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WEEKLY NEWSLETTER (FX-INDICES-COMMODITIES)

WEEKLY NEWSLETTER (FX-INDICES-COMMODITIES)
by admin

14/10/2019

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

Bearish was the beginning of the last week for EURUSD, touching 1.0940 on Tuesday but from Wednesday and on, a new bullish trend started that lead to a break-out of 1.10, up to 1.1062 (touching the price area of 1.1070 – 1.1080 that we had spotted last week), a 2-months high for the pair, which finally closed at 1.1042. This trend is based mostly on the positive news from UK regarding Brexit as well as the recent positive news from the USA – China trade war. These two major updates brought some amounts of optimism to the global financial markets so the minutes announcements of the central banks did not contain important information that could dominate. The current week does not contain news or financial announcements that alone could affect the trend of the markets and the dominating events could be the Brexit and the USAChina trade war again.

This Monday is a public holiday in USA and for other countries of America so we’re expecting low volatility on USD but there’s the Eurozone Industrial Production announcement. The rest of the days we consider the Economic Sentiment in Germany (ZEW Survey) on Tuesday, the Consumer Price Index on Wednesday, the US Retail Sales on Wednesday, a series of US announcements on Thursday (Building Permits & Housing Starts, Industrial Production and Initial Jobs Claims) and the US Leading Index on Friday. We have also important speeches from central banks officers (De Guindos of ECB on Monday, Lane of ECB on Wednesday, Brainard of Fed on Wednesday, Bowman & Williams of FED on Thursday and Kaplan & Clarida of FED on Friday. Finally, we have the very important EU summit at 17 and 18/10 with three major agenda topics: long-term EY budget, next 5 years priorities and Brexit.

 

GBPUSD

Last week we had important profits like 3%, for GBP. Announcements from UK and EU side have encouraged agreement scenarios for Brexit so GBPUSD exceeded at some stage 1.27 (weekly high was at 1.2706) and it finally closed at 1.2663. The whole bullish movement took place on Thursday & Friday since the three first days of the week were bearish (weekly open at 1.2311 and Wednesday close at 1.2204). During the weekend though, UK PM Boris Johnson claimed that theres still a pathway to a deal and the next week would be critical. This statement somehow trimmed the hopes in front of the important EU summit this week at 17 and 18/10. As long as we don’t have fresh news regarding, the most possible scenario is to see a price pullback. We’ll open sell positions targeting the price area of.2510. In a case of further progress on a Brexit agreement, we may see the price of GBPUSD even close to 1.30 again.

Besides the scheduled US news & events that we saw above at EURUSD section, this week also contains important announcements for UK economy. The most important are Jon Canliffe’s speech (Bank of England) on Monday, ILO Employment Rate on Tuesday, a series of announcements on Wednesday (Retail Price Index, Producer Price Index, Consumer Price Index), Retail Sales and Credit Conditions Survey on Thursday and UK Sovereign Debt rating by Fitch on Friday.

 

USDJPY

The wind of hopefulness that dominated last week at the financial markets, brought back the risk mood and set away the investors and the traders from safe haven assets like JPY. Donald Trump stated on Twitter that USA has come to a substantial phase one deal with China while Steven Mnuchin continued in the same mood by saying that the next round of tariffs’ hike won’t go forward. As a result of those statements was the strong bullish trend for USDJPY that made profits circa 1.5% with weekly high at 108.62 and weekly close at 108.31. The price area of 108.60 – 108.80 is a strong resistance for the pair but possible new progress regarding USA – China trade war could drive it even higher. We’ll open buy positions with main target the price area of 109.50. There’s always the case to have negative updates from this trade war or news that could restore the concerns on the global economies (don’t forget the Turkish invasion in Syria). This could lead USDJPY back to 107.

This Monday is a public holiday in Japan (sports day) and in combination with the US public holiday, we could have a low volatility. Beyond the news & events for the US economy that we saw above at EURUSD section, there are other news and announcements for Japanese economy this week, such as the important speck of Haruhiko Kuroda (Bank of Japan) on Tuesday, the Industrial Production on Tuesday, Consumer Price Index on Friday and Foreign Investments in Japanese Stocks & Bonds on Friday as well.

 

EURJPY

The positive mood of global markets caused a bullish reaction for EURJPY due to the latest progress regarding USAChina trade war and Brexit. Pair had profits more than 2%, with a weekly close at 119.76, below the very important resistance of 120. It could mean a temporary price technical retracement but if the optimism remains, we may see EURJPY above 120 this week, maybe close to the price area of 120.40, which will be the main target of our buy positions. A breakout of 121 is not impossible though. On the contrary, a worsening at the ambience of the USA – China relationships (we got used to President Trump’s contradictory statements) could lead the price of the pair even close to the area of 118.30.

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

 

EURGBP

EURGBP started last week with a bullish trend as expected and the three first days of the last week it touched 0.90, reaching at on Thursday. After the sound expectations for an EU – UK agreement regarding Brexit, GBP had serious profits and GBPUSD lost about 300 pips and finally closed at 0.8722. The total drop for the week was more than 2%. Boris Johnsons statements during the weekend, brought back some concerns to the financial markets so we’ll open low-risk sell positions, targeting the price area of 0.88. We must be very careful this week because in any phase (especially during the EU summit at 17 and 18/10) that we may have news for an agreement resurgence, the price of EURGBP could drop even at the price area of 0.8660 or even close to 0.85.

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

 

USDCAD

Until last Friday, more or less USDCAD had consolidative movements and slight bearish trend due to high oil prices. After the positive surprise from the Canadian Unemployment Rate announcement on Friday (5.5% instead of a forecast for 5.7%), CAD had serious profits and we had an important 100 pips drop for the pair. Weekly close was finally above 1.32, at 1.3202, showing a weakness for a further drop so we’re expecting a bullish reaction for the pair so our buy positions will have a major target the price area of 1.3280 and a secondary target at 1.3330, if USD has further gains.

