Risk Assets Lifted by Trump’s Show of Strength

Even as he continues his recovery from the coronavirus, POTUS has been tweeting and posting video updates on @realDonaldTrump over the weekend, even making a surprise car trip out of the hospital to wave at supporters from inside an SUV, with the windows up and the President wearing a mask.

Asian stocks and most regional currencies are climbing, while the Japanese Yen has pared most of its gains versus the US Dollar since Friday’s shock tweet by POTUS himself that he and First Lady Melania Trump have both tested positive for Covid-19.

Even the futures contract on the VIX index, which is widely deemed as Wall Street’s fear gauge, has erased most of its gains, after spiking by more than 10 percent following Trump’s revelation on Friday.

Should President Trump pull off a full recovery and return to the campaign trail sooner-than-initially-feared, that could potentially reinvigorate his voter base while bolstering risk-on sentiment in global markets. Despite Friday’s selloff, last week, the S&P 500 still managed to post its first weekly gain since August, and remain more than two percent higher since end-July. If this US stock benchmark can stay positive until the eve of the November 3rd polling day, history suggests that such a performance by the S&P 500 in the lead up to election day points to a win for the incumbent.

US equity futures are now punching back into the green, which suggest gains for benchmark indices when US markets begin the new trading week.

Risk appetite could find more support from heightened hopes that the next round of US fiscal aid could be agreed to sooner rather than later, gathering more impetus from Trump’s diagnosis. The US President also tweeted over the weekend, saying that the US “wants and needs stimulus”, while encouraging negotiators to “work together and get it done”.

Still, beyond mere hopes and expectations, the overall situation remains fluid and uncertain, with the major event risk of the US Presidential elections just some 30 days away. Hence market participants may not get too carried away, and instead brace for further bouts of volatility over the coming weeks.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Key Event Risks in Q4

But it’s not over yet, and global investors still face major event risks that could trigger massive moves in the markets in the final stretch of the year.

US elections: Polls vs. S&P 500

Of course, chief of all is the upcoming US presidential elections. Although the official voting day will be on November 3rd, investors are bracing for a scenario of a delayed outcome, whereby we could be made to wait several weeks before we know for certain who becomes the President of the United States for the next four years. Such uncertainty could seize up risk appetite, and trigger massive bouts of volatility.

Historically, if the S&P 500 registers an advance between July 31st until the eve of polling day, that signals a win for the incumbent party. Over the past two months, the S&P 500 has registered a gain of 2.8 percent and is trading back above its 50-day simple moving average (SMA), despite the steep September selloff. Is the benchmark stock index can persist with its advances over this month, and should this historical trend prove right once more, this all points to US President Donald Trump winning another term.

At the time of writing, the futures for the S&P 500 point to further gains when US markets open.

However, polls currently show Democratic Challenger Joe Biden holding a lead over Trump. So it remains to be seen which will ultimately be proven right, the polls or the stock market.

Brexit bluster could roil Sterling

This week, UK and EU negotiators are still at it, trying to hash out their trading relationship in the Brexit era. After eight months of negotiations, both sides remain deadlocked, even as UK Prime Minister Boris Johnson’s self-imposed October 15th deadline looms.

Still, currency markets don’t appear too worried just yet about the risk of a hard Brexit, with the Pound strengthening against the Euro over recent weeks, sending EURGBP lower towards its 50-SMA. The FXTM Trader’s Sentiment is short on this currency pair.

However, looking three months out, the implied volatility on the Pound is the second highest among G10 currencies, while market sentiment remains bearish on Sterling for the period. Should Johnson follow through with his threat of a no-deal Brexit, then the Pound would be set for a tumultuous end to 2020.

