Home Markets WEEKLY NEWSLETTER (FX-INDICES-COMMODITIES)

WEEKLY NEWSLETTER (FX-INDICES-COMMODITIES)

WEEKLY NEWSLETTER (FX-INDICES-COMMODITIES)
by admin

28/10/2019

IMPORTANT DISCLAIMER

The information of this report is of a general nature only. It is not a personal financial advice. It does not take into account your objectives, financial situation and personal needs.

a-Quant is not responsible for your actions and recommends you contact a licensed financial advisor before acting on any information contained in this general information report.

 

EURUSD

Last week was bearish for EURUSD which lost the important support of 1.11. More specifically, even if last week opened with a bullish outlook and the price approached 1.12 (weekly high was at 1.1179), it was followed by a bearish trend and each day except Wednesday, closed lower than the previous one. Finally, the week closed at 1.1080, very close to the weekly low of 1.1072. The slowdown in Europe concluded by the PMIs announcements as well as the back and forth news from Brexit were the major reasons for EUR dropping since last week was kind of neutral for USA.

The current week is very important because there are many critical news and announcements expected, with NFPs in USA along with dominating news the Unemployment Rate on Friday and the last days rumors about a new rate cut at the FOMC Decision Rate on Wednesday. That news along with any progress regarding Brexit will dominate at the trend of EURUSD and we also expect very high volatility. The estimation of the trend though is very risky while we cannot exclude sideways movements this week, despite the high volatility.

Besides NFPs on Friday, there’s also the US Index Chicago Fed National Activity and the Trade Balance on Monday, the Consumer Confidence for USA on Tuesday, the Unemployment Rate of Germany on Wednesday, the Eurozone Business Climate on Wednesday, the US GDP and the Rate Decision at FED along with the FOMC Press Conference on Wednesday, the Retail Sales in Germany on Thursday, the Eurozone GDP announcement with the Consumer Price Index on Thursday and the US Index PCE on Thursday as well.

 

GBPUSD

Bearish was last week for GBPUSD with losses close to 1% on the echo of the latest progress regarding Brexit. The British parliament approves and rejects at the same time, creating huge uncertainty which is the worst case for investors and traders. Now on the table is the scenario of early elections and a Brexit extension which typically has a deadline this week at 31/10. On Monday noon, there’s a meeting of European officers and diplomats in order to investigate a suggestion for a Brexit extension until 31/1/2020 while no estimation or prediction seems safe enough. The fact is that the GBP drop is not in such a degree to justify the worst-case scenario of a no deal Brexit. Such a case would bring GDP below 1.25, even close to the price area of 1.20 while last week’s close was at 1.2828. During the week we saw prices above 1.30 (1.3012 was the weekly high last Monday) and the weekly low was at 1.2788 on Thursday but the price of the pair very quickly turned above 1.28 again. This weeκ well favor small and opportunistic trades on both buy and sell directions, watching carefully the progress on Brexit and the US news.

Besides the US news that we saw at EURUSD section, other scheduled news and events for the UK economy this week include the speech of Silvana Tarneyro (Bank of England) on Monday and the Markit Manufacturing PMI on Friday. In any case, Brexit will dominate again with uncertain and non-scheduled development, which in combination with the important US news, most likely will explode the already increased volatility of the pair which lately is above 1% on a daily basis.

 

USDJPY

Last week was slightly bullish for USDJPY since we did not have any progress regarding the USA – China trade war and the US announcements did not carry any surprises, positive or negative. The price range of the pair was tight with a weekly open at 108.37 and a weekly close at 108.66, just 30 pips higher while the weekly low and low was at 108.24 and 108.77 accordingly. Even if we didn’t reach our main price target at 110, the week was profitable for us. The uncertainty and the low volatility will lead to higher volatility levels this week which contains many and critical news as we’ve already seen. There are rumors for a new 0.25% rate cut at the FOMC Rate Decision on Wednesday and if this happens, it will be the 3rd rate cut since last July. If we put in the same equation the NFPs and the Unemployment Rate on Friday as well as the US GDP announcement on Wednesday, a very high volatility is indeed expected and the low volatility of last week makes perfect sense.

