- The AUD / USD pair has renewed its two-month high. Easing coronavirus restrictions and higher commodity prices have supported demand for the Australian dollar.
- The gap between the yield on Treasury bonds for 3 years and 10 years has widened. Indicates that the market is optimistic about the Fed's rate hike.
- The Japanese yen lost ground amid improved risk appetite among investors, which was supported by the growth of US stock indices.
- The S&P 500 added 0.74% and is now near the all-time high of 4545.85.
On Tuesday, October 19, following the trading results, the euro rose in price against the dollar by 0.20%, to 1.1634.
Trading in Asia opened with a decline in the dollar index. The demand for risky assets rose on the back of rising Asian stock indices and declining yields on 10-year US bonds. In the first half of the day, the euro rate rose to 1.1669, the pound - to 1.3832, gold - to 1785.
The pound fared better than the euro amid expectations of a rate hike. He received additional support from Boris Johnson. The Prime Minister promised to solve the problem with Northern Ireland.
With the change in the direction of movement of the EUR / GBP cross pair and the resumption of growth in the yield of US government bonds (UST10), the euro rate fell back to the level of 1.1630. At the same time, the Australian and New Zealander ignored the rise in UST10. The demand for risky assets remained until the close of the European session, and only then they began to correct. The euro suffered more from the EUR / GBP cross.
Risk appetite was also supported by the rise in US stock indices. They were the ones who kept the EUR / USD pair above 1.1630. The S&P 500 Index added 0.74%, continuing its recovery after the September correction. The S&P 500 is now near its all-time high. The stock market is growing on positive quarterly reports. More than 80% of companies receive net profit above the forecasted values.
Scheduled statistics (GMT +3):
- At 09:00, Germany will publish the September Producer Price Index. Great Britain - consumer price index, producer purchasing/selling price index, retail prices September.
- At 11:00, in the eurozone will be released seasonally adjusted balance of payments for August.
- At 11:30, am UK will present the house price index for August.
- At 12:00, in the eurozone will be released the final data on the consumer price index for September.
- At 15:30, Canada is to publish the CPI for September.
- At 17:30, the US Department of Energy will publish a report on the change in oil reserves for the week of September 8-15.
- At 19:00, President of the Federal Reserve Bank of Chicago Charles Evans will deliver a speech
- At 21:00, The Fed's Beige Book will be released.
Current situation:
As of this writing, the major currencies are trading in positive territory, with the exception of the yen and franc. The demand for risk takers remains. The Australian and New Zealander are the growth leaders.
Market participants focus on reports on inflation in Britain, the Eurozone and Canada. Data is important to central banks, therefore important to traders.
Technical analysis:
The dollar has entered a correctional phase, which may last until the November meeting of the FOMC. The EUR / USD pair bounced off the 1.1630 support. The price recovered to 1.1652. Given the general attitude towards risky assets, the road to the 1.1690 level is open for buyers. They are hampered by the EUR / GBP cross, which falls on expectations of a rate hike by the Bank of England.
If the price falls below 1.1630, it will be possible to put an end to the growth, since the probability of a fall to 1.1530 will increase.
Summary: *on Tuesday, the single currency closed with growth against the dollar. The rise in quotations was facilitated by an increased appetite for risk amid a decrease in the yield on 10-year US bonds. The pressure on the pair was created by the fall of the EUR / GBP cross. Investors are buying the Briton for the euro on expectations of an imminent increase in the rates of the Bank of England.
In Asia, the euro is trading higher. The immediate target for buyers remains at 1.1690. A drop below 1.1530 will cancel the growth scenario and increase pressure on buyers.*