US DOLLAR, BRITISH POUND, GBP/USD, BOE, FED,CHINA, AUD/USD - TALKING POINTS:

• The US Dollar has rallied against most G10 currencies this week ahead of the Fed.
• APAC equities were mixed today, and generally, commodities have moved lower.
• All eyes are on the key central banks’ meetings. Will the USD resume its uptrend?

The US Dollar has made ground in a week full of central bank action. The RBA led the way yesterday, stepping back from yield curve control having already begun tapering their bond purchasing program.

The Fed are up today, and the market is on tapering tenterhooks as expectations are high for a reduction in the monthly asset purchasing program. There will be significant focus on the wording in the statement for clues on when the program will end and when the rate hikes will begin.

Tomorrow, the Bank of England is priced in to make a rate hike by markets. There is also speculation around their bond buying program. There has an upheaval in the UK bond market due to lack of supply of Gilts.

Elsewhere today, US Secretary of Commerce, Gina Raimondo, re-iterated the issues with so-called “dirty steel” coming out of China, as they try to offload excess capacity. The US-EU deal agreed to over the weekend is intended to be a forerunner for a global steel arrangement that incorporates the carbon emission level in the production process.

This has seen iron ore prices continue lower and traded below theequivalent of US$ 90 on China’s Dalian Commodity Exchange today.

The Australian Dollar remains under pressure from commodities being weaker and the RBA delivering a less hawkish than expected statement of monetary policy yesterday. Australian bond yields continue to drift lower.

New Zealand unemployment rate came in at 3.4% for the third quarter, which beat forecast of 3.9%. Oil was softer today on optimistic speculation that Iran may return to supply the market next year.

Looking ahead, in the US there are mortgage, jobs, PMI, ISM, factory orders and durable goods data due out. But the focus will be the FOMC rate decision and what Federal Reserve Chairman, Jerome Powell, says at the press conference.

GBP/USD TECHNICAL ANALYSIS

GBP/USD made a low for the year in September at 1.3412 before rallying to 1.3835, just below the 200-day simple moving average (SMA). These levels may provide support and resistance respectively.

To end last week, a Bearish Engulfing Candle formation evolved as GBP/USD broke below a prior support level at 1.3710. This level might now offer pivot point resistance.

Support could be found at previous lows of 1.3569 and 1.3544. On the topside, above 1.3710, potential resistance may be offered at 1.3835 and 1.3913.

Chart created in TradingView

 

Written by Daniel McCarthy, Strategist for DailyFX.com. 3rd November 2021.