No end to the pandemic anytime soon

Of course, developments surrounding the global pandemic will continue to dominate market sentiment, as investors assess both the health response, as well as the world economy’s ability to move into the post-pandemic era. As the number of cases worldwide heads towards 34 million, with total deaths now exceeding one million, the effects of Covid-19 are set to be felt well into 2021, as the world is made to wait patiently for the much-needed vaccine.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Monthly Outlook for October – Webinar Oct 05

Join our accomplished Senior Research Analyst, Lukman Otunuga, and Market Analyst, Han Tan, to find out. This interactive presentation reveals potential trading opportunities in the month ahead, and reveals what could be in store for Gold, US stocks, the Pound and much more. A live Q&A session will follow, providing you with the perfect opportunity to get your most pressing questions answered by our experts! Don’t miss out on the chance to learn more about what’s moving the markets this October! All the material presented has been approved by the Company’s Key Individual, in accordance to FSCA guidelines.

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Lukman Otunuga is a research analyst at FXTM. A keen follower of macroeconomic events, with a strong professional and academic background in finance, Lukman is well versed in the various factors affecting the currency markets. Read his full profile here.

Tan Chung Han (Han Tan) joined FXTM in January 2019 as a Market Analyst. A highly experienced financial journalist and news presenter with an in-depth understanding of the Southeast Asia and Asia-Pacific regions, Han will be providing valuable insights into local and international market news, as well as macroeconomic trends. Han will also act as the face of the company for these regions by providing market commentary, thereby solidifying FXTM’s reputation as a leading authority on world currency trends. Read his full profile here.

Lukman’s Week Ahead: Market Themes to Watch Out For – Webinar Sep 28

An authority on the markets, Lukman is frequently quoted by leading media across the globe, including the BBC, CNBC, CNN Money and Reuters. Join Lukman for expert insights on the latest market movements, potential trading opportunities and what the week ahead has in store for traders. Enjoy an expert look at: • The key themes driving the financial markets • Technical and fundamental trading ideas on the MT4 platform • How to use the latest FXTM trading signals • Using fundamental analysis to increase your profit potential • What to monitor over the coming week

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FXTM Senior Research Analyst Lukman Otunuga holds a BSc degree in Economics from the University of Essex and an MSc in Finance from London School of Business and Finance. A keen follower of macroeconomic events with a strong professional background in finance, Lukman is well versed in the markets. Read his full profile here.

Trend Reversal – Webinar Sep 29

This insightful presentation focuses on the concept of the trend, as well as the core principles of technical analysis. Participants will learn to identify a trend on the price chart, as well as discover reversal setup patterns. Ali will provide practical demonstrations, including the measurement of double tops, double bottoms and more. Don’t miss out on the chance to learn from the comfort of your own home! All the material presented has been approved by the Company’s Key Individual, in accordance to FSCA guidelines.

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PMI Day for Europe, UK & United States

The PMI is a leading indicator of economic health which essentially surveys purchasing managers at businesses that make up a given sector. Digging deeper, the headline PMI is a number from 0 to 100. Anything above 50 represents an expansion when compared with the previous month while under 50 represents a contraction.

It is worth keeping in mind that the direction of the PMI tends to precede changes in the trend of estimates such as gross domestic product and employment. If the PMI is painting an unpleasant picture, this could be an early warning sign for the economy and currency. Alternatively, a positive print has the potential to boost sentiment and raise confidence over the economic outlook.

All eyes on the Euro PMI

European investors will be keeping a very close eye on the latest eurozone purchasing manager’s index (PMI) data for September.

It will be released at 9 am London time and could offer some insight into the health of the region’s services and manufacturing industries in the face of Brexit related uncertainty and second wave of COVID-19 cases. Manufacturing PMI is expected to jump 51.9 in September from the 51.7 in the previous month while services PMI are projected to remain unchanged at 50.5.

What does this mean for the EURUSD?

The Euro has been punished by a resurgent Dollar this week with prices slipping to a two-month low under 1.1675.

A positive set of PMI figures from Europe could inject Euro bulls with enough inspiration to fight back, potentially pushing prices back towards 1.1750. However, if the data fails to meet expectations, the EURUSD could end up sinking to a fresh two month low around 1.1600.

Will pending PMI compound to Pounds woes?

Sterling has woken up on the wrong side of the bed today, weakening against the Dollar and most G10 currencies thanks to Brexit related drama and rising coronavirus cases. Fears over a second lockdown crippling the UK economy remain rife, and this continues to be seen in not only the Pound’s valuation but FTSE100.

