EUROPEAN session review: markets consolidate

Data released: 

08:30 GMT UK Claimant Count Change (Sep) -41.7K -25.0K -41.6K 

08:30 GMT UK Average Earnings excluding Bonus (3Mo/Yr) (Aug) 0.8% 1.0% 1.0% 

08:30 GMT UK Average Earnings including Bonus (3Mo/Yr) (Aug) 0.7% 1.0% 1.2% 

08:30 GMT UK Claimant Count Rate (Sep) 4.0% _ 4.2% 

08:30 GMT UK ILO Unemployment Rate (3M) (Aug) 7.7% 7.7% 7.7% 

Senate leaders had said yesterday they made "tremendous progress" toward an agreement to end the partial government shutdown and raise the debt limit, but hopes were starting to evaporate following reports that talks to boost the debt ceiling may be falling apart. 

Even if the Senate makes a deal, it still needs to win support in the House of Representatives, which is far from certain. Plus, the House is working on its own proposal that would include provisions to make changes to Obamacare. 

Though Washington still seems to be divided, most investors are still expecting a resolution before the Thursday deadline when Treasury has said it will start to run out of money to pay all its bills on time. 

EURO 

Data showed Eurozone trade balance came at EUR +7.1 bln in August after 18 bln earlier. Separate report showed the Sep consumer prices improved to 0.5% m/m and 1.1% y/y. 

EUR/USD consolidates higher $1.3500, above yesterday’s lows on $1.3480 (initial support). Below losses may widen to $1.3400. Initial resistance is around $1.3570 (yesterday’s high), extending to $1.3600 (Oct 8 and 14 highs). Above resistance comes at $1.3640 (Oct 3 highs). 

POUND 

In UK the number of unemployed people in the UK fell by 41.7K in September, following a 41.6K drop registered in August, National Statistics reported on Wednesday. This result is more positive than the expected 25K decrease. The Claimant Count Rate was at 4%, following a 4.2% reading. The ILO Unemployment Rate remained unchanged at 7.7% in August. 

GBP/USD rallied to $1.6057, breaking above $1.6020 with resistance now comes at $1.6120 (Oct 8 high). Above $1.6260 (Oct 1 high) resistance is around $1.6340 (Jan 2 highs). Below $1.5910 support extends to $1.5880 with a break under widens losses to $1.5820 (Sep 24 lows). 

YEN 

Yen stays within the narrow range on expectations of negotiation’s end in Washington. 

USD/JPY challenged Monday’s highs on Y98.70 again and retreated. Initial support comes at Y98.20 (23.6% Fibo of the rally from Oct 7). Below correction may widen to Y97.60 (50%) and Y96.50 (Oct 7 lows). Above Y98.70 resistance is placed at Y99.50 (channel line from May 22). 

DATA AHEAD: 

At 13:00 GMT USA release Aug Total Net TIC Flows, followed by Oct NAHB Housing Market Index at 14:00 GMT. 

At 17:30 GMT FOMC Member Pianalto speaks. 

At 18:00 GMT Fed's Beige Book will be in focus. 

At 21:30 GMT and 22:45 GMT respectively Fed's George and Fed's Richard Fisher speak.

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