US futures bounced back as traders waited for third quarter earnings from the biggest companies in the world, including Facebook, Amazon, Alphabet, and Apple. These firms have a market cap of more than $5 trillion and are the biggest constituents of the S&P 500 and Nasdaq 100. Recent reports suggest that these companies will report better earnings. For example, on Tuesday, Microsoft released strong results, boosted by cloud computing. And yesterday, Ford reported a strong quarter as Americans increased their truck purchases. Dow Jones, S&P 500, and Nasdaq futures are all up by almost 1%.
The euro rose slightly against the US dollar as traders waited for the interest rate decision by the European Central Bank (ECB). Economists polled by Reuters expect that the bank will leave interest rates unchanged at -0.50%. They also hope that the ECB will ask governments to provide more stimulus to support the European economy, which has seen Covid-19 cases surge of late. In addition to the ECB rates decision, the euro will react to the European consumer and business confidence data from Europe. It will also react to German employment and inflation data.
The US dollar is down against key peers as traders wait for the first estimate of US GDP data that will come in the afternoon session. Analysts expect that the US economy bounced back by 31% in the third quarter after falling by 31.4% in Q2. This will be the best quarterly economic growth on record. It will be driven by a rise in consumer spending and exports. The currency will also react to the initial jobless claims numbers and pending home sales. Separately, the Bank of Canada and Bank of Japan left interest rates unchanged in their October meeting.
The EUR/USD pair rose from yesterday’s low of 1.1717 to the current level of 1.1755. On the hourly chart, the price has already moved above the 15-day moving average and is now attempting to move above 25-day EMA. The RSI too has moved from the oversold level of 30 to the current 45. Also, it is eying the 61.8% Fibonacci retracement level. Therefore, I suspect that the pair will retrace its previous moves as bulls aim for the 50% retracement at 1.1783.
The USD/CAD pair rallied after the Bank of Canada delivered its rate decision. It reached a high of 1.3332, which was the highest level since October 7. The pair is now forming a bullish consolidation pattern as traders ponder the next moves. It has also moved above the 25-day and 50-day exponential moving averages while the RSI has moved from an overbought level of 80 to the current 65. Therefore, the pair is likely to continue rising as bulls target the next resistance at 1.3350.
The USD/JPY pair was little changed as traders reacted to the Bank of Japan interest rate decision. It is trading at 104.45, which is slightly above this week’s low of 104.1. The price has also moved slightly above the 25-day EMA while the force index has moved above the neutral line. The RSI, too, has moved from an oversold level of 30 to the current 57. Therefore, the pair is likely to continue rising as bulls aim for the next resistance at 104.60.