Recent German Economic Sentiment Index pointing that recovery in eurozone is unlikely atleast for next few quarters.
A breach of 1.1670 in EURUSD will drag the pair towards 1.1600 in coming sessions.
After the big stimulus rally in euro apparently looks to fade all the momentum. Inevitably European’s economy is sliding towards a double-dip recession, with economists warning that rising corona virus infections and fresh government restrictions on people’s movement are likely to cut short the region’s recent recover.
Germany, France, the UK, Italy, Spain and the Netherlands have all announced measures in the past week to contain the second wave of Covid-19 infections, with more expected in the coming days. Belgium on Sunday announced the closure of all bars and cafés for four weeks, while Switzerland widened its mandate for wearing masks. France put into effect a night curfew in Paris and other cities from Saturday as reported in FT.
Based on recent German Zew Economic Index does suggest that weakness will continue in euro. Although we may expect uplift in third quarter European GDPnumber due to release later this month but that too is highly discounted. Technically a breach of 1.1670 will open the door of EURUSD to fall towards 1.1600 and in rupee term, 85.60 on spot is a support, below we can expect the pair to dip below 85.00 in coming days.
US Stocks climb on retail-sales data
The US stock market finished session mostly higher on Friday, 16 October 2020, as risk sentiments underpinned after stronger-than-expected growth in advance reading of September retail sales. However, market gains were marginal amid lingering uncertainty about a new stimulus bill.
A report from the Commerce Department said retail sales spiked by 1.9 percent in September after rising by 0.6 percent in August. The reading marked the fifth straight increase in retail sales since the gauge cratered in April. Closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, jumped by 1.4 percent in September after dipping by 0.3 percent in August.
Adding to the positive sentiment, the University of Michigan released a report showing a bigger than expected improvement in consumer sentiment in the month of October. The preliminary report said the consumer sentiment index rose to 81.2 in October from the final September reading of 80.4.
US Industrial Production Falls 0.6% In September- US industrial production fell by 0.6 percent in September after rising by 0.4 percent in August, according to a report released by the Federal Reserve on Friday. Production declined for the first time in five months but has still recovered more than half of its February to April decline, although it remains 7.1 percent below its pre-pandemic February level. The unexpected decrease in production in September was partly due to a 5.6 percent nosedive in utilities output, which came as demand for air conditioning fell by more than usual. The report also showed manufacturing output dipped by 0.3 percent in September after jumping by 1.2 percent in August. On the other hand, the Fed said mining output surged up by 1.7 percent in September after tumbling by 2.4 percent in the previous month.
US Retail Sales Jump 1.9% In September– US retail sales spiked by 1.9 percent in September after rising by 0.6 percent in August, the Commerce Department reported on Friday. The much stronger than expected retail sales growth was partly due to a significant increase in sales by motor vehicles and parts dealers, which soared by 3.6 percent in September following a 0.7 percent increase in August. Excluding the jump in auto sales, however, retail sales still surged up by 1.5 percent in September after climbing by a downwardly revised 0.5 percent in August. Ex-auto sales were expected to rise by 0.5 percent compared to the 0.7 percent increase originally reported for the previous month..
US Consumer Sentiment Improves In October- US consumer sentiment index rose to 81.2 in October from the final September reading of 80.4, the University of Michigan reported on Friday. The bigger than expected increase by the headline index came as the index of consumer expectations climbed to 78.8 in October from 75.6 in September, reaching its highest level since March. On the other hand, the report said the current economic conditions index fell to 84.9 in October after jumping to 87.8 in September.
TREND : BEARISH
Time : 19/10/2020
Pivot : 1.1712
Technical View : LONG ABOVE 1.1732
Target : 1.1737, 1.1744, 1.1757, 1.1789
Technical View : SHORT BELOW 1.1692
Target : 1.1682, 1.1672, 1.1652, 1.1631