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CRUDE OIL OUTLOOK:

• WTI wanton oil attempts to plea a pivotal insurgency turn during US$ 41.50
• The US Dollar index fell for a second day on impulse hopes, improving sentiment
• Oil traders eye pivotal EIA data, awaiting offer dump in stockpiles amid softening direct outlook

WTI wanton oil prices edged aloft on Wednesday, severe a pivotal insurgency turn during US$ 41.50. Oil prices were increasing by stimulus hopes and a descending US Dollar after US House Representatives Speaker Nancy Pelosi self-imposed a deadline for a White House to approve a service package. The DXY US Dollar index fell for a second day to 92.92 – a lowest turn seen in a month.

Oil traders are also eyeing Wednesday’s EIA inventory reports, awaiting a 1.02 million barrels tumble in US wanton oil stockpiles. Oil prices have historically exhibited a disastrous association with register changes, and a past 12 months’ information can be noticed on a draft below.

Source: DailyFX

In a middle term, falling wanton stockpiles would expected underpin WTI prices. Total US inventories (excluding vital petroleum reserves) have declined from 536.7 million barrels in Mid-July to 489.1 million barrels recently. Yet, a stream turn of US wanton oil inventories is about 11% above a 5-year normal for this time of year.

It is value noting, however, that descending wanton inventories should not facade a weakening direct outlook, that stays a pivotal drag to oil prices. Recent EIA reports have forked to declines in refinery inputs, gasoline prolongation and essence fuel production, as downstream direct weakened. Refineries operated during 75% of their operable ability in a week finale Oct 9th. US wanton oil imports have also depressed by scarcely half a million barrels a day from a prior week.

Flight information gathered by flightradar24 has also shown a slower gait of liberation in global flights numbers, that might offer as a good substitute for transport fuel direct (chart below). The 7-day relocating normal of sum flights tracked by a website was during 143,572 on Oct 20th, down by 26% from a same duration final year. The series of daily flights seemed to have come off a new rise seen in finish Sep as a effects of pandemic-related measures might have resulted in reduction travel.

Source: Flightradar24

Technically, WTI wanton oil prices demeanour set to re-test a pivotal insurgency in a US$ 41.00-41.50 area (highlighted on a draft below). Breaking above this turn might offer room for some-more upside intensity towards US$ 43.8 – a prior high. A shelter from stream levels might lead to offer converging during around US$ 40.00 (20-Day SMA).

WTI Crude Oil Price – Daily Chart

IG Client Sentiment shows that 48.82% of retail traders are net-long oil, with a ratio of traders brief to prolonged during 1.05 to 1 (chart below). Compared to a day ago, sell traders have significantly increasing their brief positions (+27.5%) while shortening prolonged positions (-16.8%). Compared to a week ago, a series of traders net-short has increasing by 45% while a net prolonged side has decreased by 19%. From a contrarian indicate of view, a extreme change in sell traders’ view towards a short-side disposition might infer offer strengthening in wanton oil prices.

— Written by Margaret Yang, Strategist for DailyFX.com

To hit Margaret, use a Comments territory next or @margaretyjy on Twitter

Canadian Dollar, USD/CAD, CAD/JPY, Bank of Canada, Inflation – Talking Points:

• Progress in US mercantile assist talks seemed to organisation marketplace view during APAC trade.
• Retail sales and acceleration information might foreordain a opinion for a Canadian Dollar.
• USD/CAD staid to extend declines as cost marks within cost channel.
• CAD/JPY eyeing a pull to uninformed monthly highs.

Asia-Pacific Recap

The haven-associated US Dollar and Japanese Yen continued to remove belligerent opposite their vital counterparts during a Asian trade session, as swell in US mercantile impulse negotiations seemed to organisation marketplace sentiment.

Gold and silver prices edged aloft notwithstanding US 10-year Treasuries yields mountainous above 80 basement points for a initial time given June.

Australia’s ASX 200 index rose 0.12% and Japan’s Nikkei 225 index pushed behind above a 23600 mark, as SP 500 futures continued to trek higher.