The Pounds outlook this week may be influenced by the pending manufacturing and services PMI data due to be released this morning.

Manufacturing activity is projected to slip to 54.1 compared to the 55.2 in the previous month while services are forecast to decline to 56 from the 58.8 in August. A figure that fails to meet expectations is likely to compound to the Pound’s woes and provide permission for anxious investors to drag the currency lower.

Looking at the technicals, the GBPUSD is approaching 1.2650. A breakdown below this level could open the doors towards 1.2500.

Dollar Index breaks above key resistance

It took a four-letter word to push the Dollar Index higher, will the pending IHS Markit’s ‘flash’ Purchasing Managers’ Indices for US manufacturing and services in September support the upside?

Talking technicals, the Dollar Index is turning bullish on the daily timeframe. The solid daily close above 94.00 could encourage a move towards 94.65 and potentially 96.00. Should 94.00 prove to be reliable resistance, the DXY may decline back towards 92.70.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

The Foundation of Online Trading Part 2 – Webinar Sep 23

Hosted by FXTM Trading Educator Theunis Kruger, this unmissable presentation is designed to empower participants with a structured roadmap to starting their own online trading journey. Register now for the opportunity to discover more about technical analysis and enjoy practical demonstrations. Don’t miss out – sign up today to learn from the comfort of your own home! All the material presented has been approved by the company’s Key Individual, in accordance with FSCA guidelines.

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Rising Covid-19 Cases Keep Risk Assets Under Pressure

Investors are becoming increasingly worried about the momentum in the economic recovery given the resurgent numbers of global Covid-19 cases and lack of progress on a new US stimulus package.

Although President Trump signaled his readiness to back a bigger stimulus bill last week, the Supreme Court’s empty seat left by the passing of Ruth Bader Ginsburg is likely to complicate the matter. The fight between the President and Congressional Democrats on whether to fill the vacant seat now or wait until after the election is expected to lead to more delays in reaching a middle ground on a new fiscal package. Hence, we would expect that the much-needed stimulus will be pushed back until after the US elections.

Given that the list of uncertainties is growing, especially on the pandemic front, risk is now skewed to the downside. We have US elections just around the corner, hefty valuations in growth sectors despite the recent correction and the high stakes of possible national lockdowns in the UK and elsewhere all pointing to waning momentum in the economic recovery. All these factors indicate more volatile times for the next several weeks.

Datawise, investors need to keep a close eye on September’s flash PMIs coming out of Germany, France and the UK this week for further indications on how the big European economies are faring following the strong rebound in early Q3. Signs of weakness here will be a strong signal that the economic recovery is indeed losing its way and further action is needed from fiscal and monetary policymakers.

Currency markets are not yet reflecting the risk aversion seen in equities. The Dollar is trading slightly lower against its major peers, with the DXY -0.15% at the time of writing. The Fed is clearly the winner among other central banks in providing the most accommodative monetary policy, which means the long-term projections for the Dollar remain to the downside. However, if the selloff in US equities accelerates this week, expect the greenback to regain some support.

In commodity markets, Brent fell by 1% after trading slightly higher in early Asian trade. The battle between the bulls and bears is keeping prices rangebound between $40 and $45. At this stage, the demand outlook is far more important than the supply side. That’s why oil traders need to keep a close eye on the trajectory of the virus, especially if it’s going to lead to renewed lockdowns. Gold is also another commodity stuck in a narrow range as traders await new clues on the Fed’s policy approach towards inflation. This could happen later this week as Chairman Jerome Powell may provide new hints when he appears before the Congress on Tuesday.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Stock Trading: Choosing Stocks – Webinar Sep 22

This informative presentation reveals the difference between trading and investing, and explains how to select suitable stocks among the various market sectors. Participants will learn how to assess the health of a company, and comprehend the importance of monitoring company news and developments.

Don’t miss out on the chance to learn from the comfort of your own home!

All the material presented has been approved by the Company’s Key Individual, in accordance to FSCA guidelines.

