Today has been another quiet day, as markets wait for important economic data coming out, as well as the finalizing of the Phase One deal. The most action has been occurring in GBP pairs, as UK election polls drive this currency around. GBP/USD climbed around 60 pips higher today, but it is reversing down now. The Aussie, on the other hand, was dragged lower earlier this morning, after Westpac called for two more RBA rate cuts next year with QE to follow as well. In Europe, Ursula von der Leyen was officially confirmed as the next president of the European Commission.

Although, the most important forex events today were the GDP and durable goods orders reports from the US. Headline and core orders posted some big declines in September, as the report released last month showed. But, today’s report showed a big turnaround in sales during October, with both headline and core orders jumping 0.6% higher. The GDP report was also better than anticipated. The US economy expanded by 2.1% (annualized) in Q3, against expectations of 1.9%, So I’m pretty sure Donald Trump should be pretty happy with these figures.

The European Session

• German Import Prices – Import prices have been negative in Germany for four out of the last five months. But, in September they turned positive, showing a 0.6% increase. Although, prices were expected to turn negative again in October and decline by 0.2%. They did decline, but by 0.1% only, although this makes five negative months. So, the CPI inflation will be affected negatively by this.
• Russia’s Novak Show No Willingness to Cut Oil Production Further by Russians – The Russian energy minister Novak commented earlier this morning that OPEC+ to have standard agenda in meeting next week. OPEC+ to discuss compliance and market outlook in meeting. So, he’s letting markets know that Russia doesn’t like another Oil output cut.
• Rates to Stay Low For Long According to ECB’s Lane – ECB chief economist Philip Lane was making a few comments regarding the monetary policy in the Eurozone. He touched briefly on inflation, credit growth and the monetary policy. Below are his comments:
  • ECB cares
  • Euro area credit growth continues to be decent
  • Policy transmission is working
  • Have not reached reversal rate yet

  He said that he “cares equally about too low or too high inflation”, but I don’t think he and the ECB will have to worry about high inflation for a very long time. Inflation is expected to tick higher when the report comes out next week, both core and headline CPI (consumer price index), but it still remains very low.

  Policy transmission is working, according to him, which means that the latest round of monetary easing they announced in September meeting is having a positive effect. I think that it’s too early to even mention it, since the ECB only restarted the QE programme this month. The reversal rate has not been reached yet, so that means that they will jeep negative rates for a long time and they might even cut further. The Euro is not minding much though, as EUR/USD remains stable.

The US Session

• US GDP Report – The GDP report has been released. Expectations were for a tick lower to 1.9% in Q3, from 2.0% in Q2. But, the GDP expanded by 2.1% instead on an annualized basis. Personal consumption remained unchanged at 2.9%, against a small decline to 2.8% expected. Personal consumption added 1.97%, against 1.93% in advance report. Gross private investment took out -0.01 pp from the GDP, still less than -0.27 pp in the advance report. Inventories +0.17 pp vs -0.05 pp in advance report. Net exports -0.11 pp vs -0.08 pp in advance report.
• US Price Index PCE and Unemployment Claims – GDP price index ticked higher to 1.8% against from 1.7% expected. But core PCE ticked down to 2.1% against 2.2% anticipated. The unemployment claims were expected to decline from 227k to 223k this month, but they beat expectations, falling further to 213k.
• US Durable Goods Orders – Durable goods orders report has been released. headline orders were expected to decline again by 0.5% in October, after declining by 1.2% in September. But, they beat expectations, increasing by 0.6% last month. Core orders were expected to increase by 0.2%, but they also beat estimates,showing a 0.6% increase instead. The previous month stood at -1.2%, but was revised to -1.4%. Capital goods orders non-defense ex air +1.2% vs -0.2% expected. Capital goods shipments non-defense ex air came at +0.8% vs -0.2% expected. Prior stood at -0.7%, but was revised to -0.8%.

Trades in Sight

Bullish [[EUR/GBP]

• The trend has been bearish for months
• The retrace higher is complete
• Fundamentals point further down
• MAs are providing solid resistance

The 50 and 100 SMAs are doing a great job as resistance

EUR/GBP has been very predictable. It turned bearish at the middle of August and since then the traffic has been one way only. This pair has lost around 800 pips from top to bottom and now the price is trading near the bottom. During the decline, moving averages have been doing a good job in providing resistance during pullbacks and pushing the price lower.We have had quite a few trades playing out well during this decline. Almost all of our trades here have been sell signals, obviously. We have been selling retraces to moving averages, especially during the last week of October and this month.

The 50 SMA (yellow) has been providing solid resistance during the last month or so, so many times. When buyers have pushed above it, the 100 SMA (green) has taken its place, reversing the price down. Yesterday we saw another retrace higher on the H4 time-frame chart, after one poll showed a narrowing lead for Conservatives in the UK, which hurt the sentiment surrounding the GBP a little. But, the 100 SMA held strong once again and after a few small doji candlesticks, this pair reversed back down. We missed that opportunity, but I can’t beat myself up too much about it, since the reversing chart setup formed during the nights. Anyway, this is the picture in EUR/GBP and pullbacks to the 50 or 100 SMAs should offer some great selling opportunities.

In Conclusion

Markets continue to remain very quiet again today, as traders head for a long weekend in the US which starts tomorrow. The USD has started to make a move, climbing higher against most major currencies after the positive GDP and durable goods orders reports, but the move is still very slow.