Looking ahead, Canadian acceleration information for Sep headlines a mercantile calendar alongside speeches from European Central Bank President Christine Lagarde and Federal Reserve Governor Lael Brainard.

Market greeting draft combined regulating TradingView

Retail Sales Data to Dictate CAD

Upcoming sell sales and acceleration information might foreordain a near-term opinion for a Canadian Dollar, after a Bank of Canada’s Business Outlook Survey showed that “business view has softened though stays diseased opposite all regions [and] businesses design a gait of a liberation in their sales to slow”.

Surprisingly, notwithstanding business view remaining “well next a chronological average” and production sales for a month of Aug descending 0.6% some-more than a approaching 1.4% decline, a Canadian Dollar has continued to outperform a haven-associated Japanese Yen and US Dollar in new days.

Of course, this could be down to a new resiliency seen in oil prices this month, in tandem with a renewed hopes of a pre-election mercantile impulse package out of a US.

Nonetheless, a cyclically-sensitive banking has erased a waste it took after Tiff Macklem suggested that holding seductiveness rates into disastrous domain is still a possibility, with a Bank of Canada Governor saying that nonetheless a executive bank is “not actively deliberating disastrous seductiveness rates during this point”, it is still in “our toolkit and never contend never”.

Canadian Dollar comparison draft combined regulating TradingView

However, Macklem also uttered that “as most as a confidant process response was needed, it will fundamentally make a economy and financial complement some-more exposed to mercantile shocks down a road”, adding that “the bottom line is that a private and open sectors together need to be acutely wakeful of financial complement risks and vulnerabilities as a economy recovers”.

This could prove that Canadian policymakers are apropos some-more supportive to a intensity impact of choice financial process measures and might demur to palliate serve in a deficiency of a important decrease in mercantile data.

With that in mind, a Canadian Dollar might continue to outperform a haven-associated Japanese Yen and US Dollar, if arriving mercantile information encourages a Bank of Canada to retains it wait-and-see proceed to financial policy.

DailyFX Economic Calendar

USD/CAD Daily Chart – Descending Channel Guiding Price Lower

From a technical perspective, a USD/CAD sell rate’s opinion stays lopsided to a downside, as cost continues to lane within a proportions of a Descending Channel after unwell to mangle behind above feeder insurgency during a 21-day relocating normal (1.3200) and 38.2% Fibonacci (1.3228).

The growth of a RSI and MACD indicator hints during flourishing bearish momentum, as both oscillators continue to lane resolutely next their particular midpoints.

With that in mind, a daily tighten next a Oct 13 swing-low (1.3099) would substantially vigilance a resumption of a primary uptrend and carve a trail for cost to exam pivotal support during a 50% Fibonacci (1.3039).

Conversely, a annulment aloft could be in a offing if a psychologically commanding 1.3100 symbol successfully stifles shopping pressure, with a mangle behind above a 21-DMA (1.3200) potentially generating a exam of Descending Channel insurgency and a Oct 15 swing-high (1.3259).

USD/CAD daily draft combined regulating TradingView

CAD/JPY Daily Chart – Eyeing a Push to Fresh Monthly Highs

CAD/JPY rates seem to be gearing adult for a pull to uninformed monthly highs, as cost bounces divided from a sentiment-defining 200-MA (79.75) and breaks behind above insurgency during a Jul high (80.14).

With a RSI strengthening above a neutral median and a MACD indicator travelling absolutely in certain territory, a trail of slightest insurgency seems higher.

That being said, given a RSI has nonetheless to snap a downtrend fluctuating from a Jun extremes and cost hasn’t breached a Oct high (80.60), a near-term pullback is positively not out of a question.

Nevertheless, a daily tighten above a monthly high (80.60) would substantially beget a some-more guileless topside pull and potentially move pivotal insurgency during a Aug high (81.58) into focus.

On a other hand, disaster to mangle to uninformed monthly highs might enthuse would-be sellers and light a short-term pullback towards a Ascending Triangle uptrend, if support during a Jul high (80.14) gives way.

