23 Oct: US$, yields higher on tax reform progress. Cable bounces on upbeat Brexit talk.

By | October 23, 2017


The US$ made its biggest daily gains for  a month on Friday, underpinned by higher Treasury yields, on the back of the news of some progress on U.S. tax reform, raising the prospect of a fiscal lift to the economy and bolstering investor appetite for risk. The dollar made good gains against most pairs. At the same time, Sterling had a good session after some more positive news from the Brexit negotiations after Prime Minister Theresa May’s appearance in the EU summit at which she pledged to examine the Brexit bill line by line and could be willing to pay more than EUR 20Bto the EU, and not dismissing the possibility of paying EUR 60b. In other markets, US stocks surged higher again , to new all time highs, while the metals were pressured lower by the stronger dollar and  WTI settled higher as political tensions in Kurdistan continued to disrupt crude supplies offsetting signs of wavering U.S. demand.

The week starts off with the Japanese election results, at which the status quo is expected to be maintained although it will otherwise be a fairly quiet session for economic data. It may be the Catalonian issues that have the biggest impact on Monday, and data releases could well play second fiddle to politics. The global flash PMIs will be in focus on Tuesday, while Wednesday kicks off with the Australian CPI, to be followed by the German IFO Business Climate/Expectations, the UK Inflation Report Hearing and then the US Durable Goods Orders and New Home Sales. Thursday sees the ECB Interest Rate Decision and Mario Draghi’s Press Conference, which will be eagerly waited for any sign of tapering the QE programme. Later in the session the US Pending Home Sales will be in focus. Friday will be quiet until late in the day, when the Provisional Q3 GDP will be released. Have a good week.

EURUSD: 1.1779
Res  1.1805  1.1825  1.1860
Sup  1.1755  1.1725  1.1700
USDJPY: 113.49
Res  113.55  113.95  114.20
Sup  113.20  113.00  112.80
GBPUSD: 1.3187
Res  1.3200  1.3230  1.3285
Sup  1.3160  1.3120  1.3085
USDCHF: 0.9843
Res  0.9855  0.9880  0.9900
Sup  0.9835  0.9810  0.9785
AUDUSD: 0.7815
Res  0.7835  0.7855  0.7880
Sup  0.7805  0.7785  0.7770
NZDUSD: 0.6964
Res  0.6980  0.7000  0.7020
Sup  0.6950  0.6925  0.6900
S&P: 2573
Res  2575  2580  2585
Sup  2565  2560  2555
DJI: 23274
Res  23295  23350  23400
Sup  23215  23145  23100
ASX SPI: 5892
Res  5910  5940  5965
Sup  5870  5845  5815
XAUUSD: 1281
Res  1285  1290  1295
Sup  1275  1270  1265
XAGUSD: 17.03
Res  17.30  17.45  17.60
Sup  16.90  16.75  16.55
WTI: 52.03
Res  52.55  52.85  53.50
Sup  51.30  50.80  50.10