Dollar weaken sharply across the board today as Gold makes another record high of 1096 and is marching to 1100 level. Crude oil also follows by breaking 80 level too whole stocks rebounds strongly in general. ADP report showed the job market in private sector contracted -203k in October, slightly higher than expectation of -187k. Nevertheless, prior months' data was revised up from -254k to -227k. Challenger report also showed strong improvement of -50.7% fall in planned layoffs in October. Nevertheless, ISM non-manufacturing index missed expectation and fell slightly to 50.6 in October. Main focus now turns to FOMC rate decision and statement.
FOMC is expected to leave the Fed funds rate unchanged at 0-0.25%. What the market interested in the most is whether the Fed will change the statement, '... economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period', that appeared in September. We anticipate policymakers to keep the statement with the phrase 'an extended period' retained. The Fed prefer to see the job market stabilize and recovery more sustainable before exiting from the current ultra-expansionary monetary policy. More in FOMC Preview - No Change in Policy Rate, Upgrade in Economic Outlook.
Other data released today saw UK PMI services rose more than expected to 56.9 in October. Eurozone PMI services was revised slightly higher to 52.6 in October. Eurozone PPI dropped -0.4% mom, -7.7% yoy in September. UK Nationwide consumer confidence improved to 72 in October. BRC shop price index was flat in October. Australia retail sales unexpectedly dropped -0.2% mom in September.
Fitch cut Ireland's credit rating from AA+ to AA- and said that the downgrade reflects the severity of the decline in nominal GDP and the exceptional rise in government liabilities. But Euro has little reaction to the news.
Looking at the dollar index, sharp fall from 76.82 dragged 4 hours MACD below it's trend line support and suggest that a short term top is in place. More pull back could be seen to 61.8% retracement of 74.94 to 76.82 at 75.65 and possibly below. But downside should be contained above 74.94 and bring another rise. Above 76.82 will bring rise resumption to 77.47 resistance next.
EUR/USD Mid-Day Outlook
Daily Pivots: (S1) 1.4629; (P) 1.4720; (R1) 1.4814; More
EUR/USD's rebound extends further in early US session and at this point, intraday bias remains on the upside with focus on 1.4858 resistance. Break there will indicate that fall from 1.5061 has completed and will bring stronger rally to retest this high. However,failure below 1.4858, followed by break of 1.4737 minor resistance will reaffirm that case that EUR/USD has topped out at 1.5061. Intraday bias should then be flipped back to the downside for 1.4626 and break will target 1.4483 support next.
In the bigger picture, rise from 1.2456 has possibly completed at 1.5061 with bearish divergence conditions in 4 hours MACD and RSI. Break of 1.4483 support there will confirm this case and target 61.8% retracement of 1.2456 to 1.5061 at 1.3451 and beyond. Also, note that price actions from 1.2329 are treated as part of the wide range consolidation that started at 1.6039 and hence, completion of rise from 1.2456 will signal completion of such consolidations too. On the upside, nevertheless, a break above 1.5061 will indicate that rise from 1.2456 is still in progress for 1.6039 high.