28.10.201312:33 Forex Analysis & Reviews: Fundamental review for October 28, 2013

Last Friday the euro closed at the level of opening (the only difference was 1 point), the pound dropped 34 points. The investors closed the positions before a series of relevant US data scheduled on Monday and Tuesday.

Ifo Business Climate Index in Germany in October was lower than forecast and lower the September’s figure, 107.4 vs. 108.2 and 107.7 in September. UK GDP in the third quarter was in line with the forecast, 0.8%; however, as we have assumed, the data has already been regarded by the market and was a good background to close the positions.

Data in the US was strong, Durable Goods Orders in September grew 3.7% vs. expectations for 1.7%; the August’s figures were revised upwardly from 0.1% to 0.2%. Durable Goods Orders ex. Transportation was -0.1% vs. Expectations for 0.6% and August’s figures revised downwardly from -0.1% to -0.4%; however, S&P 500 added 0.45%, which suggest that it does not confuse the investors.

Today at 17:15 UTC+4 data on US Capacity Utilization in September is revealed; forecast 78.1% vs. 77.8% in August. At the same time US Industrial production in September is published; forecast 0.5% vs. 0.4%.

At 18:00 UTC+4 data on US Pending Home Sales in September; it is expected to grow 0.5%; the other sources forecast a 0.3% decline vs. expectations for a 1.6% drop in August.

There is no data on the Eurozone today; at 15:00 UTC+4 data on CBI Retail sales in October is issued, forecast 33 vs. 34 in September. Thus, we expect the continuation of the decline of the euro and the pound.

Bearish targets on the euro: 1.3740, 1.3670/80, and 1.3650.

Bearish targets on the pound: 1.6120, 1.6040/55, and 1.5955.

AUD/USD.

Our count for a decline of the Australian dollar on the basis of the decline of the world oil prices and other mineral resources is still correct. For the last week Light Sweet oil depreciated 2.76%, copper dropped 0.7%, compound index on six major metals (copper, aluminium, nickel, lead, tin, and zinc) fell from $261.6 to $259.5 (-0.8%). The Aussie lost 87 points.

Today strong US data in September is expected, thus it may provide additional pressure on the Aussie.

Tomorrow (at 02:30 UTC+4) Glenn Stevens, the Governor of the Reserve Bank of Australia speaks, we expect the speech will be neutral.

On Thursday, October 31, data on Building Approval in Australia in September is revealed; forecast 2.9% vs. -4.7% in August. That day we expect the correction.

Bearish targets: 0.9530, 0.9460/65, 0.9425, 0.9385, 0.9320, and 0.9230.

USD/CAD.

Last week data on Canada was rather weak for the Candadian dollar to depreciate 1.5% or 155 points for a week. Wholesale Sales in August added 0.5% vs. expectations for 0.6% and 1.7% in July; retail sales in August grew 0.2% vs. forecast for 0.3% and 0.5% in July (revised from 0.6%). On Thursday, Canada’s GDP in the third quarter is revealed; forecast 0.2% vs. 0.6% in the second quarter (meanwhile, Bank of Canada slashed GDP forecast for 2014 from 2.7% to 2.3%). Amid strong US statistical data and drop of the raw materials prices, which influence the rate of the Canadian dollar to a greater extent, than on the Australian one, we expect further growth of the quotes.

Bullish targets: 1.0510, 1.0560then the range 1.0590-1.0600. When the range is passed, the next target is 1.0630.