By GrowthAces.com

Macroeconomic overview:

• Federal Reserve Chair Janet Yellen stuck by her prediction that U.S. inflation will soon rebound but offered on Tuesday an unusually strong caveat: she is “very uncertain” about this and is open to the possibility that prices could remain low for years to come.
• Yellen said the Fed is nonetheless reasonably close to its goals and should continue to gradually raise interest rates to keep both inflation and unemployment from drifting too low.
• Inflation should rebound over the next year or two, she said, adding: “I will say I am very uncertain about this. My colleagues and I are not certain that it is transitory, and we are monitoring inflation very closely.”
• A key lesson of her four-year tenure atop the Fed was to keep an open mind and not assume “you have a monopoly on truth,” Yellen said. “It may be that there is something more endemic going on or long-lasting here that we need to pay attention to.”
• The Fed’s top policymakers have repeated their belief that inflation would rebound even while their preferred price measure has slipped to 1.3%, below a 2% target. Unemployment has fallen to 4.1% while overall economic growth is running strong at 3%, prompting high expectations for a rate hike next month despite the price weakness.
• Yellen noted that while undershooting the inflation target for too long “can be quite dangerous,” the Fed must also avoid driving unemployment “way below” sustainable levels. “We do not want a boom-bust policy,” she said.
• U.S. President Donald Trump earlier this month nominated Jerome Powell, a Fed governor, to become Fed chair in February – a decision that broke with tradition of chairs serving at least two terms. On Monday Yellen said she would resign her seat on the Fed’s Board of Governors once Powell is confirmed and sworn in.
• The euro edged higher for a second consecutive day on Wednesday, recouping more than half of its losses sustained after the German coalition collapse as investors bought the single currency on expectations of strong economic growth.
• In the Eurozone, the data calendar is very light, offering no meaningful direction for yields. In the US, investor attention will be focused on the FOMC minutes today. Concerns of some FOMC members over the inflation path should not jeopardize the December rate hike, which is currently almost fully priced in. Given what is priced-in by the rates market, our baseline case is that the release of the FOMC minutes will not impact meaningfully the FX market.

Technical analysis and trading signals:

• The EUR/USD is rising and has broken back inside the daily cloud. The 55-dma is the next port of call for EUR/USD bulls. The next target would be daily cloud top at 1.1877.
• Tuesday’s price action formed a doji on the candles and now we are looking for confirmation with a higher high and close today.
• Buying on dips seems to be a good trading idea. We stay long for 1.1960.

USD/CAD: Loonie recovers on higher oil prices

Macroeconomic overview:

• The Canadian dollar is strengthening against the USD, with the currency recovering from an earlier three-week low as oil prices climbed and investors weighed prospects for the North American Free Trade Agreement.
• Prices of oil, one of Canada’s major exports, rose as traders looked ahead to a meeting next week at which major crude exporters are expected to extend production cuts.
• However, persistently high oil production in the United States will be the predominant bearish factor limiting gains in oil prices.
• There are also some doubts about the willingness of some participants including Russia to keep restricting production. Russian news agency TASS reported that the country’s oil producers had met with the energy ministry to discuss a six-month extension, as opposed to the nine months originally floated by President Vladimir Putin.
• The loonie gained ground on Tuesday despite weaker-than-expected domestic data. Canadian wholesale trade fell by 1.2% in September from August. The market had forecast a 0.3% increase.

Technical analysis and trading signals:

• The USD/CAD is testing key support levels of 7- and 14-day exponential moving averages. A close below that levels would be a first step to stronger downward move. Another support level is 23.6% fibo of September-October rise at 1.2714. The USD/CAD failed to permanently break below that level two weeks ago.
• We stay short for 1.2550.

TRADING STRATEGIES SUMMARY:

FOREX – MAJOR PAIRS:

FOREX – MAJOR CROSSES:

PRECIOUS METALS:

How to read these tables?

1. Support/Resistance – three closest important support/resistance levels
2. Position/Trading Idea:
BUY/SELL – It means we are looking to open LONG/SHORT position at the Entry Price. If the order is filled we will set the suggested Target and Stop-loss level.
LONG/SHORT – It means we have already taken this position at the Entry Price and expect the rate to go up/down to the Target level.
3. Stop-Loss/Profit Locked In – Sometimes we move the stop-loss level above (in case of LONG) or below (in case of SHORT) the Entry price. This means that we have locked in profit on this position.
4. Risk Factor – green “*” means high level of confidence (low level of uncertainty), grey “**” means medium level of confidence, red “***” means low level of confidence (high level of uncertainty)
5. Position Size (forex)– position size suggested for a USD 10,000 trading account in mini lots. You can calculate your position size as follows: (your account size in USD / USD 10,000) * (our position size). You should always round the result down. For example, if the result was 2.671, your position size should be 2 mini lots. This would be a great tool for your risk management!
Position size (precious metals) – position size suggested for a USD 10,000 trading account in units. You can calculate your position size as follows: (your account size in USD / USD 10,000) * (our position size).
6. Profit/Loss on recently closed position (forex) – is the amount of pips we have earned/lost on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.
Profit/Loss on recently closed position (precious metals) – is profit/loss we have earned/lost per unit on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.

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1. Buy and sell forex, precious metals signals (entry level, target, stop-loss)
2. Suggested position size that you can easily adjust to your trading account size – this would help you in risk management and you will survive longer drawdown periods
3. Early heads-up about the potential trading opportunities or rationale to taken positions ( fundamental analysis, technical analysis )
4. Forecasts of most important macroeconomic indicators prepared by our economists and econometricians.

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By GrowthAces.com – Daily Forex Trading Strategies