Freewheeling The information presented in this publication is communicated to you for informational purposes only and does not constitute investment advice, an offer for sale, or a solicitation to buy, and should not be used as a basis or taken into account as an incentive to engage in any investment. The macro point CruisingAlongThis week, we start the newsletter with the announcement of an AFTE webinar (French Association of Corporate Treasurers) on October 14 at 11:30 AM. The topic will be: Best practices, tools, and strategies to optimize foreign exchange risk management. It will be co-presented by Hubert Bigeard, head of the trading room at Mondial Change, and Lionel Jouve, Vice President of the Fintech committee of AFTE.You can register directly on the AFTE website via this link: I registerTheMacroPointThe highlight of last week's foreign exchange market was the meeting of the US Federal Reserve (Fed). It did not provide more insight into the institution’s intentions regarding the normalization of its monetary policy. The Fed only indicated that tapering (reduction of asset purchases) will start soon and continue at least until mid-2022, depending on macroeconomic developments. Traders' expectations remain unchanged. They anticipate an official tapering announcement in November, with an effective start in December. Some traders were surprised that the US central bank did not mention the housing market, which is an evident point of fragility in the American economy. Nationally, purchase and rental prices have increased by more than 20% and more than 10%, respectively, in just one year. This creates significant social tensions. Some economists fear that the price surge could lead to a real estate bubble even bigger than the one in the early 2000s that led to the 2007-2008 crisis when it burst. It is a real concern, but it does not pose an immediate problem for the US economy.In Canada, the early legislative elections resulted in the outgoing Prime Minister Justin Trudeau, from the Liberal Party (center-left), remaining in power. He will lead a minority government, meaning he will have to work with the opposition to pass his main reforms. This is more or less the situation that prevailed before the election. The Canadian dollar reacted upward following the announcement of the results. The increase was contained and also largely linked to an appreciation in oil prices occurring at the same time.In Europe, the Bank of England and the Swiss National Bank kept their monetary policies unchanged, in line with traders' expectations. We expect the Bank of England to change its ultra-low rate policy in the second half of next year, at best. The Swiss National Bank is expected to continue its negative interest rate policy in 2022, and probably beyond.In the eurozone, the economic slowdown is already here. Activity indicators for the manufacturing sector for September showed a clear decline, particularly in Germany and France. Bottlenecks in the supply of intermediate goods are one of the main difficulties mentioned by industrialists in opinion surveys. Meanwhile, inflationary pressures are increasing. Last month, inflation in the eurozone jumped to 3%. ECB Vice President Luis de Guindos predicts inflation will reach 3.5% in November. Although the ECB still considers the high inflation as a temporary phenomenon, de Guindos acknowledged that in recent months the risk that it might become more permanent than expected has increased. For the time being, the ECB does not plan to change its monetary policy. Discussions on this topic are not expected to seriously start before December among the Governing Council members. Thus, the October meeting will be a non-event for the currency market.Finally, as expected, the Bank of Japan maintained its monetary policy unchanged. Like many other central banks, it is concerned about the disruptions that persist at the level of international trade due to the pandemic. No monetary policy changes are expected in the short and medium term in Japan. Technical point In the foreign exchange market, the euro/dollar experienced low volatility last week. The pair moved narrowly in a range of just over 100 pips. The US central bank meeting naturally sparked some volatility, but nothing excessive. From a technical analysis perspective, the medium-term trend is bearish. The main support levels that traders should monitor are well known, at 1.1680 and 1.1600. The market lacks catalysts to quickly move towards the target area of 1.1600.The EUR/GBP pair remains stagnant. It stays desperately within its monthly range between 0.85 and 0.86. Nothing significant has happened in recent months on the EUR/GBP. And nothing is expected to happen in the coming months. We are facing a forex market experiencing rather lateral movement, at least regarding the main traded currencies. Volatility is much more present among emerging market currencies. For example, the EUR/RUB (for Russian ruble) lost nearly 2% in monthly variation.The support and resistance levels shown below indicate the lower and upper points within which prices are expected to move during the week.SUPPORTSWEEKLYRESISTANCESWEEKLYS2S1R1R2EUR/USD1.16001.16801.19001.2001EUR/GBP0.84090.84710.85950.8697EUR/CHF1.06911.07861.10061.1111EUR/CAD1.46001.46221.50421.5109EUR/JPY127.67128.32130.85132.85For personalized advice on currency trends and hedging, contact our trading room: Announcements to follow This week will be much less busy than the previous one on the currency market. The scheduled indicators should cause little volatility for the main currency pairs. The new GDP estimates for the second quarter in the United States and the United Kingdom (on 09/30) are not expected to hold any surprises. The only potentially relevant indicator will be the ISM manufacturing PMI in the United States (on 10/01). The extent of inflationary pressures on the production chain will need to be closely monitored.Below are the publications and events that should have a major impact on currency movements.DAYTIMECOUNTRYINDICATOREXPECTATION?09/2816:00Consumer Confidence – Conference Board (September)Expected increase to 114.5 (second estimate).09/2916:00Pending Home Sales (August)Increase of 0.4% after a previous decline of 1.8%.09/3010:30New Q2 GDP estimateContracting by 1.5% from the previous quarter due to restrictions.14:30Final Q2 GDP estimateExpected growth to 6.6% (same as previous estimate).10/0116:00ISM Manufacturing PMI (September)Stable at 59.9.If you enjoyed this content, share it!