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Live Market Analysis and Q&A – Webinar Sep 22

Designed for traders of all experience levels, this interactive webinar will teach guests to filter decent from inadequate possible setups in the charts, as well as discover the dangers of over-analysing. Attendees will also be encouraged to participate and ask Theunis their most pressing industry questions during a lively Q&A session. Don’t miss out on the chance to learn from our expert from the comfort of your own home! All the material presented has been approved by the Company’s Key Individual, in accordance to FSCA guidelines.

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FXTM Trading Educator Theunis Kruger has always been fascinated by economics, with a particular interest in ‘wave’ formations and how they can be used to forecast and analyse trends in the financial markets. With a decade of solid trading experience to his name, Theunis now enjoys sharing his knowledge with others.

Stocks Tumble After Powell’s Warnings Over US Economic Recovery

Asian equities are in a sea of red, after US stock indices posted declines on Wednesday. The Dow Jones index was the sole exception, as it eked out a 0.13 percent advance, aided by the climbs in the industrials and financials segments. The US central bank left interest rates unchanged at the record low during their meeting this week, and suggested that rates could be kept near zero until the year 2023, or at least until the US can return to maximum employment and reach the average two percent inflation. Such an ultra-accommodative interest rate environment should keep global equities well bid over the coming years. In technical terms, the Dow may be able to call upon its 50-day moving (MA) average to guide the index higher eventually. However, at the time of writing, the FXTM trader’s sentiment is short on the Wall Street 30 (Mini).

However, stocks bulls may not get the near-term boost that they desire, considering the stalemate in negotiations over the next round of US fiscal stimulus. Despite US President Donald Trump saying on Wednesday evening that he was more open to bridging the gap with Democrats, markets remain doubtful that the next support package can arrive before the elections on November 3. Global investors are also fearing a delayed outcome to the polls, with the political uncertainty further delaying the much-need financial support. Such a major event risk, if it happens, is then likely to trigger heightened volatility in global equities. At the time of writing, US stock futures are edging slightly lower.

The concerns over the delayed US fiscal stimulus are also set to colour the jobless claim data due out later Thursday, with both initial claims as well as continuing claims expected to show slight declines. Yet, with about 13 million Americans still having to rely on unemployment benefits along with the more than 800,000 still being added to that list per week, such figures only underscore the need for more financial support for the vulnerable segments of the US economy. Further signs that the recovery in the US jobs market is stalling, even as the world’s largest economy presses on with its reopening, could trigger more risk aversion which may push the Dollar index closer to its 50-day MA.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Mid-Week Technical Outlook: Gold Waits for Fed Decision

Although the central bank is widely expected to leave interest rates unchanged, much of the focus will be directed towards the economic projections, Powell’s press conference and updated ‘dot plot’ forecast of interest rate moves. Given how this will be the first meeting after the Fed announced its new average inflation targeting (AIT) framework, there could be some volatility in the Dollar as investors sift for clarity during the meeting.

Back in June, policy members projected GDP to decline 6.5% in 2020 while unemployment was seen rising 9.3%. However, the current unemployment rate of 8.4% is already below the medium forecast – something that could allow the Fed to express some confidence over the US economy.

Let’s be honest, the US economy is certainly not out of the woods yet despite the improving unemployment rate.

Rising coronavirus cases in major states coupled with the congressional stalemate over a new fiscal package remain major threats to the country’s economic outlook. Markets expect the Fed to signal that interest rates will remain unchanged and close to zero through the end of 2023! But It will still be interesting to hear Jerome Powell’s thoughts on the latest developments, in addition to how high or how long the Fed will allow inflation to overshoot the 2% target.

What does this all mean for Gold?

Gold seems to be drawing strength from a softer Dollar this morning as anticipation mounts ahead of the Federal Reserve meeting.

Regardless of the choppiness witnessed over the past few weeks, the precious metal remains underpinned by low-to-negative government bond yields, rising COVID-19 cases in the United States and a tired Dollar.

Price action suggests that the precious metal is in search of a fresh directional catalyst to breakout of the current range. This may come in the form of the Fed meeting today.

