S&P 500 WAVERS AS CORPORATE DEALMAKING CONTINUE
American stocks wavered as investors waited for the upcoming interest rate decision by the Federal Reserve. The Dow Jones rose by 50 points while the S&P 500 and Nasdaq 100 indices declined modestly. The Fed will start its November meeting later today and then deliver its decision on Wednesday. Analysts expect that the bank will turn hawkish since the American economy remains strong. In a statement on Monday, Janet Yellen, the Treasury Secretary, said that while the economy was doing well, it was not yet overheating. Her comments came shortly after the US published relatively weak manufacturing PMI data.
American stocks also wavered as the earnings season and corporate consolidation continued. On Monday, Coca-Cola said that it will spend $5.6 billion to acquire Gatorade, the company that owns BodyArmor. In another statement, Franklin Resources, the parent company of Franklin Templeton, said that it will acquire Lexington Partners for more than $1 billion. Lexington provides secondary investments in private equity firms. The earnings season will continue today, with the key companies to watch being private equity companies like KKR and Apollo Global Management. Others will be Gartner, Eaton, H&R Block, and Mondelez.
The economic calendar will have several important events today. Earlier, the Reserve Bank of Australia (RBA) delivered a relatively hawkish interest rate decision. It left interest rates unchanged and tweaked its asset purchases program. In the morning session, Switzerland will deliver the latest inflation data. The data is expected to show that inflation in the country was under pressure even as the unemployment rate fell. Markit will then publish the latest manufacturing PMI data from Europe.
EURUSD
The EURUSD pair bounced back on Monday as bulls attempted to pare back the losses experienced on Friday. The pair rose to a high of 1.1595, which was the highest level since Friday. On the hourly chart, it has risen above the 25-day moving average while the Chaikin Oscillator has risen above the neutral level. The pair has also moved above the 38.2% Fibonacci retracement level. Therefore, the pair will likely pull back later today as the rally loses steam.
USDCAD
The USDCAD pair was in a relatively tight range in the overnight session as investors awaited the Fed decision. The pair is trading at 1.2365, which is inside the ascending channel shown in pink. This channel is part of a bearish flag. The pair has also moved to the 25-day moving average because of low volatility. The MACD and the Average True Range (ATR) have also declined slightly. Therefore, the pair will likely remain in this range today and then break out lower later this week.
NZDUSD
The NZDUSD pair was also little changed during the American session. On the four-hour chart, the pair has formed a horizontal channel. It is also above the 25-day and 50-day moving averages. The pair has also moved above the important support at 0.7168, which was at the highest level on September 3. Therefore, the pair will likely have a bullish breakout in the near term.
