Volumetric analysis on October 18
The European Commission will "most likely" reject the Italian budget plan for 2019.
Although Italy’s deficit is within the 3 percent, stipulated by the agreements, the European Commission demanded a greater deficit reduction from the country in order to reduce the debt weight, which is the largest in Europe in absolute terms and second after the Greece as a percentage of the economy.
On October 5, officials in Brussels sent the Finance Minister of Italy official warning that previous budget projections deviate from their debt reduction commitments. According to European Commissioner Günter Oettinger, the European Commission will probably reject the Italian budget plan for 2019, since it is incompatible with the rules of the bloc. The country has three weeks to submit of a revised budget. According to the regulations, by October 22, the European Commission must inform the Italian government if it has serious concerns about the budget proposal, and by October 29, in case of serious deviations, the commission should send its opinion and request a revised draft budget.
EUR / USD
The euro fell against the US dollar on Wednesday, after reports from the September meeting of the Federal Reserve System were published, which confirmed expectations that the central bank of the United States would likely continue to raise interest rates. In accordance with the meeting minutes, all members of the Federal Reserve System supported an increase of interest rates above a level that they consider neutral for the economy in the long term. The meeting participants also agreed that a further gradual increase in the target range for the federal funds rate will likely correspond to sustainable economic growth, healthy labour market and inflation of about 2 percent in the medium-term perspective. The same analysis from the Fed suggests that over the next few years, the trade war with China will not have a strong impact on US economic growth. According to the FedWatch Tool from the CME Group, the dollar index peaked at the session after the minutes were issued, and the euro fell 0.64 percent to 1.1499 dollars.
EUR / USD moves according to the previous forecast, towards to the support zone of 1.14-1.1350. The trading scenario for today will be the search of entry points, with targets at 1.14-1.1350 (TP), SL-above the daily high of Thursday.
GBP / USD
The British currency dropped against the US dollar on Wednesday after data showed that inflation fell more than expected in September. This week's economic data was able to redirect the attention of traders from Brexit to the British economy after the Tuesday release of strongest wage growth for workers in a decade. But weaker than expected consumer price inflation, which was 2.4 percent year over year in September against the forecast of 2.6 percent, put pressure on the British currency, already weakened by the message that the UK would not seek to extend the transitional period within the framework of Brexit.
The British currency fell below the .3150, which is a signal to start searching for entry points for sale, with targets (TP) around 1.30-1.2960, SL- above level 1.3150.
AUD / USD
According to data released on Thursday, the unemployment rate in Australia fell to 5 percent in September. This figure was the lowest since April 2012, well below economists' estimates. Despite this, the RBA the labour market tendency in the longer term, where the employment rate of 5 percent suggests an increase in wages. According to the Deputy Governor of the RBA, Gaia Debelle, the unemployment rate may drop even more, as historical experience may indicate before the economic data shows a significant increase in wage growth. The Central Bank of Australia keeps its key interest rate at a record low for a long period to help increase employment and stimulate the economy, which expanded the fastest in the second quarter in the last six years. Over time, this should stimulate inflation and potentially clear the way for the first rate hike from 2010. However, analysts do not see any prospects for a rate hike in the next 12 months.
The trading scenario for the AUD / USD pair on Wednesday will be the search for entry points to buy, from the level of 1.2910, with a target (TP) near the nearest maximum, at 1.3190, SL- below the level of 1.2910.
USD / JPY
The dollar strengthened against the Japanese yen on Wednesday on the background of the of the Federal Reserve System meeting minutes publication and the unexpected drop in exports of Japan, the first in a two-year period, caused by economic disruption due to natural disasters and increased energy prices. According to data published by the Ministry of Finance Japan’s exports on Thursday decreased by 1.2 percent in September. compared with the previous year. Exports to China have declined significantly (the largest Japan’s trade partner), a decline of 1.7 percent. Shipments to the USA and Europe also declined.
The trading scenario for the pair USD / JPY on Thursday maintains priorities for the strengthening of the dollar. Search for entry points to buy is relevant when the price is above 111.80 with a target (TP) in the area of 113.70, SL- below the level of 111.50.
Crude oil (XTI / USD)
An EIA report released on Wednesday showed that last week oil reserves rose by 6.49 million barrels, while reserves in the Cushing complex (Oklahoma) rose by 1.78 million barrels. Oil exports declined last week, while oil production fell to 10.9 million barrels per day, indicating the impact of limited production in the Gulf of Mexico due to Hurricane Michael. The two previous trading sessions were supported by statements from Saudi Arabia that it could use its oil wealth as a weapon against any punitive measures related to the disappearance of the well-known critic of the regime.
Oil continues to decline, supported by published reports on US stocks, to $ 68 a barrel, the closest SL level is at $ 70 a barrel.
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