This Monday is a public holiday in Canada (Thanksgiving Day) and in USA as well (Columbus Day) so USDCAD won’t have high volatility. The other days, the Canadian economic announcements that along with the USD news that we saw at EURUSD section may affect trend & volatility, include the Existing Home Sales on Tuesday, the Consumer Price Index on Wednesday and the Manufacturing Shipments on Thursday.

 

USDCHF

USDCHF reached, as expected, the milestone price area of 1:1, climbing up to 0.9990 last Friday. The weekly volatility though was low since the pair stayed above 0.99 during the week with weekly low at 0.9904. The weekly close price was at 0.9970, relatively close to 1:1 so the breakout scenario dominates this week unless we’ll have negative progress on the USA – China trade war. Our buy positions will have a target at the price area of 1.0070 – 1.0080 while the negative scenario may drive the price close to 0.99 again.

Important economic announcements for Swiss economy this week include mostly the Producer & Import Prices on Tuesday, the Imports, the Exports and the Trade Balance on Thursday. Dominating events will be again from the USA – China trade war.

 

AUDUSD

The first three days of the last week were slightly bearish for AUDUSD since the pair continued its expected long-term downtrend, reaching on early Thursday the price of 0.6710. The positive news from the USAChina trade war though have a big boost to AUD and the pair had a strong bullish reaction with a weekly high above 0.68, at 0.6810 and a weekly close at 0.6792. The weekly close below 0.68 in combination with some mixed news that came from China early this morning (Monday 14/10) with worse than expected the Imports – Exports but better than expected the Trade Balance, may press AUDUSD so we’ll open sell positions with main target the price area of 0.6720. On the contrary, positive trade war news will boost again AUD and a scenario for prices close to 0.6870 is very possible.

This is a very important news & announcements week for Australia and mainly for China (which affects as we have seen a lot the Australian economy and AUD). Imports, Exports and Trade Balance have already released with mixed results early this Monday and we expect the Chinese Consumer Price Index on Tuesday, the Australian Westpac Leading Index on Wednesday, Guy Debelle’s speech (Bank of Australia) in  Sydney on Thursday which will be followed by the announcements of National Australia’s Bank for Business Confidence and the Unemployment Rate and a series of announcements for Chinese economy on Friday, including the Chinese GDP, the Industrial Production, the Retail Sales and the Fixed Asset Investments.

 

SP500

The two first days of the last week were bearish but the next three following days gave important profits for SP500, more than 1.2%. We also had high volatility and on Thursday the Index moved from 2,880 points up to 2,952 points with a 2.5% fluctuation. Weekly high was at 2,993 points and weekly close was at 2,970 points with an obvious weakness of approaching 3,000 points. The optimism that dominates could lead SP500 to the price area of 3,000 points this week again but the things are still fragile and vulnerable since we don’t have a USA – China fixed agreement so far and further effects of the Turkey invasion in Syria could complicate the global environment even more. We’ll stay out this week.

 

DAX30

Consolidative mood dominated DAX30 in the beginning of last week, with a light uptrend during Wednesday and Thursday but on Friday we had a strong bullish trend and a weekly close at 12,461 points although on Friday afternoon, Index exceeded for good 12,500 points, climbing up to 12,558 points. The weekly close above the important resistance of 12,450 – 12,460 points creates a mixed mood in combination with the latest and well-known problems for the German economy. This could cause a drop for the Index, especially if there’s no fuel from fresh news so our short positions will target the price area of 12,250 points. In case that we’ll have positive news from Brexit and from USA – China trade war we may see DAX30 close to 12,570 points.

 

FTSE100

Positive and profitable was the last week for FTSE100, which closed at 7,226 points and profits circa 0.9%. During last week the volatility was low and the expectations regarding Brexit boosted GBP significantly. There’s a mixed outlook without any clear signals for a trend so scenarios for uptrend and downtrend are both possible. We’ll avoid taking positions in the beginning of the week and we’ll monitor the price action. We will use an appearing uptrend in order to open long positions with main target the price area of 7,310 points but in the opposite case (which we estimate is more possible) we’ll open short positions with main target the price area of 7,100 points.

 

Gold

The last week we had an important price drop for gold (about 1.5%) and a weekly close at $1,488.6. We also had high volatility from $1,517 on Thursday, down to $1,474 on Friday. The positive news from the global markets have developed an outlook of soothing and a risk mood for investors and traders and a safe-haven asset like Gold lost its dynamics remaining consistently below $1,500. On the current week, the gold prices will be affected more or less by the same factors and if the positive outlook remain, we may see prices at the area of $1,472 which will be our main target for our short positions.

 

US Oil

The behavior of last week oil prices was expected since the price could not break the usual channel of the last weeks, between $50 and $55. Weekly low price was at $51.34 but after Thursday, due to positive and encouraging news from USA – China trade war, oil started a good uptrend and its prices approached $55 on Friday, reaching $54.93. A very strong factor and cause for this was also the missiles attack on an Iranian tanker, which in any case does not provoke serious concerns to the international community. Weekly close was at $54.87, applying a dynamic in persisting these price levels. Obvious signs of heavy growth of the economies are not visible so we don’t consider very possible the scenarios of oil prices increase, significantly higher from $55 so we expect a price correction to the middle of the channel of $50 – $55. A fixed agreement though could be the necessary fuel for a bullish break-out from this channel, in combination with the unpredictable updates in the Middle East from the Turkish invasion into Syria. Our strategy is short positions with target the $52.30 but in case of bullish break-out we’ll open buy positions, targeting $56.50.

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