Market Wrap 19/10/18

Beginner

Asian markets were volatile overnight as Chinese stocks fall but recovered and closed the session 2% higher. Wall Street led further declines during the session as concerns come from the hawkishness of fed members with the hiking of US interest rates. Disputes with US – China trade, Saudi foul play and Italy’s budget deficit. This has led to a risk off sentiment with money flowing into safe haven assets such as the Japanese Yen and Gold.

The European Central Bank have stated an end to its negative interest rate policy could come in January of 2020. This has already been discounted as recent speeches from Draghi stating interest rates are unlikely to rise until the summer of 2019. The market will forecast the path of interest rates but there are a range of risks traders will monitor especially the Italian budget crisis.

Chart one

UK PM May signalled yesterday she would consider extending the transition to allow more time for the UK and EU to negotiate and solve key issues. According to the European council, no further developments have been made to the Chequers plan and PM May will need to make adjustments if it is to be agreed upon.

Chart one

Overnight China had released their GDP data which has fallen to 6.5% from 6.7% but members of the Peoples Bank of China said whilst growth was slowing, new measures will be introduced to help the market. Looking ahead today, we have macro data from the UK public sector net borrowing. Across the pond the Canadian retail sales and inflation report will be released.

 


Latest News

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Yen stays strong in risk off scenario

Last Friday’s very weak German Manufacturing Purchasing Managers’ Index data was another blow to the global economic backdrop, with concerns throughout this year of a global slowdown in China, through Asia Pacific and increasingly also in Europe. This has seen riskier asset classes come under negative forces over the past week into latter March, with … Continued

Euro vulnerability

A Euro plunge in the latter part of last week, on Friday driven by very weak German Purchasing Managers’ Index data. Furthermore, the US Dollar has seen broader strength again on Thursday-Friday against many major currencies, after US$ weakness was seen immediately after a far more dovish Federal reserve at their meeting on Wednesday. This … Continued

EURUSD Still stumbles at the 200-day MA

The Euro was the weakest currency on Friday The EURUSD cannot break above to 200-Day Moving Average There may a small bounce on Monday morning As European slides into recession EURUSD will fall to 1.1000 The 200-day moving average (200 DMA) has continued to prove a stubborn barrier to the upward path of EURUSD. This … Continued

Current Market Analysis
Euro breaks down, GBPCAD threatens upside

US Dollar Index holds support and rebounds EURUSD seeds multiple negative signals, downside risks GBPUSD sends buy signal GBPCAD sets up more bullish AUDUSD negative and USDCAD buy signal USDTRY and USDBRL surge

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