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Fundamental Analysis

The Spanish Crisis in Focus

Typography

The common currency resumed positive dynamics following the Spanish Prime minister's comments on the possible limitation of Catalan autonomy due to the Spanish constitution. The decision about these limitations may be taken as early as this Saturday. Investors mostly ignored positive news from the US where the number of initial unemployment claims decreased to 222,000 against the 240,000 forecasted and the Philly Fed Manufacturing index which grew to 27.9 in October, compared to 23.8 in the previous period. The growth potential of the euro is likely to be limited by tensions around the events in Catalonia and also with the possibility of another round of monetary tightening in the US in December. Tomorrow traders are likely to pay attention to news on the current account balance in the Eurozone.

The bulls were not able to push the aussie quotes higher despite positive data from the labour market in Australia. The unemployment rate fell by 0.1% in September to 5.5% and the number of employed increased by 19,800 compared to the 14,100 forecasted. Data from Australia's major trading partner also cheered the aussie bulls. Industrial production growth in China accelerated to 6.6% in August which is 0.6% more than in July and 0.2% above the average prediction. There was a slight slowdown in Chinese economic growth to 6.8% in the third quarter which is 0.1% less than in the second quarter.

The USD/JPY showed a confident descending move on the background of rising tensions in Spain and due to the threat of a conflict between the US and North Korea. The trade balance in Japan reduced to 0.24 trillion yen in September compared to 0.31 trillion yen in August, but this result was not able to change the mood of the market as it sought out a safe haven in the yen.

EUR/USD

The EUR/USD price left the limits of the local descending channel and was able to break through the resistance at 1.1825. This is forming the stimulus for continued price growth with the closest targets at 1.1925 and 1.2000. The RSI on the 15-minute chart is growing but has not reached the overbought zone yet indicating that the upward impulse is not exhausted. In case of a fall resuming, the quotes may return to 1.1750.

AUD/USD

The AUD/USD keeps testing the resistance level at 0.7870. In case of its breaking and overcoming 0.7900, the bulls are likely to push the quotes higher up to 0.8000. On the other hand, in order to change the current positive trend to negative, the price has to leave the boundaries of the channel and break through the local low mark at 0.7820. The immediate goals in this scenario will be 0.7740 and 0.7700.

USD/JPY

The USD/JPY demonstrated a powerful descending impulse after some consolidation near the 113.00 mark. In case of maintaining the current movement, the next target will be 111.70 and breaking through this line is likely to force the bears to pull the quotes down to 111.00 and 110.30. After a strong fall, we are likely to see an upward rebound on the background of profit taking.

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