From a technical point of view, a retest of the 100% weekly Fibonacci retracement area, in other words full retracement of the dollar’s gains at the end of Q1 2020, looks likely sooner or later. Although  volume has remained low since the middle of last week, the slow stochastic (15, 5, 5) has now emerged from overbought and the succession of five down candles since Friday night suggests a fundamental as opposed to liquidity-based movement.

USDCAD is among the more affected symbols by this week’s data, so we can probably expect higher volatility and volume around tomorrow’s American retail sales and of course Canadian inflation on Wednesday afternoon GMT. However, the potential for these releases to halt the downtrend is quite low unless the results are notably surprising.

Key data this week

Bold indicates the most important releases for this symbol.

Tuesday 17 November

• 30 GMT: American monthly retail sales (October) – consensus 0.5%, previous 1.9%
• 30 GMT: American annual export prices (October) – consensus -1.5%, previous -1.8%
• 30 GMT: American annual import prices (October) – consensus -0.4%, previous -1.1%
• 15 GMT: American annual industrial production (October) – consensus -6.6%, previous -7.3%

Wednesday 18 November

• 30 GMT: Canadian annual inflation (October) – consensus 0.4%, previous 0.5%
• 30 GMT: Canadian annual core inflation (October) – consensus 1%, previous 1%
• 30 GMT: Canadian monthly inflation (October) – consensus 0.2%, previous -0.1%

Thursday 19 November

• 30 GMT: initial jobless claims (14 November) – consensus 705,000, previous 709,000

Friday 20 November

• 30 GMT: Canadian monthly retail sales (September) – consensus 0.2%, previous 0.4%

Gold-dollar, four-hour

Gold’s bounce from the latest low around $1,850 has been weak. Despite some very positive fundamentals like ultra-easy monetary policy and a relatively weak dollar, overall sentiment in markets has shifted fairly decisively away from ‘risk off’ since last week. Joe Biden’s election as president of the USA also provides markets with somewhat more certainty as to how tariffs and the trade relationship between China and the USA more generally might develop over the next few months, with a less adversarial tone favoured.

While $1,850 has been established as an important support for gold in the medium term, the first crucial long-term support is the 23.6% weekly Fibonacci retracement area around $1,831 (slightly below the bottom of the chart). Indicators are somewhat mixed on this chart, with moving averages bunching very close together. Overall a period of consolidation looks likely for the next few days in the absence of an abrupt change in sentiment.

Key data this week

Tuesday 17 November

• 30 GMT: American monthly retail sales (October) – consensus 0.5%, previous 1.9%
• 30 GMT: American annual export prices (October) – consensus -1.5%, previous -1.8%
• 30 GMT: American annual import prices (October) – consensus -0.4%, previous -1.1%
• 15 GMT: American annual industrial production (October) – consensus -6.6%, previous -7.3%

Thursday 19 November

• 30 GMT: initial jobless claims (14 November) – consensus 705,000, previous 709,000

Pound-yen, four-hour

Traders much like the general public are now pretty fed up after three years of headlines to the tune of ‘crucial days for the pound ahead’, so there hasn’t been much volatility for the pound over the last couple of weeks. Even if a trade deal is agreed this week between the UK and the EU to come into force when the transition period ends in just six weeks, it’s likely that more focussed negotiations will continue over the first few months of 2021. Japanese preliminary GDP releases for Q3 were notably better than expected this morning.

TA continues to suggest a buy signal overall for GBPJPY, with moving averages positive and the recent test of the 50 SMA in particular showing no signs of succeeding. Volume remains low so far today but buying is overall dominant. The slow stochastic also completed an upward crossover in oversold last week and is now close to neutral at around 44.

Both Japan and the UK release data on annual inflation for October this week and the former will also announce the result of balance of trade tomorrow night GMT. Volatility is likely around these releases even if markets discount the trade talks.

Key data this week

Bold indicates the most important releases for this symbol.

Tuesday 17 November

• 50 GMT: Japanese balance of trade (October) – consensus ¥250 billion, previous ¥675 billion
• 50 GMT: Japanese annual exports (October) – consensus -4.5%, previous -4.9%

Wednesday 18 November

• 00 GMT: British annual inflation (October) – consensus 0.6%, previous 0.5%
• 00 GMT: British annual core inflation (October) – consensus 1.3%, previous 1.3%
• 00 GMT: British monthly inflation (October) – consensus -0.1%, previous 0.4%

Thursday 19 November

• 30 GMT: Japanese annual inflation (October) – consensus -0.3%, previous nil
• 30 GMT: Japanese annual core inflation (October) – consensus -0.7%, previous -0.3%

Friday 20 November

• 01 GMT: British GfK consumer confidence (November) – consensus -34, previous -31
• 7.00 GMT: British annual retail sales (October) – consensus 4.2%, previous 4.7%

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