04/11/2019
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
Last week EURUSD took back all the losses of the week before, closing at 1.1165, very close to the weekly highs of 1.1175. All days except last Thursday were bullish but the price could not exceed the price zone of 1.1170 – 1.1180 which is a high of almost three months. FED, as expected and as we had written last week, had a cut rate of 0.25% for the 3rd. time in a row since last July but this time Jerome Powell said that the rates won’t change for the next period of time. On the other hand, Europe had positive news but not in a degree that will claim and support significant euphoria or great expectations for a significant growth. During last Friday, we also had the Unemployment Rate announcement in USA, with 182,000 new jobs for the American economy versus expectations for 8,000 new jobs. This fact gave a boosting to USD at the Friday afternoon, pushing EURUSD until 1.1127 but very quickly the price took back this temporary movement and so Friday was a bullish day as well. This specific behaviour shows that if there is a breakout of the resistance zone of 1.1170 – 1.1180, there’s a serious probability to see EURUSD above 1.12 this week, maybe up to area of 1.1270 which will be the target of our buy positions.
After a week of many news and announcements, this week is quieter, not in the number of news but more on the severity of news. There’s the manufacturing Markit PMI for Germany on Monday, the Durable Goods Orders and the Factory Orders in USA on Monday too, the US Trade Balance on Tuesday, the US (Composite and Services ) on Tuesday, the German Factory Orders on Wednesday, PMI (Composite and Services) for Eurozone on Wednesday, the Eurozone Retail Sales on Wednesday, the German Industrial Production on Thursday, the Eurogroup meeting on Thursday as well, the EcoFin meeting on Friday and last but not least the Michigan Consumer Sentiment Index for USA on Friday.
GBPUSD
Bullish was last week for GBPUSD, which took back the biggest part of its losses, closing at 1.2940 with a weekly high at 1.2975 and small but steady bullish trend almost every day. This shows us that there is generally a positive mood regarding Brexit but on the other hand the price could break-out the price of 1.30 which means that nothing is sure so far. England avoids the no–deal Brexit for the moment while we’re in the beginning of the elections campaign and Boris Johnson seems to lead the polls. Also, recent rumours seem to support the scenario that Boris Johnson maybe will not include the no-deal Brexit into his part’s manifest for the elections. Regarding news and announcements of last week, the mood was mixed without any positive or negative trends. For the current week, there is a probability to see the price of the pair to move sideways into the channel of 1.29 – 1.30 but a possible break-out of 1.30 would mean a further bullish reaction which combined with the high volatility of the last weeks would lead GBPUSD even above 1.31. We favor buy positions this week only if there is a 1.30 break-out with main target the price area of 1.3160.
Except the US news that we saw at EURUSD section, other scheduled news & events of the current week for the UK economy include Markit Construction PMI on Monday, the Like-for-Like Retail Sales on Tuesday, the Bank of England Rates Decision on Thursday which will be followed by Mark Carney’s speech. We underline that there is no expectancy for rates changing from its current price of 0.75%.
USDJPY
Clearly bearish was the last week for USDJPY with losses close to 0.50%. The drop started last Tuesday and completed on last Thursday where we had the biggest decline. The rates cut on Wednesday was the spark for an uptrend for the pair but it could last for a long time while the weak bulls on Friday (mostly based on NFPs and on the positive news for the US jobs) could not change the outlook. We saw weekly lows below 108, at 107.88 and the weekly close at 108.18. FED cut the rates for 0.25% and in the same time we had statements that the rates will remain unchanged and there could be a raise only if the inflation raises. On the other hand, the Bank of Japan did not change the rates. The USA – China discussions is expected to dominate the current week and along with the scheduled news will define the trend and the volatility of USDJPY. Without a worsening of the global economic outlook and if we don’t have unpleasant surprises from the trade war, maybe we’ll see the price to have profits up to the area of 108.80 – 108.90 but above it we need to pay special attention because this zone is a critical resistance for the pair. This price zone will be the target of our buy positions this week.
The important news for Japanese economy of the week is the Monetary Policy Meeting Minutes announcement on Wednesday, the Overall House Spending and the Foreign Investments on Japanese stocks & bonds on Friday.
