The greenback was firm yesterday after media reported that the US is preparing to impose tariffs on all remaining Chinese imports. The measure could be enacted by early December, should the meeting between US President Trump and Chinese President Xi not bear fruits, or fail to ease the tensions between the two countries. US President Trump, spoke of a great deal with China later on, helping ease concerns, though also considered China as not ready yet. The two leaders are to meet at the sidelines of the G20 meeting near the end of next month. For the time being, USD could continue to strengthen in its role as a safe haven, especially if US stocks continue to be on a selling mode.
AUD/USD went through some choppy trading yesterday as it broke the 0.7065 (S1) support line, however during the Asian session today corrected above it. We could see the pair dropping again, should there be headlines about further tensions in the US-Sino relationships today, as the USD side may strengthen. If the pair comes under the market’s selling interest we could see it breaking the 0.7065 (S1) support line and aim for the 0.7045 (S2) support barrier. If the market favours the pair’s long positions, we could see the pair rising, breaking the 0.7115 (R1) resistance line and aim for the 0.7160 (R2) resistance hurdle.
BoJ interest rate decision
BoJ is to announce its interest rate decision tomorrow, late in the Asian session and is widely expected to remain on hold at -0.10%. Currently, JPY OIS imply a probability of over 99% for such a scenario, with the decision per se being rendered an open and shut case. Analysts, state that the bank may revise down slightly its forecasts, given the continued downward risks for growth and inflation and that possible rate hikes are not in the horizon. It should be noted, that a recent Reuters article, mentioned the possibility of the bank eyeing a tweak in its bond buying program. Despite no interest rate hike being expected, volatility could occur for JPY pairs, as traders zoom in the bank’s meeting.
USD/JPY rose yesterday, breaking the 112.15 (S1) resistance line (now turned to support) and during today’s Asian session tested the 112.72 (R1) resistance level. We could see the pair trading in a bullish market today, should there be further headlines about tensions in the US-Sino relationships. If the pair finds fresh buying orders along its path, we could see it breaking the 112.72 (R1) resistance level and aim for the 113.25 (R2) resistance level. Should on the other hand, the bears rake over, we could see the pair breaking the 112.15 (S1) support line and aim for the 111.63 (S1) support area.
In today’s other economic highlights:
In the European session, we get Germany’s unemployment data and the preliminary HICP release, both for October as well as Eurozone’s preliminary release of the GDP growth rate for quarter 3. In the American session, we get the US CB consumer sentiment for October and the API weekly crude oil inventories figure. As for speakers, Bank of Canada governor Stefen Poloz speaks.
USD/JPY H4
Support: 112.15 (S1), 111.63 (S2), 111.15 (S3)
Resistance: 112.72 (R1), 113.25 (R2), 113.95 (R3)
AUD/USD 4H
Support: 0.7065 (S1), 0.7045 (S2), 0.7000 (S3)
Resistance: 0.7115 (R1), 0.7160 (R2), 0.7200 (R3)
