Trading plan for 30/10/2018
Conflicting signals came from the US regarding trade relations with China. First, Bloomberg reported that the US is preparing import duties for other Chinese goods if the talks between the presidents Trump and Jinping in November will not bring a breakthrough. This hit the stock market and exerted downward pressure on the yuan. USD / CNY at 6.9741 improved the 10-year highs. The situation was saved by US President Trump, who in an interview for Fox television said he expected a “great deal” with China, and he would like to make a deal now, but he does not think China is ready for it.
Although Trump did not develop in detail, the sentiment in the markets revived. Shanghai Composite went out on a 1-percent increase, similarly, Japanese Nikkei225 grows 1.5%. USD / JPY was on daily tops at 112.70. He gains AUD (0.7090) and NZD (0.6550).
In addition, in the official Economic Information Bulletin, which is the main means of transmission of the Chinese authorities, it was written that despite the strong dollar and slowing China’s economy, the Chinese government will use a “visible hand” to intervene in the “necessary moment” on the currency market. It was also written that the People’s Bank of China will be in a position to defend the yuan against the weakening of over USD 7.00 per dollar.
On Tuesday, the 30th of October, the event calendar is quite busy with important data releases. Switzerland will publish KOF Economic Barometer data, Germany will post Unemployment Rate and Unemployment Change data, the Eurozone will present CPI, GDP, and Consumer Confidence data. At the end of the London session, the US will reveal Consumer Confidence data. There are some speeches scheduled for today from Member of the Executive Board of the ECB Sabine Lautenschager, BOC Governor Stephen Poloz and BOC Senior Deputy Governor Carolyn Wilkins.
EUR/USD analysis for 30/10/2018:
A bunch of data is scheduled for release today from Germany and the market participants expect Unemployment Rate to remain unchanged at 5.1%, the CPI to decrease from 0.4% to 0.1% on a monthly basis and increase from 2.3% to 2.4% on the yearly basis. The German CPI is significant as one of the primary gauges of inflation. As the largest Eurozone economy, inflation in Germany will contribute significantly to inflation in the Eurozone and the behavior of the European Central Bank. High or rising inflation acts as a signal to the ECB to raise interest rates, an action which will result in the strengthening of the Euro. The headline figure for CPI is the percentage change in monthly and annualized percentage term.
Let’s now take a look at the EUR/USD technical picture at the H4 time frame. The market keeps trading inside of the downward channel and the level of 1.1409 is still providing a good resistance fo the price. The market conditions are oversold and the momentum remains weak. The key technical resistance is seen at the level of 1.1444. In a case of worse than expected data from Germany, the market should continue the move down towards the levels of 1.1354 and 1.1335 and below.