
AUD/USD tested 0.7300, but failed to break higher and will likely retreat to lower levels. Negative Chinese data finally sank in. Support is at 0.7235, 0.7200 (strong level) and 0.7160. The minutes of the Reserve Bank of Australia’s meeting will be released early on Tuesday. Resistance is at 0.7350, 0.7380 and 0.7440.