Dollar Digesting Gains, But Remains Strongest for the Week

Market overviews

Overall, trading in the forex market is rather subdued today. Dollar is retreating mildly but remains the strongest one for the week. Yen remains the distant second, while Sterling is third. On the other hand, Australian Dollar is the weakest one, followed closely by New Zealand Dollar. Euro and Swiss Franc are mixed. Gold also turns into consolidation but stays firm at around 1850. WTI crude oil is holding stubbornly around 80 handle.

In Europe, at the time of writing, FTSE is down -0.45%. DAX is up 0.13%. CAC is up 0.28%. Germany 10-yaer yield is down -0.0127 at -0.242. Earlier in Asia, Nikkei rose 1.13%. Hong Kong HSI rose 0.32%. China Shanghai SSE rose 0.18%. Singapore Strait Times dropped -0.30%. Japan 10-year JGB yield rose 0.0052 to 0.076.

Eurozone industrial production dropped -0.2% mom in Sep, EU down -0.5% mom

Eurozone industrial production dropped -0.2% mom in September, better than expectation of -0.5% mom. Production of capital goods fell by -0.7%, intermediate goods by -0.2%, while production of energy remained stable, durable consumer goods rose by 0.5% and non-durable consumer goods by 1.0%.

EU industrial production dropped -0.5% mom. Among Member States for which data are available, the largest monthly decreases were registered in Denmark (-5.0%), Czechia (-3.2%) and Austria (-3.0%). The highest increases were observed in Estonia (+5.3%), Lithuania (+4.3%) and Belgium (+3.7%).

From Swiss, PPI came in at 0.6% mom, 5.1% yoy in October.

New Zealand BusinessNZ manufacturing rose to 54.3, recovery from a large hard hit

New Zealand BusinessNZ Performance of Manufacturing Index rose from 51.6 to 54.3 in October. Looking at some details, production rose from 49.8 to 54.0. Employment dropped from 54.2 to 52.1. New orders dropped from 54.1 to 53.9. Finished stocks rose from 50.2 to 54.9. Deliveries rose from 47.9 to 59.9.

BNZ Senior Economist, Doug Steel stated that “even though October’s reading is above average, we’d classify it more in the realm of some recovery from a large hit rather than an indication of outright strength.”

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3339; (P) 1.3386; (R1) 1.3413; More…

GBP/USD recovers mildly but outlook stays bearish with 1.3606 resistance intact. Current down trend from 1.4248 should target 1.3164 fibonacci level. We’d monitor the downside momentum of the next move, and look for bottoming sign around 1.3164.

In the bigger picture, the structure of the fall from 1.4248 suggests that it’s a correction to the up trend from 1.1409 (2020 low) only. While deeper fall cannot be ruled out yet, downside should be contained by 38.2% retracement of 1.1409 to 1.4248 at 1.3164, at least on first attempt, to bring rebound. On the upside, firm break of 1.4376 key resistance (2018 high) will add to the case of long term bullish reversal. However, sustained trading below 1.3164 will revive some medium term bearishness and target 61.8% retracement at 1.2493.

Economic Indicators Update

GMT Ccy Events Actual Forecast Previous Revised
21:30 NZD BusinessNZ Manufacturing Index Oct 54.3 51.4 51.6
7:30 CHF Producer and Import Prices M/M Oct 0.20%
7:30 CHF Producer and Import Prices Y/Y Oct 4.50%
10:00 EUR Eurozone Industrial Production M/M Sep -0.50% -1.60%
15:00 USD Michigan Consumer Sentiment Index Nov P 72.5 71.7