Home Markets WEEKLY NEWSLETTER (FX-INDICES-COMMODITIES)

WEEKLY NEWSLETTER (FX-INDICES-COMMODITIES)

WEEKLY NEWSLETTER (FX-INDICES-COMMODITIES)
by admin

19/08/2019

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

EURUSD had a rough turn to a downtrend last week, after Olli Rehn’s (ECB Governing Council
Member) suggested that ECB will announce a package of stimulus measures at its next policy
meeting in September. Of course, the bears had appeared earlier last week after bad news for
German & European GDP as well as the 17 years low of Chinese industrial production. On the other
hand, President Trump announced that there will be a delay in tariffs in order to benefit Christmas
period and this strengthened USD a lot. Also, there was a US Treasury inversion for 2-year and 10-
year bonds which is a sign for a recession. EURUSD reached the area of 1.1066 and finally closed at
1.1089, unable to exceed 1.11. Most likely, the next days the pair will have a consolidative range
attitude between 1.09 and 1.1150. We’ll open sell positions targeting 1.1010 at the first place and
then if the price goes below 1.0980, we’ll short the pair again, targeting 1.0920. This week we have
the FOMC Meeting Minutes on Wednesday and the Annual Federal Reserve Policy Symposium at
Jackson Hole that will last 3 days. There is a serious possibility that the decisions will be in direction
of weak USD in order to support the US economy and exports. Other minor news that may affect
pair’s volatility is the Euro-zone Consumer Price Index on Monday, the Markit PMI for Euro-zone,
Germany and USA on Thursday and US New Home Sales on Friday.

 

GBPUSD

We were absolutely correct waiting for a support breakout of 1.20 before we open sell positions
because this never happened and on the contrary, GBPUSD had a mini bullish reaction, closing at
1.2145. Our back-up suggested strategy for opening low-risk buy positions, seems the most
prevailing scenario. Since any positive surprise regarding Brexit, may skyrocket the pair up to 1.30,
we’ll use a trailing stop mechanism. The long-term outlook for GBPUSD remains bearish but maybe
we’ll have a short-term uptrend this week. There are reports that mention even food shortages in
case of a hard Brexit. UK Prime Minister is scheduled to visit France and Germany this week,
probably looking for solutions. The mini uptrend also is supported from reports that the Labour
Party and Corbyn plan to block a no-deal Brexit. There’s a lack of important economical
announcements this week (only Public Sector Net Borrowing on Wednesday) so the Brexit
speculation will dominate along with FOMC Meeting Minutes and FED Symposium at Jackson Hole
where most likely decisions for weak USD will dominate.

 

USDJPY

We really need to compliment our Machine Learning models that predicted a reversal for USDJPY
last week, even if all the technical factors showed a strong downtrend. Last week’s open was at
105.52, the high was at 106.97 and finally the pair closed at 106.35. Of course, we didn’t open sell
positions since we avoid to contradict main trends. Also, it is very important to underline that we
stray from a Japanese QE, which will possible strengthen JPY. This week we’ll favour long positions,
with main target 106.90 and 107.60. Besides FOMC Meeting Minutes and FED Symposium at Jackson
Hole, there are important news for Japanese economy this week, including Trade Balance on
Monday, PMI Manufacturing on Thursday and Consumer Price Index on Friday.

 

EURJPY

EURJPY moved in a range last week, without any clear trend. Last Tuesday was very bullish, last
Wednesday was very bearish and the rest days were rather consolidative. More or less, we closed
our sell positions very close to the entry price so we exited the market painlessly. There is some
important news regarding European and Japanese economies mentioned above but the weak euro
is going dominate the pair one more week in combination of strong JPY since a QE scenario for BoJ
is moving away. The volatility is very high though (daily volatility is 3 times up into the last month)
and our short positions will still be looking for the price area of 115.60.

