Fundamental analysis — 22.10.2015


Today is the most important day of the trading week as there will be a lot of interesting data coming out in the US. However, the situation in the market is rather unclear. Initial jobless claims last weel rose by 10 K up to 265 K, existing home sales in September increased by 1.7% m/m after -4.8% m/m in August, while Fed Kansas City manufacturing activity remained in negative territory in October and can register-9 against -8 earlier. Such mixed results, even if confirm, are unlikely  to produce any pressure on the greenback, neither to provide solid support. The tone of today’s trading will be set by the ECB comments on its quantitative easing program and its future plans.


Assumptions that Wednesday trading would be slack came true. The EUR/USD pair remained within the narrow range until the end of the session and closed at its opening prices. Investors keep waiting for the new drivers for the pair, which can come from the ECB meeting minutes results, scheduled to be released today. The market is sure that the ECB will expand its stimulus program until the end of the year to accelerate inflation rate, but it’s not sure about the dates. Statistical data for today are not very abundant. Preliminary consumer price index for the month of October is expected to fall from -7.1 to -7.3, which is definitely not going to bolster the Euro even if the result turns out to be better than expected as all eyes are now turned to the ECB decision and Mario Draghi’s press-conference.


The GBP/USD traded sideways for the most part of the trading session on Wednesday on the back of unclear monetary policy situation in the UK. As a result, the pound fell against the dollar a bit more than other majors. The news block today contains some significant data, which can produce some effect on the pound’s positions. Retail sales are expected to rise +0.3% m/m, +4.7% y/y in September after +0.2% m/m, +3.7% y/y in August.


As we can see from the Chart, the indicator’s growth rate has been slowing down for the last three months, and if the expectations of growth confirm, it may bolster the pound. Another driver today will be the ECB meeting results – hints on increased stimulus will provide some support for the pound as well.


Development in the USD/JPY pair weren’t any different from other major pairs. Slack activity was observed for the whole session and the pair closed the day at neutral positions. Weak Japan’s expert data placed some pressure on the yen – the index came out the weakest in the last 13 months. Economic calendar today is barren, the yen slightly strengthened against the dollar, most likely due to technical factors – strong resistance and decreased risk appetite on the back of -0.65% fall in Nikkei. As for the future outlook, the pair may be also influenced by the messages from the ECB. More probable scenario, however, would be further range trading ahead of the BoJ and Fed monetary policy meetings, scheduled next week.


About Author

Hello, my name is Arkady Nagiev and I’ve been working for Forex4you company since 2008. I received an economic education and worked in various sectors of former Soviet Union. After the dissolution of the USSR, I decided to engage in the banking sector. In 1994 I took "Banking" course in the Moscow International Financial and Banking School. After that, I worked in the banks of Turkmenistan and Ukraine. While working at the bank, I became interested in the foreign exchange market, which required additional knowledge and pushed me to study strategies and techniques for the analysis of foreign exchange instruments. At first, I thought that technical analysis would be enough, but I soon realized that I was wrong, and began to study fundamental analysis. I sincerely hope that my Forex reviews and financial analyses help our clients to gain a better understanding of the forex market. Good luck with your trading everyone!