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Quite bullish was the last week for EURUSD which climbed more than 1.3%, with the last three days to cover the biggest part of it. The positive outlook, based on the agreement between EU and UK regarding Brexit was dominating since we had almost forgotten that this agreement does not only involve UK but EU as well! This had the result for EURUSD to close at 1.1173 last Friday, exactly at the weekly high. The other bog topic of our days, USA – China trade war has no fresh news for the moment unless there will be new twits from Donald Trump’s side (we got used to such surprises though) and so Brexit with the rest of the news and announcements of the week is expected to dominate on the trend and volatility of the pair. We cannot exclude a trend continuation up to the price levels above 1.12 which will be our main target for this week’s buy positions but volatility may increase significantly on Thursday during the Interest Rates announcement by ECB. This time we don’t expect any surprises (positive or negative) on the monetary policy of the European Union.
The beginning of the week is relatively dull regarding to news and economic announcement while at the close of the week there will be more life. More specifically, there’s the announcement of Producer Price Index for Germany on Monday, the ECB Bank Lending Survey report on Tuesday, the US Existing Home Sales on Tuesday, the 10-years German Bond Auction on Wednesday, the US Housing Price Index and the Mortgage Applications on Wednesday as well, the very important PMI Indexes for Germany and Eurozone on Thursday, the ECB Interest Rates Decision on Thursday, the US Durable Goods Orders on Thursday, the important speech of Draghi in Frankfurt after the ECB Decision Rates, the US PMIs on Thursday, the Consumer Confidence Survey, the IFO Business Climate, the IFO Current Assessment and the IFO Expectation for Germany on Friday and the Michigan Consumer Sentiment Index for USA on Friday.
Very strong profits, almost 3%, we had for GBP vs USD last week with more than 350 pips in between the positive news and outlook regarding Brexit. There were twits and the press conference from Boris Johnson and Jean Claude Juncker. The pair climbed up to 1.30 (1.29989 was the weekly high on Thursday even if we had an important retracement on Monday close to, confirming out last Monday’s analysis where we stated that «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. »
Brexit had serious complications last weekend because there was a delay for the agreement voting & approval on Saturday, despite the intense reaction of Boris Johnson. The British media underline (due to EU’s officers, that all scenarios are now possible: no deal Brexit, deadline extension from a few days to some months, even a new referendum. Until this Tuesday 22/10, we don’t expect serious developments on a decision if the possibility of the approval is not estimated and fixed. Until next Tuesday, GBPUSD will move more through rumours and statements and from Tuesday and on all scenarios are possible, from an uptrend continuation to the price area of 1.3280 to the price drop to the last days levels, circa 1.25. Our positions will be both buy and sell, small and opportunistic, according to the progress.
Except the USA news that we saw at EURUSD section, there are other important economic announcements this week for the British economy but it won’t be easy for the pair to get affected by them more than the news flow regarding Brexit. The most important are the speech of Andy Haldane (Bank of England) on Monday, the Public Sector Net Borrowing on Tuesday, the BBA Loans for House Purchase on Thursday and the UK Sovereign Debt rate by S&P on Friday.
We passed through a week of low volatility for USDJPY with a weekly open at 108.30 and close at 108.40 while the weekly low was preserved above 108 and weekly high below 109 (108.02 and 108.92 accordingly). The assessment of course was positive, even it was small for the pair but the price could not exceed the resistance zone of 108.60 – 108.80 that we had spotted last week. The positive news from Brexit and the positive outlook of USA – China trade war have created euphoria at the financial markets and a fresh mood for risk and this had the result for traders and investors to move away from safe-haven assets such as JPY. Even if things were not really clear during the weekend for the Brexit with many alternative scenarios on the table, we expect to see more positive outlook in the markets this week that may drive USDJPY to the price area of 110, which will be our main target for our buy positions. We need to pay special attention because news from Brexit may affect abnormally the international sentiment. Also, we need to pay special attention to the Haruhiko Kuroda (Bank of Japan) statements during last weekend that the Interest Rates may be cut in a short to mid-term basis.