Important week for the Japanese economy as well. On Tuesday we have the announcement of the Japanese CPI, the Retail Trade on Wednesday, the Industrial Production on Thursday, the Rate Decision and the Japanese economy outlook during next Thursday and the Unemployment Rate of Friday.

 

 

EURJPY

Last week we had a light drop, below 0.50%, for EURJPY that come along with a low volatility. The pair achieved two times during the week to exceed 121 but very quickly it dropped below this level and it finally closed on Friday at 120.40. EURJPY was obviously affected from the last negative economic news from Germany and Eurozone because all the announcements of PMIs were below the expected values. The fact is that beyond that we didnt have an important strengthening of JPY and so most likely the uptrend which started from the beginning of October will continue that is why our selection for this week will be buy positions.

News & announcements regarding European and UK economies are mentioned at the sections of EURUSD and GBPUSD accordingly.

 

EURGBP

Slightly bullish was last week for EURGBP, with low volatility compared to what we saw during the last weeks. More specifically, the price range of the pair was about 100 pips while the average range of the last weeks was about 170 pips. This is a volatility reduction more than 40% which shows us the uncertainty due the Brexit and a restrained optimism of the markets because in an opposite case we would have a GBP breakdown and a much stronger bullish trend for the pair. The weekly close above 0.86, at 0.8637, even if temporarily we saw the price at 0.8576, confirms the above. We’ll stay out this week and maybe we can try some low-risk short positions with main target a few pips above 0.85.

News & announcements regarding European and UK economies are mentioned at the sections of EURUSD and GBPUSD accordingly. Brexit will dominate again.

 

USDCAD

Significantly bearish was the last week for USDCAD, which opened at 1.3132 and closed at 1.3055, about 0.60% lower. The high oil prices had was a very critical factor the Canadian dollar, in combination with the lack of progress from USA side. The current week is very important because besides the Rate Decision in USA, we have Rate Decision for Canada on Wednesday as well. We also have US NFPs and GDP but the Canadian GDP announcement on Thursday too. There’s also the announcement of the Markit Manufacturing PMI on Friday but the Central Banks decisions will dominate during the week. The Bank of Canada is not expected to change the rates this week which are currently at the price of 1.75% but there are strong rumors for a 0.25% rate cut in the USA. The result will be a very high volatility from this Wednesday and on having always in mind that the price area of 1.30 is a very strong support for the pair and a low for almost a year that is why we’ll open buy positions this week with main target the price area of 1.3140.

 

USDCHF

USDCHF exceeded 0.99 again, after a temporary drop that drove it close to 0.9840. Every day of the last week was bullish and the weekly close at 0.9946 was near enough to the weekly high at 0.9954.  It is obvious that the behaviour of the pair this period of time is close to 1:1 and the pair returned back to this price area after a transitory bearish movement. Of course, this situation may not stand this week with such important announcements and news from the USA side (Rates Decision, GDP, Unemployment Rate) but in any case, we’ll try some buy positions, targeting the 1:1.

The “dead” week for the Swiss economy is followed by a very active one. There’s the announcement of KOF Leading Indicator on Wednesday, the very important speech of Thomas Jordan (SNB) in Verne on Thursday about challenges for pension funds and a series of announcements on Friday such as the Retail Sales, the SVME – PMI and the Consumer Price Index. Finally, the Manufacturing PMI for Switzerland is announced on this Friday.

 

AUDUSD

A very small drop, about 20 pips we had last week for AUDUSD. The price of the pair moved in a tight channel of 0.6809 – 0.6882 with a weekly open at 0.6840 and a weekly close at 0.6820. Even if we didn’t have special progress regarding the USA – China trade war which affects a lot Australia and its economy as we have seen, the news of last week confirm the weakness of the Australian economy. The lack of news from the trade war and the higher gold prices that took place last week, prevented AUDUSD from a further drop which “refused” to drop below 0.68. The current week though is extremely important and a possible rate cut in USA will dominate. Also, very important news for the pair will come from NFPs on Friday and possible divergence from the expected value of 3.6% will increase the volatility, affecting all the USD pairs and so AUDUSD.

