29.10 .2019: Investors focus on Brexit and Fed meeting (USDX, USD, EUR, GBP, CHF)

29.10 .2019: Investors focus on Brexit and Fed meeting (USDX, USD, EUR, GBP, CHF)


In the European session, investors remained cautious in anticipation of the Fed’s monetary policy decision. They expect the regulator to cut its interest rate again. At the same time, traders predict that the US monetary authorities will adopt a wait-and-see approach limiting themselves to tomorrow’s rate cut. Against this background, the dollar index increased further and even attempted to reach its 2-week high at 97.90. A rally of the American currency was also driven by the weakness of its European rivals, the euro and the pound. The euro/dollar pair has lost gains earned the day before and sunk into the area of itsdaily and weekly lows of 1.1080-1.1075. The new price target lies at 1.1040. So far, the pair has not been able to recover above 1.1100, which may lead to short-term consolidation with a continued slump. Interestingly, the euro’s growth in October was almost entirely due to the weak US dollar. The demand for the euro declined after Mario Draghi provided a gloomy outlook during his last speech as the ECB President, noting the lack of stability and the existence of external risks for the successful economic development. Another factor that influences the pair is the news from the UK . Yesterday, the European Council agreed to grant Britain a new Brexitdelay from October 31 to January 31 next year. Boris Johnson’s bid for an early election was rejected. Today, the Parliament is to hold a new vote on a new plan that would only need a simple majority to dissolve the House of Commons but not two thirds as required before. The political uncertainty had little impact on the pound. The GBP/USD pair found support in the area of 1.2800 and even managed to recover within the day. However, today’s rebound failed to gain momentum. Now the pair is consolidating near 1.2860, as investors are refraining from buying the pound in anticipation of the UK Parliament’s
decision on an early election in the country. The USD/CHF advanced to the area of 0.9960-0.9965 after bulls attempted to regain the momentum above the important 200-day moving average. The main driver of the pair was the US dollar’s strength and a reduced demand for safe-haven assets on the back of growing optimism about the US-China trade deal. In the meantime, traders are awaiting the Conference Board consumer confidence index and the data on pending home sales in the United States to be released. We keep close tabs on the market development. Stay tuned!

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