Home Markets WEEKLY NEWSLETTER (FX-INDICES-COMMODITIES)

WEEKLY NEWSLETTER (FX-INDICES-COMMODITIES)

WEEKLY NEWSLETTER (FX-INDICES-COMMODITIES)
by admin

07/10/2019

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

In the beginning of last week, EURUSD continued its downtrend, dropping below 1.09 at 1.0878 but the rest of the week was quite bullish due to Tuesday announcement of PMI at the United States, which was the worst of the last decade. This had the result of strong pressures on the USD and of the trend reversal for EURUSD. The pair touched the price of 1.10 on Thursday and Friday without exceeding it which shows that an uptrend is not well established yet. Finally, EURUSD closed at 1.0977. All investors’ and traders’ eyes are pointing towards central banks minutes announcements on Wednesday for FED and on Thursday for ECB. Moreover, FED president Jerome Powell will have three scheduled speeches this week on Monday, Tuesday and Wednesday just before FOMC minutes and we expect to have significant increase of volatility for the pair, especially if there will be references and hints regarding the monetary policy and the rates. There are two main scenarios: if there will be a cross over of 1.10 for good, we may see EURUSD at the price area of 1.1070 – 1.1080 or EURUSD will return to its long-term bearish trend and we may see it at the price area of 1.09 again. Our positions will have this character this week, selecting scenarios according to the price action of the pair. Other important news for European and US economies for this week include Germany Factory Orders on Monday, the US Producer Price Indexes on Tuesday, the US 10-year Note Auction on Wednesday (one hour before FOMC), the German Trade Balance on Thursday, the US Consumer Price Indexes on Thursday, the German Harmonized Index of Consumer Prices on Friday and Michigan Consumer Sentiment Index for USA on Friday too.

 

GBPUSD

GBPUSD had a bullish week, closing at 1.2336 with profits above 0.3%. The pair during the week touched the price of 1.22 and it also moved above 1.24 as a result of the uncertainty and the ongoing progress regarding Brexit. The main feature for last week was that each daily open was very near to the daily close and during the day there was high volatility. Excluding last Monday, the rest of the days we had slight profits for the pair but this euphoria stopped as we had reports which mentioned that the European Parliament does not approve Boris Johnson’s plan and that Ireland has rejected the agreement because it creates borders into the Irish territory. Moreover, breaking news underline that Boris Johnson will challenge the Queen to fire him instead of resign. As long as the uncertainty and the political tension remains in the Island, it’s very possible to watch the same movie this week as well, so we’ll open small, low-risk and opportunistic positions, looking mostly for bullish reactions. In such a case, our targets will be at the price area of 1.24. Besides the scheduled US news & events that we saw above at EURUSD section, news from UK that may affect the trend and the volatility of GBPUSD are the Like-for-Like Retail Sales announcement on Tuesday, the very important speech of Governor Carney on Tuesday in Tokyo and a series of announcements on Thursday like Manufacturing Production, Industrial Production and UK GDP for August.

 

USDJPY

Significantly bearish was the last week for USDJPY with losses close to 1% and closing price at 106.92. This fact allowed us to take our target of 107.30 though. The very first two days of the last week were bullish but then USD dropped after the disappointing PMI news for the US economy. Last Friday with the NFPs announcement gave a balance to the pair because markets evaluated positively the results. US unemployment fell to 3.5% (best results for the last 50 years) while the US economy created 136,000 new job positions in September. This news somehow calmed down the markets in the middle of serious concerns & fears for a new global recession. Of course, the main question remains: how is it possible to have new and well-paid new job positions in the United States and in the same time the Manufacturing, Construction and Industrial Indices show an opposite outlook? As long as a global recession is still on the table, safe-haven assets like JPY will strengthen so our sell positions will target the price area of 106 this week. Beyond the news & events for the US economy that we saw above at EURUSD section there are important news for Japanese economy this week as well, such as the Coincidence and the Leading Economic Indices on Monday, the Overall House Spending on Tuesday, the Machine Tool Orders on Wednesday and the Foreign Investments in Japan Stocks & Bonds on Thursday.

 

EURJPY

EURJPY continued for a 3rd week its bearish trend and it had losses like 0.6%. The pair approached the price of 117 (117.06 was the weekly low) which was our major target for last week. All days excluding Friday were bearish. The weak EUR in combination with the strong JPY due to the expectations of a global recession caused the drop of EURJPY at these levels and finally the week closed at 117.42. We expect for this downtrend to carry on as long as we won’t have important news that will calm down the markets but we need to pay special attention to the important support at 116.40 which will be our main target for our sell positions this week. A possible cross below 116.40 could lead the prices even below 116. News & announcements regarding European and Japanese economies are mentioned at the sections of EURUSD and USDJPY accordingly.

 

EURGBP

Avoiding taking positions last week on EURGBP was a correct decision because the pair was dominated by uncertainty and volatility decrease. The weekly closing price was above 0.89, at 0.8902, only 12 pips above the weekly open. The contradictory behaviours of EUR and the erratic attitude of GBP due to Brexit create this confusion and the lack of a clear trend for the pair, so we’ll stay out for one more week. If we had to make a guess, one way or another, we’d favour the bulls. News & announcements regarding European and UK economies are mentioned at the sections of EURUSD and GBPUSD accordingly. The ECB Monetary Policy Meeting Accounts on Thursday will increase the volatility and may give a clearer trend for the pair.