The Japanese Imports/Export were announced early this morning with mixed results (worse than expected the Exports at -5.2%, better than expected the Imports at -1.5% with an expected value at -2.8%)
This Tuesday is a bank holiday in Japan but other news & announcements for the Japanese economy that along with the USA news that we saw at EURUD section will affect USDJPY include the Leading Economic Index on Thursday and the Foreign Investments in Japanese Stocks and Bonds on Friday.
Quite bullish was the last week for EURJPY, which had profits close to 1.3%, with a weekly close at 121.13, in the neighborhood of the weekly high at 121.34. Given that the last week had opened at 119.50, the very important resistance of 120 was broken easily, allowing us to take the profit of 120.40 and confirming our conviction for a break-out of 121 as well. The positive mood at the traders, based mostly on Brexit news but also based on the rest global economic sentiment, seems to strengthen EURJPY further so we’ll open buy positions with main target the price area of 122. We need to be very careful though because the Brexit environment is yet very fragile and full of surprises.
News & announcements regarding European and UK economies are mentioned at the sections of EURUSD and GBPUSD accordingly.
The GBP boosting last week lead EURGBP to losses more than 1%. We need to underline though that last Wednesday and Thursday were days full of uncertainty and so the bespoken price drop is based mostly on last Tuesday and Friday. It is also important to mention that even the pair reached the price of 0.8574, it did not succeed to close below 0.86 (weekly close was at 0.8604), showing some signs of exhaustion which is perfectly normal since the doubts and concerns regarding the Brexit agreement were not so absurd. This week it seems that will have high volatility and every trend prediction is extremely full of pitfalls.
News & announcements regarding European and UK economies are mentioned at the sections of EURUSD and GBPUSD accordingly. Brexit will dominate in any case but simply that news is expected to act as a temporary price correction causing a further volatility increase.
We had not seen such low prices for USDCAD since last July. The pair closed at 1.3126, very close to the weekly lows of 1.3119 and this fact shows that the price drop was robust. The most bearish day was last Thursday but the bears continued on Friday as well. The Federal Elections in Canada this Monday with many open political & economic issues, (economy, cost of living, environment and climate change, political corruption), are expected to give fresh air to the pair. The price area of 1.31 is in any case a very strong support for USDCAD and we cannot exclude a bullish reaction up to 1.32. We’ll favour sell positions with a main target the price area of 1.3020.
This week is very important for the Canadian economy regarding news & events, which combined to the US news (see EURUSD section), will affect the trend and the volatility of the pair. Despite the Federal Elections on Monday, there will be announcements for Retail Sales on Tuesday, the Bank of Canada Business Outlook Survey Report on Tuesday and the Wholesale Sales on Wednesday. While we move to the end of the week, the lack of news from Canada is expected to cause a price affection for USDCAD mostly from other sources (US news, oil prices, Brexit etc).
Last week USDCHF opened at 0.9966 and started its well-known flirt with the 1:1 price, reaching 0.9995 last Tuesday but from last Wednesday and on we had a very strong bearish reaction which brought the pair significantly below 0.99, with a weekly close at 0.9841. USDCHF has a strong negative correlation with EURUSD and so a EURUSD bullish trend causes a drop for USDCHF. A possible bearish break-out of 0.98 may lead the price at the area of 0.9710 – 0.9720 which will be the main target for our sell positions but we cannot exclude a bullish reaction and a retracement above 0.99 again.
This week is “dead” regarding economic news and announcements from Swiss economy and so USDCHF will move mostly according the to the behavior of USD and the current headline news (Brexit, USA – China trade war etc.).
Strong bullish reaction for AUDUSD last week. The pair returned to price area that it had last September. More specifically, the weekly open was at 0.6786, the weekly close was at 0.6854 while during the week the pair’s price touched the area of 0.6720, allowing us to take the profit from our sell positions.
