US Stockmarkets Reach Record Highs

Oct 27 21, 08:38 GMT

The USD edged higher against a number of its counterparts yesterday amidst low volatility, yet market attention is expected to remain on US stockmarkets as Dow Jones and S&P 500 reached new record high levels while Nasdaq also briefly touched its record high. There seems to be an increased interest for the tech sector and today we note the release of the earnings reports for Apple (#AAPL), Amazon (#AMZN), Bidu (#BIDU), Caterpillar (#CAT), pharmaceutical company Merck (#MRK), among others. As for financial releases we note the release of the durable goods orders growth rate for September, which is expected to decline into the negatives on a month-on-month basis and if so, could weaken the USD. Oil traders may be more interested in the release of the weekly EIA crude oil inventories figure, due out later in the American session especially after API’s release yesterday that showed another considerable increase in US oil inventories.

US 100 Cash (Nasdaq) rose yesterday briefly testing the 15715 (R1) resistance line, which is a record high level for the index. Given the correction lower that followed, we tend to maintain a bias for a stabilisation of the index, yet the RSI indicator below our 4-hour chart is at the reading of 62, implying an advantage for the bulls. Should the bulls actually regain control over the index, we may see it breaking the 15715 (R1) resistance line reaching new record high levels with its next target possibly being the 16000 (R2) round number. Should the bears take over, we may see Nasdaq breaking the 15365 (S1) support line, which provided ample of support in the past week and aim for the 15125 (S2) support level.

BoC’s confidence could boost the Looney

The CAD seems to remain rather stable against the USD while on the monetary front BoC’s interest rate decision is expected to monopolize the interest of CAD traders and the bank is widely expected to remain on hold at 0.25%. It should be noted that the accelerating hot Canadian inflation rates for September along with the stellar employment data for the same month have increased the pressure on the bank for a tightening of its QE program. The event is expected to provide further clues regarding the bank’s intentions, yet overall, we expect BoC to maintain a clearly hawkish tone. Analysts tend to note their expectations for a rate hike in Q3 next year, yet the bank’s QE program could be tapered even faster. Should the bank signal an earlier tightening of the bank’s monetary policy we may see the CAD gaining, while if it fails to meet the market’s hawkish expectations, we may see the CAD weakening considerably.

USD/CAD maintain a clear sideways motion between the 1.2425 (R1) resistance line and the 1.2330 (S1) support line. We maintain our bias for a sideways motion currently given the movement of the pair for the past week, yet BoC’s interest rate decision could alter the pair’s movement. On the other hand, it should be noted that the RSI indicator below our 4-hour chart is higher than the reading of 50, which could imply a slight advantage for the bulls. Should buyers be in charge of the pair’s direction we may see it breaking the 1.2425 (R1) resistance line and aim for the 1.2500 (R2) level. Should a selling interest be displayed by the market, we may see USD/CAD breaking the 1.2330 (S1) support line and aim for the 1.2250 (S2) level.

Today’s events and expectations

Today we note the release of Germany’s GfK Consumer Sentiment for November during the European session. On the fiscal front we would also note the planned speech of UK’s finance minister Rishi Sunak later on. In the American session we get from the US the durable goods orders growth rate for September and the weekly EIA crude oil inventories figure and from Canada BoC’s interest rate decision. In Thursday’s Asian session we note the release of BoJ’s interest rate decision, while RBA deputy governor Debelle is scheduled to speak.

US 100 Cash H4 Chart