After the Federal Reserve’s policy shift to let inflation rip, the big question on the mind of many investors is how will the central bank put this policy to action? Clarity on this could provide Gold a tailwind as the metal is seen as a hedge against inflation. Additionally, a dovish sound Fed could weaken the Dollar, further supporting Gold prices.

Looking at the technical picture, strong support can be found around $1910 and resistance around $1985. The solid daily close above the $1952 intraday resistance level may open the doors towards $1985. If $1952 proves to be unreliable support, prices may decline back towards $1910.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

The Foundation of Online Trading Part 1 – Webinar Sep 17

Hosted by FXTM Trading Educator Theunis Kruger, this first installment of this unmissable presentation is designed to empower participants with a structured roadmap to starting their own online trading journey. Register now for the opportunity to discover the three foundational pillars of online trading and the nuts and bolts of trading the foreign exchange market. Don’t miss out – sign up today to learn from the comfort of your own home! All the material presented has been approved by the company’s Key Individual, in accordance with FSCA guidelines.

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FXTM Trading Educator Theunis Kruger has always been fascinated by economics, with a particular interest in ‘wave’ formations and how they can be used to forecast and analyse trends in the financial markets. With a decade of solid trading experience to his name, Theunis now enjoys sharing his knowledge with others.

Dollar Slips as Market Mood Improves

It is starting to feel like any vaccine news is good news for investors and this euphoria continues to reflected across global stocks, currency and commodity markets! A major breakthrough in the fight against COVID-19 that produces a cure could inject global markets with a potent dosage of positivity while elevating investor confidence to a new level. Such a development could see the tired Dollar crumble across the board as market players rush to riskier assets at the expense of safe-havens.

The past few months have been rough for the Greenback. It has depreciated against every single G10 currency since the start of Q3.

Although the Dollar’s performance in September thus far has offered some hope to bulls, this could be a technical rebound before bears jump back into the driver’s seat in Q4.

Fundamentally, the Greenback remains pressured by rising coronavirus cases in the United States, repeated rate cuts from the Fed which have eroded differentials between the US and other developed economies and risk of inflation surpassing 2% next year. However, given the Dollar’s safe-haven status and title and world’s reserve currency, it will be interesting to how low the currency falls before a bottom is formed.

Looking at the charts, the Dollar Index is turning increasingly bearish on the monthly with a breakdown below 92.00 opening a path towards 88.60.

We see a similar theme on the weekly charts with prices respecting a bearish channel. The consistently lower lows and lows highs reconfirm the trend, while lagging indicators such as the MACD and moving averages reinforce the bearish setup.

Zooming into the daily, support can be found around 92.20 while there is resistance at 94.00. A breakout/down setup could be in play with 93.00 acting as pivotal level. Weakness below 93.00 may trigger a drop towards 92.20. If 92.20 is breach, the next key level of interest will be found around 91.70.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

A Not-So-Happy Birthday for OPEC

OPEC’s birthday week holds key events that could influence the near-term performance of Oil prices. Later today, OPEC is set to release its Monthly Oil Market Report, complete with its outlook on global demand and output. Then on Thursday, the OPEC+ Joint Ministerial Monitoring Committee is scheduled to meet and discuss the efficacy of its supply cuts, while assessing the level of compliance among members.

Recall that back in April, OPEC+ agreed to an unprecedented supply cuts deal, shaving off 9.7 million barrels per day (bdp) from its collective output, only to then ease off by about two million bpd starting last month in hopes that global demand will stage a sustained recovery.

However, things haven’t quite panned out as they hoped.

Both Crude and Brent are coming off back-to-back weekly drops for the first time since April. On a month-to-date basis, Brent and WTI futures have fallen by over 12 percent respectively, leaving both to be ‘scooped up’ by their 100-day simple moving averages. Both these instruments are also trying to claw themselves out of the ‘oversold’ domain, judging by their respective 14-day relative strength indices having dipped into sub-30 levels recently. At the time of writing, Brent and WTI futures are about 35 percent lower so far in 2020.