The Chinese rates have already announced early this Monday from PBOC (People’s Bank of China) with a rate at 4.20% despite the estimation for a cut to 4.15%. That news is expected to give a further boosting to AUDUSD but we need to be very careful because there’s a difficulty in breaking out the price area of 0.6870 – 0.6880 and possible price pullbacks cannot be excluded. If there will be a break-out of this area for good, it may mean that the road for the pair’s return again to the area of 0.70 is open, that’s why we’ll open buy positions this week. We need remark that AUDUSD has been at these levels again during last July when the big price drop started taking place after the deterioration in the relationships between USA and China. We also need to underline that the Australian economy and AUD are both affected a lot from China and Chinese economy.
The Australian news of this week include the speech of Kent (RBA) on Wednesday and the important announcements of PMIs on Thursday. The bespoken news combined with any progress from USA – China trade war and with the US news of this week are expected to affect AUDUSD.
Last week was slightly bullish for, which closed at 2,988 points with profits circa 0.6%. During the week though and more specifically on last Thursday we had a break–out of the important resistance of 3,000 points but very quickly the Index returned back below this threshold. This week, amid the general markets’ positive mood, we don’t expect an outlook change in the Index’s behaviour and 3,000 is the target for our long positions. It seems that SP500 is trying to build a block at this area in order to use it as springboard for new highs. Possible negative news from the global environment, mostly from Brexit, may press SP500 to the price area of 2,950 – 2,960 points or even lower
We had a bullish reaction last week for DAX30 which closed at 12,654 points with profits 1.40%, even if this uptrend took place mostly on last Tuesday where the profits of the Index was more than 1%. Last Thursday the Index exploded above 12,800 points at 12,813 points but after that we had serious pressures that drove it again to the price area of 12,650 points which was the weekly close. A pullback to the price area of 12,500 is not impossible because the German economic outlook does not justify such price levels that we hadn’t seen since August, 2018. The global economic environment affects DAX30 so the situation is still fragile.
The British Index, obviously influenced by the GBP bullish trend, had strong bearish trends and closed at 7,145 with losses circa 1.4%. Every estimation for the current week is very risky since we expect serious progress from Brexit and many scenarios are on the table: an agreement approval, a postpone and even scenarios for a new referendum is on the table. Technically speaking, there’s the important support at 7,000 points which may be a good brace for the Index and a possible uptrend that may lead it above 7,250 points could be a forerunner for the price area of 7,400 points.
Consolidative was the last week for gold with a weekly open at $1,487.3 and a weekly close at $1,490.4 while during the week the price did not exceed $1.500 (weekly high was at $1,498.4) neither a drop below $1,477. The risk in the global financial markets remained about the same and so we didn’t see gold at the area of $1,450 but we didn’t also see things getting worst so we didn’t see it above $1,500 either. The yield of the 10-years US bonds at the levels of 1.75% justifies this lack of a clear trend but yields above 1.80% may give an extra motivation for traders to press gold to lower price levels. The most possible permutation is to see prices in a range between $1,480 – $1,500 even if the Rates announcement in China, early this Monday, moves gold to the area of $1,1493. We’ll favor the range trading strategy in this channel (buy close to $1,480 and sell close to $1,500).
Last week was bearish for US Oil with a weekly open at $54.88 and a weekly close at $53.73, lower about 2%. During last week we saw even lower prices, close to $52,43, very close to the target of our sell positions at $52.30. This drop originates mostly from the further growth slowing in China.
Our estimation for prices into the channel $50 – $55 was confirmed one more time since the weekly open at $54.88 was also a weekly high price. The OPEC meeting next December and the attempts of Saudi Arabia to convince the other members for a further production cut will affect seriously the prices of US Oil. This doesn’t seem to have serious correspondences so far and so we don’t expect changes. We’ll try the range trading strategy for the channel $50 – $55 for one more week.