23/09/2019
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 light bearish trend last week. On Monday, Thursday and Friday it moved below 1.10 but it recovered quickly and finally the weekly close was at 1.1017 losing about 0.5%. We took our first & main target at 1.1010, we couldn’t take our second target at 1.0970 (1.0983 was the weekly low) but last week was undoubtedly profitable for us. The cancellation of visit of Chinese officers to the USA triggered rumors again for the USA – China trade war. This fact, combined to the decision of USA for sending troops to the Middle East and the recent attack to the oil facilities in Saudi Arabia, brought back serious turbulences to the global financial markets. At a macroeconomic level, last week FED announced a new 0.25% rate cut after last week’s announcement of ECB for a new QE, caused a new balance for the pair. We estimate due to our Machine Learning models that EURUSD is moving in a tight channel between 1.0950 and 1.11 and so we’ll favour range trading strategies for the current week (long positions close to 1.0950 and short positions close to 1.11). This week also has serious announcements and news that will affect the pair’s volatility such as German PMI on Monday, Eurozone PMI on Monday, Mr. Draghi speech in European Parliament on Monday too, US PMI on Monday, German IFOs on Tuesday, US Consumer Confidence Index on Tuesday, US New Home Sales on Wednesday, the Economic Bulletin Report on Thursday, US GDP announcement on Thursday, Mr. Draghi speech in Frankfurt on Thursday and the Durable Goods Orders in the USA on Friday.
GBPUSD
Last week GBPUSD, had a weekly close very near to the weekly open (only 5 pips lower), stopping for the moment the uptrend rally of last weeks for the pair. This was mostly a result of a possible temporary stagnation in the negotiations between EU and UK regarding Brexit. We did take our major target though at 1.2570 since the weekly high was at 1.2582, which shows that our target estimation was very accurate. Most likely, the good mood and ambience for the negotiations of the last weeks will carry on and we consider last week as a breath-taking week before the continuation of the uptrend for the pair. We will open buy positions with main target the important resistance area for GBPUSD at 1.2730. Besides the US news that we mention at EURUSD section, there are also news & events in the UK such as announcements for UK Public Sector on Tuesday, BBA Mortgage Approvals on Wednesday and BOE’s Saunders speech on Friday.
USDJPY
USDJPY started last week with a strong bullish movement, filling the gap after the Middle East news but the last two days, it was followed by a strong drop that took back almost all the profits. Finally, USDJPY closed at 107.55, just 9 pips above the weekly opening, confirming and complementing our decision to stay out. The USA – China trade war latest events, the fact that US is ready to send troops in the Middle East after the recent attack at the oil facilities in Saudi Arabia have restored the mood for investing in safe-haven assets such as JPY. It seems that this mood was stronger than the disappointment from some negative news for Japanese economy last week. We estimate that this will not change so for this week we prefer short positions with 1st and main target the price of 106.60 and secondly, the price area of 105.70. Current week is also a week full of news & events for the Japanese economy and in combination with the news of the US economy that we saw above at EURUSD sections could cause high volatility for the pair. More specifically, there’s the important speech of Mr. Kuroda (Bank of Japan) on Tuesday in Osaka, the Monetary Policy Meeting Minutes announcement on Wednesday and the CPI announcement on Friday.
EURJPY
EURJPY started last week with a bullish trend (not enough though to allow us to hit our target) but after last Wednesday it moved into a strong bearish movement. Finally, the pair closed at 118.48, περίπου 50 pips lower than the weekly open, which had already an important bearish gap. The mood for investing in safe-haven assets such as JPY, in combination with the weak EUR, lead the pair into this bearish channel. As long as the price remains below 120, EURJPY does not show the required bullish momentum. On the other hand, we cannot ignore the bullish rally that has started from the beginning of September from the price of 115.85. Pair’s outlook remains fuzzy and bleary and there’s no clear trend evidence for the moment that’s why we’ll stay out this week. Scheduled European and Japanese economies news are mentioned above at EURUSD and USDJPY sections respectively.
EURGBP
The big bearish movement of EURGBP that started from 12/8/2019, continued last week although some signs of recovery appeared last Thursday and Friday. The drop was more than 0.3%, with a weekly close at 0.8829 and a weekly low below 0.88, at 0.8785. We could not take our target of 0.8780 (we were very close actually) but it was another nice and profitable week for us. The good news with the negotiations regarding Brexit and the weak EUR is straight correlated with the bearish trend of the last weeks. We believe that the bears will dominate this week as well until 0.8770 and maybe until 0.8660 in case of positive and encouraging news from UK and Brexit. European and UK financial news are mentioned above at EURUSD and GBPUSD sections respectively.