EURJPY
Slightly bullish was last week for EURJPY with a weekly open at 120.40 and a weekly close at 120.80 (about 0.30% profits), even if in the middle of week, we saw prices close to 121.46. It seems that the pair returned back to its main uptrend that started from September, 1st from the price of 116.50 but it seems to have serious difficulties to stay above 121. We consider that it’s possible to see it this week so we will open buy positions, targeting a price a few pips below 122. In the long run this could be a sign for even higher levels for EURJPY.
News & announcements regarding European and UK economies are mentioned at the sections of EURUSD and GBPUSD accordingly.
EURGBP
We’ve been through a week of high uncertainty and low volatility for EURGBP. The pair closed at 0.8629, just 7 pips below of the weekly open while during the week the range was in the tight channel of 0.8895 – 0.8651. Also, each days’s close was pretty near to its open and just some speculative movements were pushing the price up or down. Since we won’t have serious progress regarding Brexit and since the European news do not carry strictly positive or negative moods, this pattern gathers high probability to remain the same and in such a case we will see low volatility and lack of a clear trend. We chose to stay out this week or to open small and opportunistic trades of both long and short directions.
News & announcements regarding European and UK economies are mentioned at the sections of EURUSD and GBPUSD accordingly. Brexit will dominate again.
USDCAD
Clearly bullish was the last week for USDCAD, with profits close to 0.65% and a weekly close at 1.3141 even if we say prices above 1.32, at1.3208. We took our main target which was at 1.3140. The Bank of Canada left the rates unchanged at 1.75% as we expected but there were many warnings for the Canadian economy since the predictions mention a growth shrinking for the 2nd semester of 2019 with the main problems in the Industrial Production and Investments. In parallel, we had serious price drops for US Oil prices last Friday and as we have underlined it as a strong correlation with the Canadian dollar. When the US Oil prices had a comeback, the USDCAD rally stopped and from the price area of we had a drop to the area of 1.3140. Under these circumstances and keeping in mind that the price area of 1.30 is an important support for the pair, there’s a serious probability of the uptrend continuation up to 1.32 at the first place but our buy position will target higher levels, close to 1.3280.
Regarding scheduled news and announcements for the Canadian economy this week, we emphasize on the Import/Exports on Tuesday, on the Ivey PMI Index on Wednesday and on the Unemployment Rate announcement on Friday for October where a small increasement from 5.5% to 5.7% is expected.
USDCHF
Serious drop for USDCHF last week which could not keep the price levels of 0.99, closing at 0.9855 and losses close to 0.90%. During last Monday and Tuesday, the price attempted to approach the 1:1 area reaching until 0.9970 but the next days were clearly bearish and pushed the pair even to 0.9850. There’s a probability that this price is a bottom for the pair this period of time and maybe during this week we will see it above 0.99 again, approaching 1:1. On the contrary, possible prices consolidation below 0.9830 would mean the beginning of a downtrend and in such a case the next support is close to 0.97. We consider the first scenario as the most prevailing so our long position will have a main target the price area of 0.9960.
From Switzerland, the announcements and the news that will affect the pair (along with the US news of course) is the SECO Consumer Climate on Monday, the Foreign Currency Reserves on Thursday and the Unemployment Rate on Friday where we expect a small decline of 0.1% 0.1% at 2.2%
AUDUSD
Very impressive was the last week for AUDUSD which achieved to excess 0.69 by closing at 0.6903 with a weekly high at 0.6929, even if it started from the price area of 0.6820. All days except Thursday were bullish. News from Australia were more or less neutral and so this uptrend has its basis mostly on the weak USD. We believe that the bullish trend had more way to go and the only possible stop would come from the USA – China trade war bad news. In every case, the price area of 0.70 is a very strong resistance for AUDUSD since many automates strategies and Trading Robots have pending short positions on this price. A few pips below 0.70 will be the target of our buy positions this week. Early this Monday morning we saw the Retail Sales in September for Australia at 0.2% which were down but not below the expectations so the uptrend of the pair does not seem to change so far.