CAD/JPY daily draft combined regulating TradingView

— Written by Daniel Moss, Analyst for DailyFX

Follow me on Twitter @DanielGMoss

GBP price, Brexit news and analysis:

• UK open zone borrowing in a initial half of a stream financial year was some-more than 6 times a figure a year progressing due to a mercantile cost of a coronavirus pandemic.
• Official information also showed that public-sector debt rose serve above a £2 trillion turn and reached a top as a commission of GDP given 1960.
• UK acceleration in Sep rose to 0.5% from 0.2%.
• Nonetheless, GBP/USD hold a belligerent as “risk-on” resources benefited from rising hopes that a US mercantile impulse package can be agreed.
• The FTSE 100 index, though, is descending back.

GBP/USD circumference adult notwithstanding bad UK mercantile data

GBP/USD mostly abandoned a really bad set of UK borrowing, debt and acceleration information early Wednesday, suggesting some stability underlying vitality as “risk-on” resources benefited from rising hopes of a US mercantile impulse package, and mercantile strength in China.

There are also hopes that US-China family could urge if Joe Biden wins a US Presidential choosing on Nov 3.

GBP/USD Price Chart, One-Hour Timeframe (October 16-21, 2020)

Chart by IG (You can click on it for a incomparable image)

FTSE 100 falls back, Brexit talks still a focus

By contrast, a FTSE 100 index of a vital London-listed bonds was weaker in early trade Wednesday and there was churned news on probable trade deals. While a EU-UK negotiations on their attribute once a Brexit transition duration ends on Dec 31 continue to uncover no signs of progress, a US and a UK have launched a new turn of talks focused on products and tariffs.

UK borrowing, debt and acceleration all rise

Turning to a UK economy, a cost of a coronavirus pestilence was clear in a really bad set of borrowing, debt and acceleration information expelled Wednesday before a UK markets opened. Government borrowing in a initial half of a 2020/21 mercantile year was some-more than 6 times a turn a year progressing due to a cost of ancillary a UK economy during a coronavirus pandemic.

Public zone debt climbed serve above £2 trillion to 103.5% of GDP, a top debt/GDP ratio given 1960.

However, a potentially disastrous impact of a borrowing and debt information was equivalent by a news that UK acceleration rose to 0.5% year/year in September, adult from 0.2% in August.

Source: DailyFX mercantile calendar

You can find a beam to reading an mercantile calendar here

We demeanour during currencies frequently in a DailyFX Trading Global Markets Decoded podcasts that we can find here on Apple or wherever we go for your podcasts

— Written by Martin Essex, Analyst

Feel giveaway to hit me on Twitter @MartinSEssex

USDJPY Price, News and Analysis:

• US dollar basket next 93.00.
• USDJPY heads reduce as support breaks.
• IG customer perspective is mixed.

The US dollar continues to trickle reduce and a dollar basket (DXY) is now next a remarkable short-term support turn around 93.00. The categorical motorist of a pierce – as we mentioned here during a weekend – is a ongoing US impulse check discussion. Tuesday’s some-more certain tinge for an agreement has weighed serve on a US dollar and taken it by a short-term support. The DXY is looking oversold currently, so a tiny short-term miscarry can't be ruled out.

US Dollar (DXY) Daily Price Chart (February – Oct 21, 2020)

The Japanese Yen has pulled in a tiny bid currently as well, exacerbating a pierce lower. A demeanour during CHFJPY shows a new run aloft has stopped and incited reduce today, suggesting that a Japanese Yen is today’s elite reserve play. USDJPY currently overwhelmed a low of 104.87, a new one-month low and if perspective stays negative, dual new swing-lows between 104.00 and 104.19 come into play. The CCI indicator suggests a marketplace is oversold though not during new impassioned levels.

USDJPY Daily Price Chart (April – Oct 21, 2020)

IG client information uncover 57.00% of traders are net-long with a ratio of traders prolonged to brief during 1.33 to 1.The series of traders net-long is 6.50% reduce than yesterday and 8.93% reduce from final week, while a series of traders net-short is 1.14% reduce than yesterday and 8.98% reduce from final week.