USDCAD
Finally, USDCAD did not affected seriously from oil prices (except maybe last Monday) and it had profits about 0.3%. FED’s Rate Decision last Wednesday also contributed to this trend. We estimate that there will be an uptrend continuation this week so we’ll open buy positions with main target 1.3330. A case of opposite movement may be triggered from unexpected events in Middle East since Canada and CAD are very correlated to the oil prices. Canadian financial news that could affect the price and the volatility of the pair (besides US news that we saw above at EURUSD section) is only the Wholesales Sales announcement on Monday and as a result to this lack of news is that the pair will be dominated this week mostly by USD and Middle East news.
USDCHF
Last week was bullish for USDCHF, even if it couldn’t reach 1:1. More specifically, weekly high was at 0.9983 and weekly close was above 0.99, at 0.9908. This behaviour shows a resilience of the uptrend for the pair and this week it’s very like to see it flirting with the price area of 1:1 again. Our strategy was quite profitable since we took advantage of the several and temporary bullish movements during last week. There was a temporary bearish reaction last Wednesday, which continued on last Thursday as well as a result of the FED’s Rate Decision. There is some economic news for the Swiss economy this week (Domestic & Total Sight Deposits on Monday, KOF Institute Autumn Economic Forecast on Tuesday, ZEW Survey on Wednesday and the SNB Quarterly Bulletin on Wednesday too) and in combination with US news & announcement may increase volatility for the pair. However, none of the above-mentioned announcements has a big and serious importance and so the USD behaviour is expected to dominate the pair one more week.
AUDUSD
Very strong bearish movement for AUDUSD last week as a result of negative news regarding the negotiation between USA and China and the cancellation of the visiting of Chinese officers in USA. The pair dropped even more after the rumours and the atmosphere that RBA is going to cut the rates again into the current year. More specifically, the weekly drop was about 1.5% with a weekly close at 0.6762, very near to the weekly low at 0.6759. The big question for the current week is if AUDUSD will cross below 0.67, putting the pair not only into a downtrend channel but more into a free-falling mode. Our Machine Learning models agree and so our sell positions will target 0.6730 and if there will be a breach of 0.67, next target is at 0.6670. US financial news that will affect the price and the volatility of AUDUSD are already mentioned at EURUSD section and there’s no important news for Australian and Chinese economy this week, except the Australian Job Vacancies announcement on Thursday.
SP500
SP500 was into a consolidation channel last week, closing 4 points only under the weekly open. During the week, Index had prices above 3,000 points, up to 3,022 points but during last Thursday and Friday there was a big drop after the news regarding USA – China trade war. Excluding trade war issues, US economy and specially the consumption is still in a good shape without appearing signs of exhaustion. This fact in combination with the high liquidity & easing from all central banks, postpone the gloom & doom scenarios for the moment. All this liquidity must go somewhere and the US stock market is not considered to be saturated so far. Despite all these, the last days behaviour of SP500 with cruel pullbacks below 3,000 points, makes us consider a price retracement so we’ll open short positions with first target at 2,970 and maybe below that level, the price area of 2,940 points.
DAX30
DAX30 continued its bullish trend last week, closing at 12,401 μονάδες with profits about 0.44% making last week profitable for us since we had long positions even if we didn’t take the target. There was an uptrend braking during last Thursday and mostly during last Friday. This week there are two scenarios: if we see uptrend movements, we’ll open buy positions targeting 12,600 points and in the opposite case we’ll open sell positions targeting 12,200 points.
FTSE100
After the gap at the beginning of last week, FTSE100 had a slight bullish trend, closing at 7,334 points with profits about 0.13%. This behaviour of the Index (bullish after a bullish gap) shows a solidification of the last weeks’ uptrend, starting from 15/8 and so FTSE100 could move even higher. Our long positions will have a major target at 7,400 points this week.
Gold
Gold was in a sideways movement as a result of uncertainty but it exploded above $1,516 on Friday, by taking advantage the reduced mood of traders and investors for risk after the negative news regarding USA – China trade war. Traditionally, gold is the most safe-haven asset and as long as there will be no calm down news for the markets, this uptrend is expected to be continued. This fact is also confirmed from the obsession of gold above $1,500, even if we saw prices close to $1,482 last week (very close to our $1,480 target). Our buy positions will target mainly the price area of $1,540.
US Oil
US Oil prices exploded last week, up to $63.07 after the attack of unmanned aircrafts to the oil facilities in Saudi Arabia. This attack left out of order and production almost the 5% of world Oil production, which is a very rare fact for the world’s chronicles. USA have already directly blamed Iran and they also announced that will send troops and army forces to the area. War clouds start gathering again at the sensitive region of Middle East. The fact is that the markets showed a calm-down and relief mood and so US Oil closed last week at $58.28. While the Oil production is re-established smoothly and there’s no obvious war mood, we believe that Oil prices will return back to the price area of $55. Our Machine Learning models confirm this behaviour and our short positions will have as a main target the price area above $55.
