Will the CPI Crash the USD?
The most impactful releases of this week will fill the market with volatility and sharp movements.
Market updates on October 16
Information is not investment advice
Key events ahead:
- British CPI – 11:30 MT (8:30 GMT)
- Canadian CPI – 15:30 MT (12:30 GMT)
- US retail sales and core retail sales – 15:30 MT (12:30 GMT)
- Speech by the BOE Governor Mark Carney – 16:00 MT (13:00 GMT)
- Speech by the FOMC member Evans – 16:00 MT (13:00 GMT)
- Speech by the FOMC member Brainard - 22:00 MT (19:00 GMT)
- Trade tensions between the US and China remain. During the Asian trading session, the US sent a bill to the Senate for consideration. The bill is aimed to support the Hong Kong protestors. China reacted immediately and said that it would retaliate if the bill passes. The news has lowered the risk sentiment in the market and affected the risk-weighted currencies.
AUD/USD slid lower to the support at 0.6728. If the downside pressure continues, this level will be broken and the next support will lie at 0.6709. Bulls need to push the pair above the 0.6738 level to regain their strength. The next resistance levels will lie at 0.6749 (100-period SMA) and 0.6757. RSI is moving within an oversold zone. If it leaves this zone, it may provide a buying opportunity.
- After the bullish reports that the UK and the EU are close to the deal, GBP/USD tested the 1.28 level. However, one single tweet saying that the DUP party needs more clarity before reaching a Brexit deal has pulled the cable lower towards the support at 1.2722. GBP/USD has already tested the support levels at 1.2686 and 1.2662. Further direction of a pair depends on the news. Any optimistic comments will help bulls to push the pair back to the 1.2783 level. The next resistance levels in focus will lie at 1.28-1.2818. RSI is about to leave the overbought zone, which may provide a buying opportunity.
- EUR/USD has tested the 1.1059 level due to the weak USD. If bulls get even stronger, the next key level for them will lie at 1.1068. Otherwise, the pair will slide below the 1.1024 support level towards the next support at 1.1014. After that, reaching the 1.1003 level will be possible. Traders need to pay attention to the release of US retail sales and core retail sales at 15:30 MT, which may determine the further direction of a pair.
- The USD/CAD pair has been rising on risk-off sentiment. The key movement may happen on the release of Canadian CPI. If the actual level of indicator is higher than the forecast of -0.3%, the pair will retest the 1.3195 level. The next support lies at 1.3177. On the other hand, weaker figures will help bulls to revisit the resistance at 1.3235.
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