Daily Report: A Busy Day Featuring BoE and FOMC Minutes

Market Overview | Written by ActionForex.com | Nov 19 08 07:18 GMT |

The forex markets are still bounded in tight range in generally as markets are still searching for a theme and direction. Meanwhile, as mentioned before, Swiss Franc remains the weaker one as driven by its pull back in EUR/CHF and GBP/CHF crosses. USD/CHF continues to climb higher. GBP/USD, on the other hand, loses momentum after hitting 1.5080 minor resistance. Dollar index continues to be bounded inside a triangle like consolidation pattern below 87.98. A number important events are scheduled today, including the release of FOMC and BoE minutes as well as US housing and inflation data, which could trigger some volatility in the markets. BoE MPC minutes are expected to reveal a 9-0 vote for the surprised 150bps cut earlier this month. With core CPI having the steepest drop in at least 11 years and a clear sign of turnaround in inflation trend, markets expect that BoE is now free to have further steep rate cuts from BoE to avoid a prolonged recession in the UK economy. Indeed, markets are pricing in another 100bps cut over the next 12 months. The minutes are expected to affirm this view. But the impact on Sterling might be minimal. FOMC minutes, on the other hand, is expected to elaborate on the perceived dovish bias of Fed and provide details of the discussions between board members, including those in the intermeeting cut before Oct 29. Markets are pricing in 90% chance of another 50bps cut from Fed on Dec 16 and the minutes will likely have little impact to this view based on current economic and inflation outlook. Consumer inflation in US has peaked at 5.5% in Jul and is expected to continue the down trend in Oct. Headline CPI in US is expected to moderate drop sharply by -0.8% mom in Oct, with year-over-year rate steeply down from 4.9% to 4.0%. Core CPI is expected to rose 0.2% with year-over-year rate down to 2.4%, after plateau at 2.5% for three consecutive months from Jul to Sep. NAHB builder confidence surprised the markets yesterday by plummeting sharply from then record low of 14 in Oct to new record low of 9 in Nov. Such pessimism is expected to be reflected in today's new residential construction data too. Housing starts is expected to continue the down trend and drop from 0.82m to 0.78m annualized rate. Building permits is also expected to drop from 0.81m to 0.78m annualized rate. USD/CHF Daily Outlook Daily Pivots: (S1) 1.1983; (P) 1.2014; (R1) 1.2062; More USD/CHF's rally is still in progress and climbs further to 1.2061 today so far. Intraday bias remains on the upside as long as 1.1965minor support holds. Current rise from 1.1208 is still expected to extend to next target of 100% projection of 1.0693 to 1.1746 from 1.1208 at 1.2261. On the downside, below 1.1965 will indicate that an intraday top is in place and bring retreat to 4 hours 55 EMA (now at 1.1875). Also, considering bearish divergence condition in 4 hours MACD, this will be an early alert that a short term top is formed and focus will then turn to 1.1549 support. In the bigger picture, medium term rise from 0.9634 is still in progress and has taken out 1.1878 (61.8% retracement of 1.3283 to 0.9634 at 1.1889). Sustained trading above there now encourages further medium term rally to test 1.3283 high. On the downside, break of 1.1208 support is needed to indicate that such medium term rally has completed. Otherwise, medium term outlook will remain bullish even in case of deep pull back.

Economic Indicators Update

GMT	Ccy	Events	Actual	Consensus	Previous	Revised
23:30	AUD	Australia Westpac leading economic indexSep	-1.00%	N/A	-0.10%
23:50	JPY	Japan All industry index Sep	-0.10%	-0.10%	-1.80%	-1.70%
9:30	GBP	BOE MPC vote outcome (C-U)		9--0	9--0
11:00	GBP	U.K. CBI industrial trend Nov		-41	-39
13:30	USD	U.S. Building permits Oct		0.78M	0.81M
13:30	USD	U.S. Building permits M/M Oct		N/A	-6.10%
13:30	USD	U.S. Housing starts Oct		0.78M	0.82M
13:30	USD	U.S. Housing starts M/M Oct		N/A	-6.30%
13:30	USD	U.S. CPI M/M Oct		-0.80%	0.00%
13:30	USD	U.S. CPI Y/Y Oct		4.00%	4.90%
13:30	USD	U.S. CPI core M/M Oct		0.20%	0.10%
13:30	USD	U.S. CPI core Y/Y Oct		2.40%	2.50%
13:30	USD	U.S. Real earnings Oct		0.50%	0.00%
13:30	CAD	Canada Leading indicators Oct		-0.30%	-0.20%
15:35	USD	Crude Oil Inventories		0.9M	0.0M
19:00	USD	FOMC minutes