GBP/CHF looks like a potential mover with the latest U.K. inflation data right around the corner. And with price action swinging higher in October, the question is whether or not we’ll see fresh long opportunities on pullbacks or is the top near?
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at a symmetrical triangle pattern on USD/JPY, so be sure to check that out to see if there is still a potential play!
Intermarket Update:
| Equity Markets | Bond Yields | Commodities & Crypto |
|
DAX: 15515.83 +0.27% FTSE: 7217.53 +0.19% S&P 500: 4519.76 +0.74% NASDAQ: 15129.09 +0.71% |
US 10-YR: 1.638% +0.054 Bund 10-YR: -0.107% +0.007 UK 10-YR: 1.152% -0.016 JPN 10-YR: 0.089% +0.00 |
Oil: 82.88 +0.53% Gold: 1,770.10 +0.24% Bitcoin: $64,040.06 +4.42% Ether: $3,806.80 +1.60% Cardano: $2.10 -1.79% |
Fresh Market Headlines and Economic Data:
U.S. homebuilding stumbles as supply constraints mount; Housing starts fall 1.6% in September; August revised down
U.S. manufacturing production falls 0.7% in September; Industrial production drops 1.3%
Fed’s Waller says high inflation through year end may need ‘aggressive’ response
Bitcoin futures ETF demand surges during U.S. trading premiere; over 20M shares traded on its first day and rise 4%
Brazil central bank intervenes in FX market rattled by new spending
Oil remains near multi-year highs as energy crunch continues
Grayscale files to turn biggest bitcoin fund into an ETF
Upcoming Potential Catalysts on the Economic Calendar
Japan Trade Balance at 11:50 pm GMT
Australia Leading Index at 12:00 am GMT (Oct. 20)
China House Price Index at 1:30 am GMT (Oct. 20)
Germany PPI at 6:00 am GMT (Oct. 20)
UK Inflation Rates at 6:00 am GMT (Oct. 20)
Euro Area Current Account at 8:00 am GMT (Oct. 20)
UK House Price Index at 8:30 am GMT (Oct. 20)
Euro Area Inflation Rate at 9:00 am GMT (Oct. 20)
If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.
What to Watch: GBP/CHF
The British pound could be the next currency to get moving in the upcoming London session as we get the latest U.K. inflation update. This is a top tier economic event for any currency as price stability is the focus of most major central banks.
Expectations are for headline CPI to come in at 3.2% y/y and core CPI to dip slightly to 3.0% y/y. Any reads outside of these expectations may generate a market reaction, especially if they come in below expectations. The markets are expecting the Bank of England to raise rates soon, so a weaker read may prompt traders to take some rate hike bets off of the table.
If we do see strong inflation reads, odds are in favor of the recent rally in Sterling to continue higher. That makes the break of the minor swing high levels around 1.2725 one to watch, and if the market sustains price action above that level, that could draw in more buyers in the short-term.
If the market dips to the previous broken resistance area/now support around 1.2670, then we’ll be watching out for bullish reversal patterns there if U.K. inflation data surprises to the upside.
Of course, if we see disappointing inflation data, then a break below the rising ‘lows’ pattern marked on the chart above could draw in sellers, especially those who may take profits if they caught the recent swing move from 1.2600 to 1.2725.
