Daily Forex Market Preview, 17/10/2018
China's headline inflation rose 2.5% on the year ending September. This was a modest increase from August inflation rate which touched 2.3%. However, producer prices index data rose at a slower pace for the third consecutive week. PPI was seen rising just 3.6% on the year missing estimates of a 3.7% increase. In August, China's PPI was at 4.1%.
Data from the UK showed that wage growth picked up sharply. Excluding bonuses, wages in the UK advanced 2.7% in the three months ending August. This was higher than the median estimates of 2.6%. The UK's unemployment rate held steady at 4.0% for the third consecutive month.
Data from the Eurozone showed that the German economic sentiment index weakened to -24.7 unexpectedly. The decline was seen coming due to the uncertainty on global trade policies.
The UK's Office for National Statistics will be releasing the inflation report today. Consumer prices in the UK are forecast to rise 2.6% on the year ending September 2018. The forecasts mark a modest slowdown in the pace of inflation increase. Core inflation rate is also expected to rise at a slower pace of 2.0% from 2.1% in August.
Following this, the Eurozone's final inflation figures will be coming out. Headline CPI is expected to be confirmed at 2.1% while core inflation rate is expected to rise at a much slower pace of 0.9%.
The NY trading sessions start off with Canada's manufacturing sales report. This is followed by the building permits and housing starts data. Building permits are expected to rise by 1.28 million while housing starts are expected to rise at a slower pace of 1.21 million.
Later in the evening, the Fed will be releasing its meeting minutes from September. The minutes mark the monetary policy decision where officials hiked interest rates by 25 basis points.
EUR/USD intraday analysis
EUR/USD (1.1565): The EUR/USD currency has formed a double top pattern on the 4-hour chart. Price action spiked through this level yesterday before giving up the gains. We expect a retest of the support area near 1.1547 - 1.1525 level. If this support gives way, the common currency could be seen pushing lower. We anticipate that the EUR/USD would test 1.1500 level to establish support ahead of potential further gains in store.
GBP/USD intraday analysis
GBP/USD (1.3176): The GBP/USD currency pair posted a rebound and managed to rise only to form a lower high. The decline off this lower high suggests that the British pound could be on its way to test the lower support at 1.3054 - 1.3028. Price action is currently supported by the 20-period EMA on the 4-hour chart time frame. Watch for the minor support at 1.3132 to hold the declines initially. To the upside, GBP/USD will need to break past the 1.3250 level to confirm the upside.
XAU/USD intraday analysis
XAU/USD (1222.57): Price action in gold was muted as price stalled near Monday's highs before closing slightly bearish. On the 4-hour chart, we see the retracement taking place. This is indicative of a further decline down to the 1212.05 - 1207.00 level of support. A retest of this support would mark price action establishing support following the breakout from the ascending triangle pattern. The bias remains to the upside. However, if gold prices fail to hold near the support level, we expect further declines to invalidate the ascending triangle pattern.