 

EURGBP

Another case that we should compliment our Machine Learning models that predicted the reversal
of the furious EURGBP trend. Excluding last Monday, all the other days where bearish and the pair
closed at 0.9128 while it had opened at 0.9277. Fundamentally, not many things have changed
regarding Brexit so the main uptrend for the pair has not changed too. However, taking under
consideration our Machine Learning models and the important support of 0.93, we’ll stay out this
week, waiting for new data.

 

USDCAD

We took the first target of 1.3270 for our long positions on USDCAD and we couldn’t reach the
second one for just a few pips (1.3350 was our target and 1.3338 was last week’s high).
Nevertheless, the week was profitable and the uptrend was confirmed even there was a pullback
last Friday. Our Machine Learning models support the continuation of the uptrend but since there
are important events regarding US Economy (FOMC Meeting Minutes and Jackson Hole FED
Symposium), our buy positions will be low-risk, targeting 1.3350. We’ll avoid opening new
positions after Wednesday due to the mentioned events. News for Canadian economy this week
that may also increase volatility include Consumer Price Index on Wednesday and Retail Sales on
Friday.

 

USDCHF

Finally, the price of USDCHF dropped below 0.97 but the pair had a strong bullish reaction after
President Trump’s announcement regarding USA – China Trade War and tariffs activation delay.
Our Machine Learning models show a bullish reaction too so we’ll open buy but low-risk positions,
taking under consideration any possible reactions from FOMC Meeting Minutes and Jackson Hole
FED Symposium after Wednesday. Our targets will be 0.9815 and 0.9880. Pretty quiet week for
Swiss economy since only the Industrial Output announcement on Thursday may be considered as
important.

 

AUDUSD

AUDUSD moved into a small range last week (0.6735 – 0.6817) without any clear trend. Our sell
positions were at the breakeven so we didn’t have any profit or loss. We consider last week as a
breath-taking week in order to see a downtrend continuation. Since there are no relieving news
from a new global recession, since China had a 17-year low in the Industrial Production and since
President Trump said that he treats Chinese Huawei as a national threat, we don’t see any reason
for AUDUSD recovery, despite some mini reactions during last week. Our sell positions target 0.6750
and 0.6670.

 

SP500

Last Wednesday, SP500 dropped significantly and the next two bullish days were not able to cover
the loss. The stock markets had a serious recover on Friday though. Our outlook remains bullish and
our buy positions will target 2,935 points and above it the price area of 2,965 points.

 

DAX30

We approached the first target of 11,850 points on DAX30 early last week, but last Wednesday was
extremely bearish for all markets although there was a significant recovery, mostly on last Friday.
Nothing changed to our outlook since our Machine Learning models keep on favouring the
uptrend. 11,820 points is our first target but we don’t think it’s impossible the price area of 12,150
points too.

 

FTSE100

FTSE100 followed the pattern of the major markets as well. A significantly bearish Wednesday
followed by a recovery attempt, mostly on last Friday. We keep on supporting the opinion of bullish
trend for the Index so our buy positions, looking for a profit at 7,205 points at the first place and
maybe at 7,290 points.

 

Gold

We took our first target of $1,525 early last week but we couldn’t get the ambitious target of $1,560.
Last Wednesday was extremely volatile since the day’s high was at $1,534.88 and the low was at
$1,479.78. The days that followed could not exceed this range and the week closed at $1,513.38.
The fear of a global recession still favours Gold which is the most safe-heaven commodity but the
latest stock rally in combination with the unpredicted results of FOMC Meeting Minutes and
Jackson Hole FED Symposium this week make us very sceptical so we’ll avoid taking any positions
this week.

 

US Oil

US Oil had a bullish reaction the first two days of last week but last Wednesday lost more than
4.5%, returning back to prices below $55. The last two days of the week did not have any price
significance and the commodity closed at $54.78. Last week, OPEC cut the forecast for global Oil
demand from 1.14 million barrels per day to 1.10 million barrels per day. Additionally, the fear for a
global economical recession gives more points to the bulls. Our Machine Learning models agree
with this approach so our long positions will target $55.90 and $57.20.

Leave a Reply