Ster­ling spikes down, as UK GDP misses es­ti­mates

Financial Mirror (Cyprus) - - FRONT PAGE -

The Ster­ling spiked to the down­side across the cur­rency mar­kets as a re­sult of UK GDP print­ing be­low ex­pec­ta­tions at 0.5%. The cur­rency has suf­fered for an ex­tended pe­riod of time as a re­sult of a risk-off en­vi­ron­ment mixed with es­ca­lat­ing fears of a slow­down in eco­nomic mo­men­tum in the UK. It seems that BoE Gover­nor Mark Car­ney’s state­ment sug­gest­ing the ‘pos­si­bil­ity’, rather than the ‘cer­tainty’ of a UK rate hike has pushed back ex­pec­ta­tions deep into 2016. Eco­nomic data in Oc­to­ber from the UK has lost its ro­bust touch and with this GDP fig­ure fail­ing to meet ex­pec­ta­tions on Tues­day, Ster­ling has been left vul­ner­a­ble. The GBPUSD, which had four con­sec­u­tive days of de­clines last week, re­mains un­der pres­sure; a break be­low 1.5300 on this pair may open a path to the next rel­e­vant sup­port at 1.5200.

The Dol­lar In­dex en­coun­tered an ag­gres­sive ap­pre­ci­a­tion last week as a re­sult of the ECB hint­ing of fur­ther QE in the fu­ture. De­spite the in­dex surg­ing to 10-week highs, Dol­lar vul­ner­a­bil­ity still re­mains the main theme in the global cur­rency mar­kets.

This up­side mo­men­tum may be short-lived as with only a slim chance that the US rates will be hiked in the FOMC state­ment this week, this cur­rency will be left vul­ner­a­ble which should re­sult in the bears tak­ing con­trol once again. Sen­ti­ment re­mains bear­ish for the Dol­lar and the creep­ing fears of a po­ten­tial slow­down in eco­nomic mo­men­tum in the States com­bined with the mount­ing con­cerns that GDP growth in the US for Q3 has shrunk, add to the al­ready di­min­ish­ing ex­pec­ta­tions of a rate hike in 2015.

Even though Gold has ex­pe­ri­enced a tech­ni­cal de­cline which started from the sec­ond week of Oc­to­ber, it still re­mains fun­da­men­tally bullish. Whilst the sharp ap­pre­ci­a­tion of the USD played a part in cap­ping any up­wards mo­men­tum in this pre­cious me­tal, the re­newed fears about the de­cel­er­at­ing growth in China should pro­vide a foundation for the Gold bulls to take cen­tre stage once more.

The

FOMC

state­ment

this week, which most

are ex­pect­ing to con­clude with no ac­tion be­ing taken by the Fed to hike US rates, may in­spire up­ward mo­men­tum on the yel­low me­tal, re­sult­ing in prices trad­ing back above the 1170.00 re­sis­tance.

The EURCHF is tech­ni­cally bear­ish. Prices are trad­ing be­low the daily 20 SMA and the MACD has crossed to the down­side. As long as the 1.0900 re­sis­tance holds, there may be a de­cline to the next rel­e­vant sup­port at 1.0700.

EURCHF:

EURJPY:

The EURJPY is tech­ni­cally bear­ish. Prices are trad­ing be­low the daily 20 SMA and the MACD has crossed to the down­side. A breakdown be­low the 133.00 sup­port may open a path to the next rel­e­vant sup­port at 131.00.

The CADJPY be­comes tech­ni­cally bear­ish once a breach be­low the 91.00 sup­port is achieved. Prices are cur­rently trad­ing be­low the daily 20 SMA and the MACD is in the process of cross­ing to the down­side. The next rel­e­vant sup­port is based at 89.00

The AUDCAD is tech­ni­cally bullish on the daily time­frame. A break above the 0.9580 re­sis­tance may open a path to the next rel­e­vant re­sis­tance based at 0.9650. Tech­ni­cal in­di­ca­tors such as the 20 SMA and MACD point to the up­side.

CADJPY:

AUDCAD:

Mar­kets Re­port b

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