EUR/USD: Dovish Fed Minutes Vs. Draghi's Speech

GROWTHACES.COM Trading Positions

USD/CHF: long at 0.9590. target 0.9750, stop-loss 0.9450

USD/CAD: long at 1.1150, target 1.1290, stop-loss 1.1060

AUD/USD: short at 0.8800, target 0.8610, stop-loss 0.8915

EUR/CHF: long at 1.2085, target 1.2160, stop-loss 1.2045

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EUR/USD: FOMC worried about the strong USD. Eyes on Draghi now.

(our EUR/USD short reached the stop-loss level)

• Discussions between FOMC participants on whether to change interest rate guidance heated up last during their September 16-17 meeting, as exit from extraordinary accommodation appeared closer, while labor markets continued improving but inflation remained soft.
• Regarding the labor market, participants generally agreed that payroll growth, the unemployment rate, unemployment claims, and several other indicators were encouraging signs.
• Some FOMC members worried that the strong USD could result in weaker inflation and worried that slow euro area growth could keep the USD strong, softening exports. Some participants were the opinion that domestic inflation might be held down by persistent disinflation among US trading partners.
• In its September 17 statement, the Fed's policy-setting committee repeated its assurance that rates would stay ultra-low for a "considerable time" after a bond-buying stimulus program ends, a pledge it has kept in place since March.
• ECB President Mario Draghi is set to speak later on Thursday and is likely to highlight the growing divergence in monetary policy outlooks between the United States and the euro zone and say again that the central bank is keeping all its options open including full-blown quantitative easing. The appreciation of the EUR will not be good news for the European monetary authorities, because a weaker EUR could revive growth through exports and help avert the threat of deflation.
• The USD retreat is stronger than expected. The EUR/USD broke above 1.2700 and our short position reached the stop-loss level. A USD correction lower will leave the market better balanced and the USD should continue to go higher. We will be looking to get short again but will be patient and place the sell offer just below 1.2900.

Significant technical analysis' levels:

Resistance: 1.2816 (low Sep 22), 1.2849 (30-dma), 1.2864 (high Sep 24)

Support: 1.2653 (hourly low Oct 8), 1.2623 (low Oct 8), 1.2583 (low Oct 7)

AUD/USD: The market ignored the employment report

(our AUD/USD short is endangered after dovish Fed minutes)

• The Australian Bureau of Statistics estimated a net 29.7k jobs were lost in September, with all the fall in part-time work as full-time jobs rose 21.6k. The unemployment rate ticked up to 6.1% from a revised 6.0%.

• The ABS has had to restate all the figures since July because of problems with its seasonal adjustment process. It is now reporting the raw, unadjusted series which makes it harder to interpret. Some traders might ignore the employment numbers because of the mess with the data. The market reaction was limited. The AUD/USD initially dipped to 0.8806 but soon recovered to hit a day's high at 0.8898.
• Our short position on the AUD/USD is endangered, mainly because of the USD weakness after dovish FOMC minutes. In our opinion medium-term outlook for the AUD/USD is bearish and getting short is still a justified strategy.

Significant technical analysis' levels:

Resistance: 0.8927 (high Sep 23), 0.8949 (high Sep 22), 0.9001 (Sep 19)

Support: 0.8797 (session low Oct 9), 0.8730 (low Oct 8), 0.8649 (low Oct 6)

GBP/USD higher after the USD retreat

(GBP/USD is rising after the Fed minutes, but we are looking to get long on the GBP/JPY)

• The BoE's Monetary Policy Committee left Bank Rate at 0.5%, in line with expectations. The BoE left QE asset purchase unchanged at GBP 375 bn. The central bank made no statement after monetary policy decision.
• Expectations for a rise in UK interest rates, the main driver behind the GBP's gains since the beginning of 2013, have been pushed back into next year. However, traders are still the opinion that the UK will raise rates before the Fed.
• Britain's finance minister George Osborne said there were already signs that Britain's economy was being affected by weakness in the euro zone. He said that the European Central Bank must play its part to help the euro zone escape its economic malaise.
• The GBP/USD rose above 1.6200 for the first time in a week on Thursday, extending overnight gains in early European trade after dovish Fed minutes.
• At GrowthAces.com we maintain our bullish outlook for the GBP. Due to higher uncertainty about the USD strength, we prefer to get long on the GBP/JPY. We have placed our buy offer at 173.80.

Significant technical analysis' levels:

Resistance: 1.6234 (50% of 1.6525-1.5943), 1.6252 (high Oct 1), 1.6272 (30-dma)

Support: 1.6154 (10-dma), 1.6161 (hourly low Oct 9), 1.6032 (low Oct 8)

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