GREENBACK STRENGTH REMAINS DOMINANT MARKET THEME

US DOLLAR BID

The US dollar surged higher across the board this week after bullish comments from Federal Reserve Chair Jerome Powell and better than expected economic data. The US dollar Index climbed above the 96.00 level, touching levels not seen since mid-August as Federal Reserve Chair Powell struck a hawkish tone towards upcoming US interest rate rises and the overall US economy. The ADP jobs report beat market expectations, with the US economy creating 230,000 private sector jobs during the month of September.

• The USDCHF pair is bullish while trading above the 0.9890 level, key resistance is found at the 0.9950 and 1.0045 levels.

• If the USDCHF pair trades below the 0.9890 level, key support is found at the 0.9850 and 0.9780 levels.

NEW NAFTA

Canada finally agreed to join the United States and Mexico in a new tri-lateral trade deal this week, after weeks of negotiations with officials from the Trump administration. The new deal replaced the twenty-four-year old-NAFTA agreement and was officially named the USMCA agreement. US dealmakers highlighted key changes such as the origin of automobiles and market access to Canada's dairy sector, while also adding provisions on digital trade and intellectual property. The market reaction saw the USDCAD pair tumble below the 1.2800 level, as the U.S. dollar fell to a four-month trading low against the Canadian dollar.

• The USDCAD pair is bearish while trading below the 1.2865 level, key support is found at the 1.2775 and 1.2710 levels.

• If the USDCAD pair trades above the 1.2865 level, key resistance is found at the 1.2910 and 1.2960 levels.

EURO PRESSURED

The euro currency fell against the US dollar and the British pound this week as fears over Italy’s 2019 budget caused Italian bond-yields to rise and the single currency to drop. The EURUSD tumbled below the 1.1500 level, marking the weakest trading level for the pair since August 20th this year. The EURGBP pair also traded on the back foot as Brexit negotiators from the UK Conservative party continued to push for a deal with the European Union, despite EU leaders rejecting British Prime Minister Theresa May’s Chequers plan last month.

• The EURUSD pair is bearish while trading below the 1.1600 level, further losses towards the 1.1380 and 1.1300 levels seem possible.

• If the EURUSD pair trades above the 1.1600 level, further gains towards the 1.1650 and 1.1730 resistance levels remains possible.

YEN FALLS

The US dollar hit a new 2018 trading high against the Japanese yen this week, as widening interest rate differentials between the US and Japanese economies and a strong bid-tone in the greenback pushed the USDJPY pair towards the 115.00 level, marking its best trading level since November 5th 2017. Investors sold the Japanese yen currency as financial markets anticipated that the Bank of Japan would continue to maintain an ultra-loose fiscal policy stance, while the US Federal Reserve is likely to embark on further rate increase for the foreseeable future.

• The USDJPY pair is bullish while trading above the 113.30 level, key resistance is found at the 115.00 and 115.80 levels.

• If the USDJPY pair trades below the 113.20 level, further losses towards the 112.30 and 111.50 levels remains possible.

RBA ON HOLD

The Reserve Bank of Australia left interest rates unchanged at 1.5 per cent as widely expected by market participants, with Australian policymakers noting that unemployment and underemployment are still higher than expected. The RBA said that inflation growth remained muted, while the central bank also expected that inflation would gradually increase over time. The Australian dollar gained ground against the US dollar after the policy meeting, although the AUDUSD pair later weakened towards a fresh 2018 trading low as the US dollar index headed higher.

• The AUDUSD pair is bearish while trading below the 0.7130 level, further losses towards the 0.6990 and 0.6880 levels seem possible.

• If the AUDUSD pair trades above the 0.7130 level, price may correct towards the 0.7180 and 0.7230 resistance levels.