Economic data released yesterday in the US confirmed that the slowdown in the economy is larger than expected. US retail sales failed to meet expectations of a 0.2% m/m growth and settled for 0.1%.

Markets have now priced the expectation of a Fed rate hike in the coming months at the following levels:
October: 6%
December: 30.4%
January: 38.8%
Mar: 52.3%

The EUR/USD extended its winning streak into a 6th day, hovering near a two month high at 1.1485. However, this might change if EU stocks rise as their Asian counterparts did. Higher commodity prices (GOLD) and Australian jobs data boosted the sentiment over in Asia with Japan and China rebounding today.

Gold rose over $20 yesterday on the back of Expectations for a delay of a rate hike nearly breaking the important resistance of $1190. The improving risk appetite in Asia halted the rally so far below that level.

GBP/USD rose almost to 1.5500 as UK unemployment rate dropped to 5.4% in August, the lowest rate since the financial crisis in 2008, and giving investors’ confidence as to the domestic market outlook.

Looking ahead, main focus will be in US data today. Initial jobless claims are expected to rise to 269k in the week ended October 10. CPI is expected to turn negative to -0.2% yoy in September while core CPI is expected to be unchanged at 1.8% yoy. Empire Stat manufacturing index and Philly Fed survey will also be featured.

Trading quote of the day:

“The opportunity of a lifetime must be seized during the lifetime of the opportunity.”

-Leonard Ravenhill

EUR/USD
Pivot: 1.1405
Likely scenario: Long positions above 1.1405 with targets @ 1.1515 & 1.156 in extension.
Alternative scenario: Below 1.1405 look for further downside with 1.1375 & 1.1345 as targets.
Comment: The RSI is mixed to bullish.

GBP/USD
Pivot: 1.538
Likely scenario: Long positions above 1.538 with targets @ 1.553 & 1.5565 in extension.
Alternative scenario: Below 1.538 look for further downside with 1.5325 & 1.529 as targets.
Comment: Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.

AUD/USD
Pivot: 0.727
Likely scenario: Long positions above 0.727 with targets @ 0.738 & 0.74 in extension.
Alternative scenario: Below 0.727 look for further downside with 0.724 & 0.72 as targets.
Comment: The RSI is mixed to bullish.

USD/JPY

Pivot: 119.55
Likely scenario: Short positions below 119.55 with targets @ 118.55 & 118.25 in extension.
Alternative scenario: Above 119.55 look for further upside with 119.9 & 120.1 as targets.
Comment: As long as 119.55 is resistance, look for choppy price action with a bearish bias.

USD/CAD
Pivot: 1.2975
Likely scenario : Short positions below 1.2975 with targets @ 1.29 & 1.285 in extension.
Alternative scenario: Above 1.2975 look for further upside with 1.304 & 1.308 as targets.
Comment: As long as the resistance at 1.2975 is not surpassed, the risk of the break below 1.29 remains high.

USD/CHF
Pivot: 0.956
Likely scenario: Short positions below 0.956 with targets @ 0.945 & 0.9405 in extension.
Alternative scenario: Above 0.956 look for further upside with 0.9615 & 0.9645 as targets.
Comment: The RSI is mixed to bearish.

GOLD
Pivot: 1169
Likely scenario: Long positions above 1169 with targets @ 1192 & 1196 in extension.
Alternative scenario: Below 1169 look for further downside with 1163 & 1151.5 as targets.
Comment: The RSI is mixed to bullish.

OIL
Pivot: 47
Likely scenario: Short positions below 47 with targets @ 45.7 & 45.2 in extension.
Alternative scenario: Above 47 look for further upside with 47.85 & 48.46 as targets.
Comment: As long as 47 is resistance, likely decline to 45.7.

DAX
Pivot: 10070
Likely scenario: Short positions below 10070 with targets @ 9825 & 9725 in extension.
Alternative scenario: Above 10070 look for further upside with 10185 & 10340 as targets.
Comment: As long as the resistance at 10070 is not surpassed, the risk of the break below 9825 remains high.