The slide in Oil prices comes amid signs that the global demand recovery appears to have stalled. Diesel stockpiles in Singapore are at their highest since 2011, while Saudi Arabia, Iraq, and other Gulf producers have slashed the pricing on their respective crude grades to the US and Asia. Oil supermajor, BP, recently cited the risk that global demand may never recover to pre-pandemic levels, while traders are buying up tankers in case they need to hold crude supplies for months. According to CFTC data, short-selling on Oil has risen to its highest levels since the historic crash in April this year, when WTI futures were sent into negative territory.

This week, investors will be monitoring how much sway the alliance could still have over global markets, even as these major Oil-producing nations aim to shore up prices. While its 60th birthday celebrations had to be put on hold due to Covid-19 restrictions, OPEC may not be able to hold off further intervention for much longer if Oil prices keep unwinding more of its recovery from the past five months.


Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

50-Day Moving Average to the Rescue

This technical indicator calculates the closing price over the past 50 days and averages it out, so as to give the investor a better idea about the asset’s recent trend.

This week, it played its role as a support level, and it was evident in multiple assets.

In recent days, the Nasdaq posted its fastest-ever correction from a record high, falling by just over 10 percent within three trading days. The index dipped below its 50-day simple moving average (SMA), only to rebound and register its best day since April. Market participants saw the selloff as an opportunity to “buy the dip”, and were unfazed by the recent rout that wiped out US$ 2 trillion from stock markets.

The same pattern was also evident in the S&P 500, as it bounced off its 50-day SMA before advancing two percent, which was the benchmark’s biggest single-day advance since June 5th. This technical indicator has proven to be a reliable support level, showing its worth two other times since the index broke back above the 50-SMA in April.

And this trend wasn’t just confined to riskier assets this week.

Even Gold exhibited the same pattern on Tuesday, with Bullion bulls drawing comfort from the fact that, since end-March, forays below its 50-day SMA have been short-lived. The precious metal is now on course to register its 8th consecutive quarter of gains. If Gold can post 5 more quarterly gains in a row, it would beat the run of 12 that was set between 2008 and 2011.

Gold has been able to take advantage of the weaker Dollar overnight, along with its traditional role as a hedge against inflation, considering that real yields on 10-year US Treasures remain mired in negative territory close to minus one percent. Still, Gold and the Dollar index (DXY) may see near-term gyrations, pending the US inflation data due Friday.

Other key events that could move markets before the trading week is over include the European Central Bank policy decision and the US weekly jobless claims, both due today. Ongoing Brexit negotiations, as well as discussions over the next round of US fiscal stimulus could also sway global sentiment.

Amid such uncertain times, investors can perhaps draw comfort from the notion that some things can still be relied on.

Open your FXTM account today


Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Support and Resistance Zones – Webinar Sep 15

This insightful presentation explains the concept of support and resistance zones and how to identify them on MT4. Participants will also discover trendlines and Fibonacci retracement, as well as the importance of risk management. Ali will provide practical demonstrations, ensuring guests understand how these concepts work throughout different scenarios. Don’t miss out on the chance to learn from the comfort of your own home! All the material presented has been approved by the Company’s Key Individual, in accordance to FSCA guidelines.

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FXTM Trading Educator Ali Mortazavi has an academic background in Economics, with over five years of experience in the financial markets. Ali previously gained invaluable career experience as a stock market analyst and macroeconomic analyst. Since joining FXTM, he has continued to pursue his passion for analysis and trading education.

Mid-Week Technical Outlook: Dollar Bulls Stage a Comeback

The former king of the currency markets is on a mission to reclaim dominance, appreciating across the board after a sell-off in stock markets prompted investors to rush towards safe-haven destinations. Dollar bulls seem to be deriving strength from not only concerns over a possible delay in the Covid-19 vaccine but the recent U.S jobs report showing a decline in the U.S unemployment rate and jump in U.S Treasury yields.

With the Dollar Index trading at levels not seen in four weeks around 93.60 and appreciating over 1.5% since the start of September, are bulls back in the game?

