Financial market research and analysis

The UK’s third quarter GDP growth came in line with 0.4% quarter-on-quarter expected by analysts (second estimate), 1.5% year-on-year. Exports contracted by 0.7% compared with +1.7% printed earlier, the gross fixed capital formation declined to 0.2% from 0.6% previously and 0.4% expected. The pound gave a limited reaction to the GDP data. The UK budget statement, the growth revision and fluctuations in the US dollar are the main drivers in the pound markets.

The GBPUSD advanced to 1.3337, the highest level since October 12. The positive trend has been the GBP-long positions’ friend this week, but the pair encountered resistance by 1.3336/1.3342 (October 12 peak / 50% retrace on September – October decline). The upside potential could be limited as the official UK growth figures are revised lower. In addition, today’s GDP data showed that the components that drive growth in the long-term could be somewhat discouraging for the buy-side.

The FTSE 100 edged lower on stronger pound, stagnant oil prices and individual stock news. Centrica Plc (-15.43%) plunged on profit warning and erased 5.4445 points off the index.

WTI crude consolidated near the $58 level as the EIA data confirmed that the US stockpiles fell by 1.86 million barrels last week, compared with -1.4 million expected by analysts. Tighter supply triggered the upside move, along with expectations that the OPEC will remain committed to reduce its output as well. This being said, next week’s OPEC meeting may leave those who wish for a positive surprise disappointed. An extension of the output cut agreement beyond March 2018 is already widely priced in. There is little potential left to explore on the upside. Offers could come in play within the $58/60 area.


USD falls post-Fed minutes, US closed due to Thanksgiving

The US dollar fell after the Federal Reserve (Fed) minutes showed that some members were less sure about the speed of the US rate tightening due to tepid inflation. This being said, a December rate hike is still highly likely (92.3%) to happen, what will the Fed do after December is uncertain. On a side note, it is important to mention that the US core inflation advanced to 1.8% last month after having stagnated for five months. This means that the macro economic data should determine how fast the Fed will be tightening its policy moving forward.

The US stock markets will be closed due to Thanksgiving.


Euro boosted by PMI data, ECB account in focus

The USD sell-off helped the EURUSD gaining momentum above the 1.18 level (200-day moving average). Strong PMI data from France and Germany further boosted the euro appetite.

The European Central Bank (EcB) meeting minutes could reveal some reluctance from some members to discuss about the Quantitative Easing (QE) tapering. Nevertheless, the minutes will not change the ECB’s plans to continue buying assets at half speed starting from January. Provided that President Mario Draghi convinced traders that lower-speed QE is not a tapering, any optimistic view on the Eurozone’s economic activity could bring some hawks back on their feet. The EURUSD lost up to 4.44% after the ECB’s latest policy announcement and recovered only half of these losses after hitting the bottom (1.1554) in the beginning of November. There could be a further upside to explore and if the momentum remains strong, there is no reason why the pair could not rise more, despite the ongoing decline in the Eurozone yields. Resistance could be found at 1.1860/1.1885 (November high / major 61.8% retracement on September-November decline).


USDJPY steps in bearish consolidation zone

The USDJPY pulled out the major 38.2% Fibonacci support and plunged below its 200-day moving average (111.47). Provided that the knee-jerk reaction has mostly been absorbed by now, it could be time for an upside correction. Support is eyed at 111.02/110.70 (50% retracement on September – November rise / daily Ichimoku cloud bas). Yet the short-term bearish reversal should limit the recovery by 111.91 (major 38.2% retrace, former support).


AUD gains at risk

Softer US dollar and the positive breakout in iron ore futures (+2.84%) gave a boost to the Aussie, however the absence of carry traders will likely spoil the recent rebound. Solid offers are eyed by the 200-day moving average (0.7706).


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