Along with the important news that concern the USD that we saw at EURUSD section, there are scheduled news from Australia and China that will affect the pair. On Tuesday, Governor Philip Low of RBA gives an important speech in Canberra, on Wednesday we have the CPIs of Australia, on Thursday we have the new Building Permits in Australia while the same day we have the announcements for the Chinese PMIs and on Friday we have the Australian PMI and the Caixin PMI in China. We emphasize on the high correlation between the Australian and the Chinese economies and the influence of this correlation on the economy and the currency of Australia.

 

SP500

US Index SP500 has built a good price area above 3,000 points with strong bullish trends throughout last week but mostly on last Friday where we had a the weekly close at 3,020 points. The weekly performance was 1.20% and things look very optimal but we need to pay special attentions because we’re close to the price area which is an all-time record for SP500 and so we cannot exclude bearish reactions and corrections. The fact is that the markets are more liquid than ever and in combination with the low or even negative returns of the bond markets, the stocks markets has an advantage. The last weeks’ concerns for a global recession gave its place to optimism views and enthusiasm even if such a case is still on the table. This week we’ll stay out because there are so important US news, also because we cannot ignore the strong uptrend but we cannot in any case ignore the all times high for the Index.

 

DAX30

Strongly bullish week for DAX30. The Index closed at 12,890 points, with a performance of 1.70% while every day except last Tuesday was bullish. This way, we’ve reached the highest prices levels since July, 2018 and it possible to see DAX30 above 13,000 points (this will the target of our long positions), since technically it’s not at overbought levels yet. We need to pay extra attention though because the last news from Germany and Eurozone regarding Manufacturing and Services sectors do not justify such an enthusiasm.

 

FTSE100

A very strong bullish reaction, about 2.30% we had for FTSE100 last week and it seems that the approach of the price area of 7,000 points that we saw recently, acted like a spring for the Index and exploded it higher. The weekly close was at 7,325 points, very close to the weekly high of 7,339 points. We also note that the Index had opened at 7,156 points and it did not drop below 7,143 points, while excluding the consolidative movements of last Friday, the rest of the days were strongly bullish. Most likely, until we’ll have news regarding Brexit, we’ll see consolidative trends for the Index maybe close to the 7,400 points but it extremely risky and dangerous to have further estimations in unpredicted progress from the Brexit aspect.

 

Gold

Bullish week that gave profits about 0.85% we had for gold last week but the price could not move very away from $1,500. Last Friday we had strong bullish trends that drove gold close to $1,518 but very quickly a correction took place and the week closed at $1.504. The weekly low was at $1,480.76, confirming the price zone of $1,480 – $1,500 that we had suggested last week. The global markets estimated that they should decrease their risk by having more positions on gold, evaluating the risks and the developments on the international environment. The current week will be very important for gold price: Rates Decision in USA and Canada, GDP and Unemployment Rate announcements for USA, important news from Europe and China that we saw above; all these will increase the volatility and we’re keen to try buy positions with main target the price area of $1,530.

 

US Oil

Very strong bullish reaction with profits above 5% we had last week for the oil prices. The fact is that the recent euphoria of the markets had a serious role on this but as we approach the OPEC meeting this December in Vienna, we’ll have plenty of rumors. Saudi Arabi is pressing the global producers for a production reduction, causing the loud reaction of Russia which claimed that Saudi Arabia should not press other countries on such a decision. US Oil opened last week at $53.71 and it closed at $56.72, moving above $55 last Wednesday with a big bullish movement, close to 3%. The prices remained above $55 until the end of the week and this is maybe a sign for a further bullish movement. If this happens, we may see prices close to $58 and this will be the target of our long positions. On the contrary, a possible price correction which may be caused from the important news of the current week may move the oil prices below $55 again.

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