FX.co ★ Mark Carney takes the floor

On October 17, both the major currency pairs of euro and pound is likely to trade within the range but the performance of Mark Carney in the Treasury poses a risk.

EUR / USD and GBP / USD pairs

Europe and the British pound stayed within the range predicted in the expectations of an important news on Monday. Most especially since there is a vivid uncertainty that has developed around "Brexit" in accordance with the British currency market. Theresa May, along with David Davis, met Michel Barnier and Jean Juncker, who was intensely surrounded by rumors, but it was ultimately irrelevant and has no big impact. "I even had to speak to the Minister of Finance of Hammond and assure the public that the talks are not at an impasse", as some say.

The five-day "ultimatum" of the Spanish government of Catalonia for clarification of the situation on deferred independence expired yesterday, but, as expected, Catalonia did not follow any action. The head of Catalonia, Carles Puigdemont, is wasting his time in correspondence with Mariano Rajoy and he has received the last time to "fix the situation" until Thursday.

The US-euro macroeconomic balance was settled while the wholesale price index for September increased by 0.6% in Germany. In the euro area, the expected data is 0.4% and the trade balance for August was 21.6 billion euros against the forecast of 20.3 billion. The index of business activity in the manufacturing sector of New York jumped from 24.4 to 30.2 in October.

Today, the British pound will again be in the spotlight. At 10:15 London time, the head of the Central Bank, Mark Carney will have a speech in the treasury committee. Before that, the September inflation figures will come out at 8:30 London time. The basic CPI is projected without change at 2.7% y/y while the total CPI is expected to increase from 2.9% y/y to 3.0% y/y. Retail prices may increase by 0.1%, to 4.0% y/y, the growth in house prices is expected from 5.1% y / y to 5.4% y / y. The indicators are consistent, and even slightly better than that the rate as it was raised already at the next meeting. The only obstacle here is "Brexit" but the uncertainty on it all the more can contribute to an early increase in the rate. It is time to return it back. If the rates in the U.K. and the U.S. are raised at the same time in December, the pound will receive support primarily from cross-rates of the yen and the franc. It seems that there will be strong cash flows indirectly exactly there supporting the main currency pair as well.

In the euro area, the final CPI estimates will be released in September and the forecasts are kept unchanged at 1.1% y/y for the base index and 1.5% for general CPI. An interesting indicator is the index of sentiment in the business circles of the eurozone ZEW for October, which is expected to grow from 31.7 to 34.2.

In the US, investors are waiting for an improvement in industrial production in the September assessment. After the previous fall of 0.9%, it grew at 0.3% which increased the capacity utilization from 76.1% to 76.2% are projected. Yet, weakness can be expected from budgetary expenses with a deficit of 0.9 / 1.0 billion dollars is expected in September. This may become the worst indicator for the last 5 years.

It is probable that the trading range of the euro will continue in the previous range at 1.1775-1.1830 while the range of the British pound will beat 1.3230-1.3320. If Mark Carney disappoints expectations, then it is possible to fall into the range of 1.3095-1.3120.

AUD / USD pair

Today, the Reserve Bank of Australia has published the minutes since the last meeting. They noted positive changes in the Australian and global economy, but the "Australian" slightly declined as the first reaction. The reason for this another decline was the commodity markets. Iron ore in the United States went up by 0.29%, but it fell 2.5% in China, along with reinforcing steel (-1.89%) and coking coal (-2.86%). Sales of new cars in Australia declined in September by 0.5%. On Thursday, the data on employment will be released and it is expected to decrease. If the unemployment rate is maintained, the share of an economically active population may decrease from 65.3% to 65.2%. The increase in jobs is expected at 15,000 after the previous increase of 54,200.

The AUD / USD pair is expected to decrease to 0.7800. A further decline will depend on the behavior of the US dollar. In the medium term, we decrease to 0.7740 is expected.