Weekly Market Report – 15.10.2018
CurrenciesEUR/USD – shot up after the NFP data but was held back by the resistance around the 1.12 level. While the NFP came in a bit less than expected, it was still a reasonable number and also the number of last month was revised up. What we did see is that the unemployment level edged up again and stands at 5.0%. While this is unlikely to postpone a rate hike this year, it was likely not strong enough to warrant a rate hike in November, so the chances for a move in December have gone further up.
Technically we are close to the resistance around the 1.12 level and also to the downwards trend line.
USD/JPY – it appears that the 104 level is too much for now, as we were not able to reach that level again on Friday in part due to the disappointing NFP. BOJ Kuroda has said that he expects that inflation will reach its target of 2% later than anticipated, even though the economy is expected to grow.
GBP/USD – remains under a lot of pressure after the crash Thursday night and is currently trading around the 1.24 level again this morning, just as it was on Friday. We can see that there is some resistance around the 1.2465 level, which is tried to break multiple times on Friday, but wasn’t able to do so.
USD/CAD – reached the resistance again around the 1.33 level and after the NFP and the strong Canadian data dropped sharply. However, we have been edging back up again, as the USD is recovering some of its losses and also oil have been dropping again, weakening the CAD.
USD/MXN – dropped sharply, as the likelihood of a Trump Presidency is seen fading away after the damaging tape of Donald Trump and his remarks on women was aired. However, it is edging back up again after the second Presidential Debate has, by all accounts, not knocked out Donald Trump and he stays in the race.
IndicesDollar Index – was unable to reach the July levels as the slightly disappointing NFP took the wind out of the USD rally. However, the drop was not too large, as also the NFP was not that bad overall and the data was strong enough for the FED to raise the interest rate in December.
S&P 500 – started moving up after the NFP, but when oil prices started to drop again, we saw the S&P go down as well.
CommoditiesGold – is trading up after having reached the support near the 1240 level on Friday. While the NFP was a bit lower than expected, it wasn’t bad enough to force the FED to delay and push the interest hike to 2017. This means that the upside is relatively limited, although Brexit and also a possible Trump Presidency are the most know factors which could cause gold to move higher.
Oil – is dropping as part of some profit taking after oil reached the 50 level, but also over lingering doubt over the effectiveness of the agreement reached by OPEC. To make matters worse the Russian energy minister said he doesn’t expect an agreement to be reached with OPEC this week, basically casting doubt whether OPEC will also go through if non-OPEC countries won’t follow suit. Even within OPEC there are already cracks appearing as Iraq said it plans to increase production next year, which obviously would not be in the spirit and according to what OPEC agreed to. In addition we see an additional increase in the number of active rigs in the US.