Lagarde’s conclusions in his presentation on Thursday in the framework of the IMF failed to bring out optimism in the international market. The euro reacted slightly bullish on the euro after his speech however it will depend on the buyers next week. Lagarde’s political perspective does not match the logic of the market. Production data will be released this Friday and that could throw off all Lagarde’s optimism. Summing up his speech, she argues that ¨ World economic activity has continued to recover since our previous meeting in April this year, thanks to new advances in vaccination campaigns and supportive economic policies.
However, the pace of recovery remains uneven across sectors and countries, and the spread of the most contagious delta variant of the coronavirus (COVID-19), along with supply bottlenecks, is clouding growth prospects across the world. short term for the region. The recovery phase of the euro area economy is increasingly advanced and uncertainty about the pandemic continues. Activity in the euro area recovered strongly in the second quarter of this year and appears to have been strong in the third quarter as well, supported by a strong recovery in domestic demand thanks to successful vaccination campaigns and significant support of monetary and fiscal policies.
This week the production data from France and Germany will be decisive. The forecasts do not cooperate with Lagarde’s perspective. A stagnation in production is estimated from September that could extend until the end of the year.
While there is still uncertainty about how the pandemic will play out from here, we consider the risks surrounding the euro area’s growth prospects to be broadly balanced over the medium term. The downside risks are related to both the pandemic and supply bottlenecks becoming more persistent than currently expected. However, upside risks could also materialize from a higher sentiment effect and higher consumer spending.
EURUSD is kept in the sell zone. The area’s highs are currently between 1.16 and 1.1620. Buyers are showing no interest in the euro in the current market area. For Monday’s opening we estimate sales below 1.1590 and 1.1580. Buy bounces are at 1.1580 and 1.1550. The data on Friday could keep the euro with low expectations for buyers.
GPBUSD remains in transition between its buy zone above 1.37 and sell zone below 1.37. The first half of October the pound got the interest of buyers, although it is possible that it is an early speculation of recovery. We will wait for the opening on Monday to assess a possible strategic change. However, buyers have control of the market only up to 1.39 at this year’s highs. The interventions of the central bank are ruled out for the moment and that means that the official maximums do not exceed 1.39.
USDCAD remains in a key transition for buyers. Below 1.24 the cross loses market strength. We estimate that at Monday’s opening the cross could hold above the 1.2350 lows to take us back to the 1.24 and 1.25 buyers. Otherwise, if Lagardé’s speech works for the market, we would have a weaker dollar against other currencies. Below 1.2340 we are on sale until 1.2330 and 1.23. Basically the strength of the dollar will depend on the weakness of the euro.
XAUUSD XAGUSD remains at buy levels. In silver it will depend on the buyer of 23.0 if we get the levels of 23.50 and 23.80 again. In gold we stay out of buy strategies until the low of 1775.0. Once buyers are found in 1775.0 we will have the prices of 1780.0 and 1788.0 with the possibility of 1800.0. Sellers above 1750.0 would be ruled out.
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