CANADIAN GDP FALLS BY 0.1% SENDING THE LOONIE LOWER
Despite positive data published in the Eurozone today, the EUR/USD price was still not able to lift out of the doldrums it’s been in recently. The unemployment rate in the Eurozone declined to its lowest level since 2009 reaching 8.9%, which is 0.1% lower than expected. The preliminary report on GDP showed growth in the Eurozone of 0.6% in the third quarter against the 0.5% expected but was still not able to offset the negative sentiment of investors concerning the euro. Meanwhile, the consumer confidence index published by the conference board in the US improved marginally with the index now at 125.9, up from 120.6 in September. Traders are in no hurry to build up positions ahead of the FOMC statement on monetary policy which will be released tomorrow. In case of hawkish rhetoric and the rising possibility of an interest rate hike in December, we are likely to see the fall of the EUR/USD quotes continue.
The USD/JPY is trying to restore previously lost positions. The Japanese yen was under pressure following the statement of the Bank of Japan, according to which the monetary policy settings will remain ultra-soft until inflation reaches 2.0%. This stance by the Japanese regulator may result in continued rising dynamics for the pair, especially if monetary tightening in the US come through as expected.
The Canadian dollar kept falling today and the trigger for another powerful impulse has come from weak GDP data in Canada, according to which the country’s economy contracted by 0.1% in August against an expected increase of 0.1%. Markets are likely to remain nervous in the next couple days and we may see sharp moves in different directions.
The EUR/USD quotes are consolidating above the important 1.1620 level below which the price could not fix previously. The possible rising movement may be limited by resistance at 1.1700 but it is more likely that we’ll see negative dynamics resume with the closest targets at 1.1550 and 1.1500. After the completion of the current consolidation, we are likely to see a growth in volatility.
The USD/JPY quotes resumed their positive dynamics after they could not fix below the support at 113.00 and returned to the SMA100 on the 15-minute chart. The immediate objectives, if the current impulse continues, will be at 114.00 and 114.70. On the other hand, confirmation of the signal to sell may come from fixing under the support at 113.00.
The USD/CAD has grown significantly after a long consolidation above 1.2800. Gaining a foothold above 1.2800 has become a strong basis for a future increase with potential targets at 1.3000 and 1.3200. The RSI on the 15-minute chart is in the overbought zone which indicates the possibility of a price correction. The amplitude of price fluctuations is likely to increase during the next couple sessions.