 

USDCAD

The price squeeze that we had spotted on USDCAD last week, finally drove the pair to a bullish price explosion with profits close to 0.6%. The day with the biggest contribution was last Wednesday where the pair took more than 110 pips. This was a result of a further oil prices drop and of the pressures on USD after the disappointing news for US economy. USDCAD’s price climbed until 1.3347 and finally it closed at 1.3313 which shows an establishment on its uptrend. This week we’ll open buy positions, targeting mainly the price area of 1.3420. The financial announcements of Canada will affect seriously the pair only on Friday (Canadian Unemployment announcement) so the trend and the volatility will be dominated mostly by USD and oil prices. Other announcements in Canada include the Building Permits on Tuesday and the New Housing Price Index on Thursday.

 

USDCHF

USDCHF last week finally achieved to exceed the important threshold of 1:1, up to the price of 1.0027. It couldn’t have a further bullish reaction though due to USD pressures after the disappointing US results last week. Nevertheless, the pair kept its touch with the important resistance of 1:1 until last Friday where the NFPs results were released, evaluated by the global markets as positive for the US economy, strengthened USD temporarily and finally the pair closed at 0.9953. It seems that things won’t change dramatically this week so we’ll keep the same strategy waiting for USDCHF’s flirting with the 1:1 area again. Some important news from FED this Wednesday and news that may occur from Jerome Powell earlier may increase pair’s volatility and finalize either an uptrend to the price area above 1:1 or a downtrend to the price area of 0.9850. Important Swiss economy announcements this week are the Foreign Exchange Reserves on Monday, the Unemployment Rate for September on Tuesday and the Real Estate Index on Wednesday.

 

AUDUSD

AUDUSD had small profits last week, about 8 pips although during the week we saw prices below 0.67 (weekly low was at 0.6670) so both of our targets were reached. The temporary pressures on USD is the main cause for this pullback which does not seem to change the long-term bearish outlook for the pair. We’ll follow this trend by opening sell positions, targeting the price area of 0.6670. We must pay special attention though because these price levels are the lower levels of the last 10 years and a bullish reaction for an oversold asset such as AUDUSD is also possible. This Monday is a public holiday in China but the same day we have the announcement for AiG Performance of Construction Index, the National Australian Bank’s Business Confidence on Tuesday, on Tuesday also the very important Chinese Caixin Services PMI, the Australian Westpac Consumer Confidence on Wednesday, Australian Home Loans on Thursday, Chinese Foreign Direct Investments also on Thursday and Investment Lending for Homes in Australia on Friday. It is a week full of news and we expect to have high volatility for the pair.

 

SP500

A very volatile week for SP500 passed by as the Index opened at 2,976 points, it fell at 2,854 points on Thursday but the same day there was an optimism wind that continued on Friday as well that limited the losses below 1% and finally SP500 closed at 2,950 points. Our target of 2.930 points was reached. Weekly close was above the very critical support of 2,932 points and this fact may indicates a bullish reaction for the Index while we cannot ignore the fears and the concerns of a global recession as well as the fragile environment from USA – China trade war. Both of these factors are able to give extra pressure to US stocks. We will have a clearer image of the situation after FOMC minutes on Wednesday if there are indications and hints regarding the monetary policy and the rates in USA. Below 2,932 points, we’ll open sell positions with main target the price area of 2,880 points and second target the price area of 2,930 points. In opposite case, we favour buy positions with main target the 2,990 points.

 

DAX30

Big losses for DAX30 (above 2%) last week. The bullish trend of the very first two days did not last and it was followed by a very strong bearish trend from Tuesday and on, with a weekly low on Thursday at 11,980 points. From Thursday afternoon, there was a bullish retracement which continued on Friday too with a weekly close above 12,000 points, at 12,063 points. The unstable global economic environment is very possible to affect further DAX30, specially if there will be disappointing news for German economy (see EURUSD section) so we’ll favour sell positions with main target the price area of 11,800 points.

 

FTSE100

A very bearish week passed by for FTSE100, with losses more than 3% with a slight retracement after last Thursday and weekly close at 7,173 points. Weekly lows were a bit above 7,000 points and a possible breakout of this level would cause further panic. If the bullish reaction at the end of last week was temporary then this week the Index is possible to try 7,000 points again and this will be our main strategy. Of course, if there will be news regarding Brexit that will drop GBP, we may have a bullish reaction, up the price area of 7,420 points.

 

Gold

Last week was a very volatile week for Gold: On Tuesday it touched the $1,459 but after that there was a bullish rally and Gold exceeded a lot the price of $1,500 (weekly highs ere at $1,519,5) and finally closed at 1,504.6. The first two days though were more than enough for us to take our target at $1,480. Last Friday had very neighbouring open and close prices (close was just $0,38 below open) and this fact shows a trend uncertainty: Will Gold return below $1,500 if global markets calm down or the concerns regarding a global recession will drive Gold even above $1,530 this week? We consider the 2nd option as most possible, so we’ll open buy positions with target $1,530. Keeping in mind that Gold is denominated in USD, the FOMC minutes on Wednesday and the scheduled speeches of Jerome Powell earlier this week (see EURUSD section), will also affect seriously the price of Gold.

 

US Oil

US Oil returned back to its prices before the attack in Middle East a few weeks ago with a weekly close at $52.87 while during the week we saw low prices at $50.90. Our range trading strategy was very profitable because both our short at $55 and our long at $51 were profitable. It is very difficult under the current circumstances to see oil prices below $50 and this will happen only if there are robust evidence for a global recession. On the other hand, it’s also difficult to see prices above $55 $55 while there are no clear growth signs for the global economies and so far, the we don’t have war scenarios and tension in Middle East. The same range scenario for a range pricing between $50 and $55 is very possible so we’ll follow our range strategy for one more week.

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