Financial markets have been pretty volatile in recent months, due to everything that has been going on. The weakening global economy, the trade war, Brexit and geopolitical tensions, as well as central bank actions and rhetoric have been keeping things interesting for forex traders. But, this week was pretty quiet. I thought that the economic data from the US on Wednesday would offer some decent price action in forex, but the numbers were sort of mixed that day, with the GDP and durable goods orders coming better than expected, while personal income, pending home sales and the Chicago PMI disappointed once again, which left traders uncertain.
Yesterday, US markets were closed for Thanksgiving Day and despite them being opened today, US traders have taken off for a long weekend holiday, so markets have remained quiet today as well and they are expected to fade, as we head towards the end of the US session and the whole week. Earlier in the European session, there were some semi important economic figures being released, with German retail sales the most important, posting another major decline for October. The Canadian GDP for September posted only a small increase, but the details of that report were much better, although now impact on the markets.
The European Session
- German Retail Sales – Retail sales have been negative in Germany during the last several month, but they haven’t been all negative like factory production or factory orders. They posted a big decline in July, but returned to growth in August, which slowed down to 0.1% in September. Today’s report was for October and was expected to show another decline of 0.2%. But, the decline was bigger, with retail sales declining by 1.9%.
- French Prelim CPI and GDP – Consumer spending posted a 0.3% decline for September, which was revised to -0.3% today. Spending grew in October by 0.2%. The GDP has been increasing by 0.3% in the last three quarter and in Q3, the economy expanded by 0.3% again, as expected. CPI inflation posted a 0.1% decline last month, but was revised higher today to 0.0%. For this month, CPI was expected to remain flat, but increased by 0.1%.
- BOJ Trying to Look Optimistic – The Bank of Japan governor Kuroda held a speech this morning, saying that they still view that the Japanese economy will gradually recover as a whole. But, private consumption somewhat weakening, warrants attention. China’s economy unlikely to fall into recession.
- UK PM Johnson Commenting on Brexit – The UK Prime Minister Boris Johnson said earlier that the NHS (UK health service) is not for sale. Labour party is producing “pure Bermuda Triangle stuff” on NHS claims. We have talks on trade deals underway with many countries. On Brexit, says that there is no reason to go beyond transition period.
- Inflation Improves in the Eurozone – Euro area annual inflation is expected to be 0.8% in November 2019, up from 0.7% in October according to a flash estimate from Eurostat, the statistical office of the European Union. Headline CPI increased to 1.0%, beating expectations of 0.8%, while core CPI increased to 1.3% from 1.1% last month, beating expectations of 1.2% as well. Although, this is just one positive month. It remains to be seen whether inflationary pressures will remain, or whether they will decline again, as we have seen before.
The US Session
- Canadian GDP Report – The GDP report from Canada was released a short while ago. The economy expanded by 0.1% in September, keeping the same path as in August. Canada Q3 GDP expanded by 1.3% against 1.3% expected. Year on Year GDP for September beat expectations, increasing by 1.6% against 1.4% expected. YoY GDP for August stood at 1.3% but was revised higher to 1.5%. The Bank of Canada forecast a 1.3% growth in Q3 so this shouldn’t change their outlook too much in either direction. Looking at the details, this report is better than it looks. Inventories cut 1.62% from growth and trade took another 0.49%. Take those out and growth is at 3.4% on a strong consumer that’s once again starting to feel good about his/her housing wealth.
- OPEC November Oil Output – Reuters released its secondary sources survey on Oil production. OPEC November oil output falls by 110,000 bpd. Lower supply from Angola, Saudi Arabia, Iraq, Nigeria. Production was down 140K bpd in Angola on field maintenance. OPEC cut compliance at 135%. Average production of 29.57 mbpd. Saudi production -50K bpd. Kuwait boosted production by 70k bpd.
- ECB’s Holzmann Speaking – The Austrian central bank leader Holzmann was speaking on the monetary policy a while ago. He said that the ECB can’t ignore environment in monetary models. Price stability remains primary task. Environment should be considered in rating.
Trades in Sight
- The trend has turned bearish again
- The 100 SMA is pushing the trend lower
- Traders are turning into the USD this week end
The 100 SMA is doing a great job as resistance
AUD/USD has turned bearish again this month, after having put up a decent fight in October, with the sentiment turning bullish last month. But, the positive sentiment started fading away and risk currencies started turning bearish again this month. AUD/USD has been on a straightforward bearish trend and moving averages have been doing a great job keeping it down. The 50 SMA (yellow) and the 100 SMA (green) have been doing a great job in providing resistance and the 200 SMA has come to help when the first MAs have failed. Earlier today, AUD/USD found resistance at the 100 SMA, which reversed the price down.
The price action continues to be pretty slow, with most major pairs trading in tight ranges. Although, we are seeing some movement now. It seemed at first like the risk sentiment was turning off once again, as AUD/USD turned bearish while safe havens started climbing higher. But, the Euro is also climbing now, so it seems like traders are positioning themselves ahead of the weekend. By the way, this is also month end, so there might be some cash flows globally, so trade with caution guys.