US dollar jumps ahead of FOMC decision
Global stocks were relatively unchanged today as investors waited for a decision from the Federal Reserve. They were also reacting to a series of corporate news. In Europe, Stoxx50 declined by 5 points while DAX lost 20 units. In the United States, Dow futures declined by 10 points. In Europe, markets reacted to a merger deal that was announced between Fiat Chrysler and Peugeot. This deal comes a few months after Fiat and Renault talks broke down. Meanwhile, in Germany, Volkswagen reported a 43% rise in third-quarter pre-tax profits. Profits reached EUR 5 billion. In the United States, the market reacted to GE earnings. The industrial conglomerate’s adjusted EPS of 15 cents a share was higher than the consensus estimates of 11 cents. Revenue of $23.36 billion was better than the consensus estimates of $22.93 billion.
In Europe, the market received mixed economic data. In Germany, unemployment change rose by 6k, which was worse than the consensus estimates of 2k. The unemployment rate remained unchanged at 5.0%. In Switzerland, ZEW expectations declined to minus 30.5 from the previous -15.4. This number is from a survey of senior managers on their expectations of the economy in the next 6 months. In the EU, the business climate improved slightly to -0.19 from the previous -0.23. Services sentiment declined from 9.5 to 9.0 while industrial sentiment declined from -8.9 to -9.5. Later today, the market will receive inflation numbers from Germany.
The United States dollar rose slightly after ADP released the private payroll numbers for October. The numbers showed that the economy added 125k jobs in the month. This was slightly higher than the 120k jobs created in September. Analysts surveyed by Refinitiv were expecting the number to come in at 120k. Meanwhile, the first reading of the US Q3 GDP showed that the economy expanded by 1.9%. Core PCE prices in the quarter rose by 2.20%, which was higher than the consensus estimates of 2.10%. Meanwhile, GDP sales rose by 2.0%, which was lower than the second quarter’s 3.0%. Later today, the market will receive the interest rate decision from Canada.
The GBP/USD pair rose slightly as markets reacted to developments in the United Kingdom and the better-than-expected retail sales in Japan. The pair is trading at 140.23, which is higher than last week’s low of 138.38. On the hourly chart, the pair has been trading within a narrow channel. The Bollinger Bands have narrowed while the average true range has declined significantly. This is a signal of low volatility. It is also a signal that the pair could see a major breakout. This could happen tomorrow when the BOJ releases its rates decision.
The USD/CAD pair rose today after data from the United States and ahead of the Canadian interest rates decision. The pair is above the 61.8% Fibonacci Retracement level. The price is along the upper line of the Bollinger Bands. The RSI has moved high from a low of 40 to the current level of 65. The signal line of MACD has crossed the middle line and is heading downwards. The pair will likely see some volatility ahead of the Canadian rates decision.
EUR/USD pair dropped sharply after the US GDP and job numbers. This is also ahead of the much-anticipated interest rates decision by the Federal Reserve. The pair is trading at the important support of 1.1100, which is between the 28.6% and 38.2% Fibonacci Retracement level. Volatility has increased as evidenced by the widening Bollinger Bands and the rising Average True Range indicator. The pair will likely remain volatile as the market waits for the rate decision. The key levels to watch will likely be 23.6% and 61.8%, Fibonacci levels of 1.1095 and 1.1130.