Looking at the technical picture, a rebound may be on the cards on the weekly timeframe following the solid move above 93.00. A weekly close beyond this point could suggest an incline towards 94.00 and 96.00 in the medium term. If 94.00 proves to be reliable resistance, the DXY may find itself sinking back towards 93.00 and 91.15.

On the daily timeframe, prices remain in a wide range with support at 92.20 and resistance around 94.00. A daily close above 94.00 could inject bulls with enough inspiration to target 94.65 which then opens the doors towards 93.00 and beyond.

The question on the mind of many investors is whether the Dollar is able to maintain this current burst of confidence and majesty across the FX space. Although the currency is still considered as a safe-haven currency and the worlds reserve currency, it has weakened against every single G10 currency this quarter.

Negative themes in the form of rising coronavirus cases in the United States and political uncertainty ahead of Novembers presidential election may limit the Dollar’s upside gains. Given the fundamental forces influencing the Dollar’s longer-term outlook, prices still have the potential to decline with a move below 92.00 on the monthly timeframe acting as an early signal.

Pound gets no love as Brexit drama intensifies

Earlier in the week, we discussed the possibility of the Pound extending losses on Brexit related uncertainty and rising fears around the United Kingdom leaving the EU with no deal by the end of 2020.

Since then, it looks like nobody wants anything to do with the Pound which has tumbled across the board.

Buying sentiment towards the currency hit rock bottom after the government renewed the prospect of a no-deal Brexit, with Boris Johnson insisting Britain would “prosper mightily” with or without a deal.

Looking at the technicals, prices are heavily bearish on the daily charts with the first level of interest at 1.2900. Weakness below this level may trigger a decline towards 1.2730.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Crude’s Golden Cross May Be a Short-Term Dud

Having flirted recently with the $44/bbl handle and reaching a near 6-month high in late August, crude has since pulled back on signs that the demand recovery may not be as robust as expected.

From a technical perspective, Oil prices have formed a ‘golden cross’, with its 50-day simple moving average just about breaking above the 200-day simple moving average. Such a technical event typically heralds more gains for the asset. However, the fundamental outlook remains mired in downside risks, which has served as a drag on prices.

The concerns over the waning demand were evident in Saudi Arabia’s decision to lower its prices for October sales of its Arab Light grade to Asia, which is the largest oil-importing region in the world. Asian refiners appear hesitant to import more Oil, with India’s transport fuel demand in July and August still over 20 percent lower compared to the same period last year.

For WTI crude in particular, with the summer road trip season in the US coming to a close, transportation fuel demand is expected to be dampened as the world’s largest economy remains a long way from fully reopening. According to data from the US Energy Information Administration (EIA), US oil demand is stuck around 85 percent of 2019’s levels. Saudi Aramco also lowered the prices of its shipments to the US for the first time in six months.

Keep in mind that the above events are coming at a time when OPEC+ had decided to pare back its output cuts from 9.7 million bpd to 7.7 million bpd starting in August. Yet there are signs of rising inventories around the world. Traders are looking to store crude in tankers out at sea in Northwest Europe and the Mediterranean. They hope to sell the Oil that’s currently stored at a higher price in a few months.

Yet, such profits remain contingent on a global economic recovery that is still uncertain. Traders will be getting more crucial data over the coming days to help refine their outlook on Oil markets. The EIA will be releasing its short-term energy outlook on September 9, before announcing the US inventory report on September 10.

What is more certain is that China will have a major role in helping to support global Oil markets. With the world’s second largest economy leading the way in the post-pandemic era, its recovery will help to chip away at the excess output and inventories. Although China’s imports of the commodity have not been able to replicate the record high in June of nearly 13 million barrels per day (bpd), its August imports still registered a 12.6 percent year-on-year increase to about 11.18 million bpd. China’s air travel is also recovering rapidly, with the levels of Oil use in the world’s largest importer rising by almost 20 percent in July!

But China cannot do it all alone. The rest of the world has to pull their weight in getting a grip on their respective outbreaks, and getting their domestic economies back on track. Then only will Oil’s upward climb be more assured, unless we get a vaccine over the near term.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

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