Along with the important USD news, mentioned at EURUSD section, there are many important news for the economies of Australia and China that affect AUDUSD. More specifically, on Tuesday we have the important Chinese Index Caixin PMI and the in the same day we have the Rates Decision from RBA with an expected change from the current price of 0.75%. On Thursday we have the Imports/Exports and the Australian Trade Balance, on Friday there’s the release of the RBA Monetary Policy Statement and finally we have the Chinese Imports/Exports and Trade Balance for China.
SP500
Consecutive new all-time records we had for SP500 which had another bullish week with a weekly open at 3,023 points and a weekly close at 3,063 points, very close to the weekly high of 3,065 pointsκαι. The total profits were more than 1.30%. Most likely, this pattern will carry on: the huge liquidity in the markets combined with a relative quiet outlook in the global environment lead the Index higher and higher. On the other side, we must be very careful because these price levels are new and unknown and we cannot exclude the probability of price retracement through a speculative profit taking. We’ll support the uptrend scenario and we’ll open buy positions, targeting 3,105 points.
DAX30
Good profits for the German Index DAX30, close to 0.60%. More specifically, last Monday and Friday were clearly bullish while during the week we had small bearish pullbacks that could not last. Finally, the Index closed at 12,970 points while on Friday we had a further approach of 13,000 points, at 12,986 points. Last time that we saw prices above 13,000 was in the beginning of summer, 2018 and this fact must keep us very careful. A possible break-out of these levels for good, opens the road for historical highs with the first resistance at 13,120 points which will be the main target of our long positions above 13,000 points.
FTSE100
A week full of uncertainty passed by for British Index FTSE100 which navigated until 7,240 points and finally closed very close to the weekly open at 7,310 points. The volatility is getting lower and lower in the last weeks but as it seems so far, the support of 7,000 points is not in danger while the markets have a look at higher price levels. According to this scenario, maybe we’ll see the Index above 7,400 points, even close to 7,500 points. Long positions will be our weekly selection. Of course, there are existing scenarios of worsening in the British markets which will have a result a serious price retracement, especially in a vulnerable and fragile environment in England due to Brexit news.
Gold
Last week was quite bullish for gold which started with a drop reaching the area of $1,481 but then it took a strong bullish trend and closed above $1,514 with weekly highs at $1,516. The turning point was the expected 0.25% rates cut from FED. On Thursday, disappointing results from China were released that show a further shrinking for 6 consecutive months and the increasing slowdown in the sector of services which was the worst since the beginning of 2016, gave extra boosting to gold. The most dominating scenario this moment seems to be a price channel extension from $1,480 – $1,500 to $1,480 – $1,520. There must be a bullish break-out above $1,530 in order to consider a clear uptrend. On the other side the strong support of $1,480 does not seem to be threatened but of course we cannot exclude anything. Our selection for this week will be the range trading strategy in the channel $1,480 – $1,520.
US Oil
US Oil had a price correction in a small degree of 0.80% but this drop would be significantly bigger I if we didn’t have the big accession of last Friday, close to 4% which followed a mini bearish rally on the rest of the week. It is obvious that we have a lack of a clear trend and low volatility for US Oil since there are contrary news. There is serious press from Saudi Arabia for a production cut while on the other side there are rumours for low demand due to a global recession. A very fresh advancement us that Saudi Arabia finally decided to remove all the barriers for the initial public offer of Aramco by cutting taxes again while the company’s valuation is from $1.6 to $1.8 trillions. Maybe we should stay out this week but the developed uptrend intrigues us to try buy positions with main target the price area of $58.
Bitcoin
Last week was bearish for Bitcoin which is the most important cryptocurrency in the world with the biggest capitalization. This drop was mostly a correction of a huge bullish trend the week before which drove Bitcoin above $10,000. Recently, the crypto traders are looking for other trading tools beyond technical analysis or machine learning models. They’re looking for more fundamentals, trying to connect the cryptos prices with geopolitical and macros. The base of this theory says that the monetary policy of the central banks makes the traditional money more or less attractive so investors and traders turn to alternative investment methods such as the cryptocurrencies. Technically speaking, Bitcoin seems to be in an uptrend without being at overbought levels and maybe the prices of $10,000 is not very difficult to be achieved. We’ll try long positions this week but of course we underline the high volatility of the cryptos which makes it too risky even for high-risk traders.