We typically take a contrarian perspective to throng sentiment, and a fact traders are net-long suggests USD/JPY prices might continue to fall.Positioning is reduction net-long than yesterday though some-more net-long from final week. The multiple of stream perspective and new changes gives us a further churned USD/JPY trade bias.

What is your perspective on the Japanese Yen – bullish or bearish?? You can let us know around a form during a finish of this square or we can hit a author around Twitter @nickcawley1.

USD/ZAR ANALYSIS

• Pre-election impulse package stays a possibility
• USD/ZAR falling wedge arrangement supports serve downside
• Accommodative tellurian risk-on outlook

President Donald Trump has put revised US impulse hopes behind on a list with comments that he might go opposite members of a Republican celebration that could means inner difficulties. Senate Majority Leader Mitch McConnell has disclosed a fact that he has suggested opposite final a understanding with House Speaker Nancy Pelosi before a Nov 3 elections.

A pre-election service package could support serve Rand strength though a disaster to do so might see short-term Rand debility as choosing jitters set in. The US Dollar and other normal safe-haven counterparts might see increasing movement with rising sensitivity approaching over a subsequent few weeks.

Visit a DailyFX Educational Center to learn because news events are Key to Forex Fundamental Analysis

USD/ZAR TECHNICAL ANALYSIS

USD/ZAR weekly chart:

Chart prepared by Warren Venketas, IG

The weekly draft next exhibits a text falling wedge arrangement that is revealing of a bullish (upward) continuation. Currently USD/ZAR stays within a crowd itself that could see serve ZAR strength toward crowd support before cost pushes aloft – as a arrangement implies.

USD/ZAR daily chart:

Chart prepared by Warren Venketas, IG

The daily draft highlights poignant support (green) between a 16.3444 38.2% Fibonacci turn and 16.5000 psychological level given early June. While cost has been contrast these levels over Q3 and Q4, marketplace participants are watchful for a bigger pull divided from a new laterally consolidation. A auspicious impulse preference for a Rand might see a 16.0835 being tested as initial support if a 16.3444 38.2% Fibonacci turn is broken.

USD/ZAR bulls will aim a 16.7199 (blue) as a new pitch high in a eventuality that a impulse package is not upheld before to Nov 3.

DOMESTIC FACTORS AFFECTING THE RAND

With no poignant news or events this week, a Rand has been during a forgiveness of tellurian influences and risk sentiment. A solid appreciation of a Rand has continued nonetheless still fluctuates around a 16.5000 pivotal plane level. Attention will be focused globally for a residue of a week with a tighten eye on a US coronavirus service package negotiations.

Next week binds several pivotal announcements for a Emerging Market (EM) currency with unemployment, acceleration information and Finance Minister Tito Mboweni’s Medium Term Budget Speech (MTBS) being a categorical attractions. Although these events are expected to means some change in ZAR crosses, tellurian factors will sojourn a primary cost change motorist for a internal currency.

DailyFX Economic Calendar:

USD/ZAR: KEY POINTS TO CONSIDER MOVING FORWARD

The Rand stays auspicious to tellurian investors as it endures as an appealing lift relations to some-more grown economy currencies. Local bond markets counterpart this with yields on both a R2023 and R2030 remaining intensely appealing for high-yield seeking investors respectively. Most marketplace participants are positioned for serve ZAR strength toward a 15.5000 – 16.0000 section after that we trust positioning will be reviewed. The undervalued inlet of a Rand (according to a Purchasing Power Parity model) encourages probable longer-term strength.

Uncertainty around a US impulse package is a categorical cause concerning EM currencies so any certainty around negotiations will expected give a USD/ZAR span a short-term directional bias. Key points to consider:

• US impulse negotiations
• Falling crowd pattern
• Expected arise in volatility
• Next week’s South African information

— Written by Warren Venketas for DailyFX.com

Contact and follow Warren on Twitter: @WVenketas

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