Accessing FXTM Trading Signals – Webinar Nov 03

This presentation introduces FXTM trading signals and reveals how they could potentially benefit your trading. Attendees will explore the various ways that these signals can be used as an indicator for possible higher time frame momentum, as well as in conjunction with other trading methods and strategies. Theunis will provide practical examples and demonstrations, as well as answer your most pressing industry questions. Don’t miss out on the chance to learn from one of our experts 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.

Biden Victory, Divided Government

The odds for a Trump second term have narrowed as Joe Biden won Wisconsin and Michigan overnight, two key swing states which puts him within six electoral votes of the Oval Office.

All the major US stock markets closed firmly in positive territory with the tech-heavy Nasdaq leading the way, after gaining as much as 3.5% and futures continuing to point up. Asian markets are similarly upbeat with the Nikkei climbing 1.3% and taking the benchmark above 24,000 for the first time since January.

Investors have returned to the top performing parts of the market – namely the Tech megacaps – as the prospect of lower stimulus spending and US growth draws ever closer. Results out of Nevada later today could prove the tipping point for the election result, with the state due to report by noon time in New York.

As we said yesterday, the reflation trade – a big Democratic win driving a bumper stimulus package to fuel growth, and potentially inflation – is being unwound with bond selling driving yields aggressively lower.

The US 10-year yield has dropped over 20 basis points over the last 24 hours, a huge move, as markets look towards a Biden victory but divided Congress. There will be no tax hikes, no infrastructure spending and no green energy spending as the Democrat’s domestic policy becomes a lame duck.

Dollar sinking, FOMC tonight

King Dollar sits at the bottom of the major currency pile this week with traders re-pricing a Biden presidency and pushing EUR/USD to 1.1740. Markets will focus on the Fed meeting later today and its assessment on the economy, given the new corona wave and for any guidance on future action, especially with regard to bond buying.

EUR/USD whipsawed around yesterday but any dollar gains were soon blocked, and the pair returned within its established range. The 1.1612 level proved to be strong support and the 50-day Moving Average looms above around 1.1775 as first resistance, coinciding with yesterday’s high.

Bank of England boosts GBP

Lest we forget, it’s Super Thursday and this morning’s BoE surprised some in the market by launching more stimulus than expected, in an effort to boost consumer spending. The MPC voted to buy another £150 billion of government bonds pushing the total to £895 billion, while it left rates unchanged at 0.1% and said it did not consider voting to impose negative rates. The Bank forecast a double-dip recession for the UK following the second lockdown being imposed today.

There are still ‘serious gaps’ between the two sides in Brexit talks according to the EU’s Barnier, as a lack of progress pushed EUR/GBP earlier in the session back into the recent range. The 50-day Moving Average has capped gains above 0.9068, with today’s central bank action pushing prices back to the lower part of that range. Brexit talks are set to resume next week as the mid-November ‘final’ deadline approaches – watch for the headlines!

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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.

US Elections: Bye Bye ‘Blue Wave’?

Expectations for a landslide win for Democrats, as had been priced into US equities in the first two trading days of the week, and indeed over recent weeks barring the selloff in late October, have not been vindicated. With both President Trump and former vice-president Joe Biden racking up easy wins early on election night, the jury is still out at the time of writing for key battleground states such as North Carolina, Georgia, Pennsylvania, Wisconsin, and Michigan.

Judging by the initial market reaction, investors seem to be expecting the status quo be maintained, not just in the makeup of the US government, but also in stock markets. The US Senate could still be a deeply divided chamber, which could slow any passage of fresh US fiscal stimulus. Such prospects are prompting equities to fall back on a stalwart to push benchmark indices higher. Nasdaq 100 futures hit limit up, briefly halting trading, before paring gains. The Nasdaq 100 Minis are surpassing gains in the futures contracts for either the Dow Jones or the S&P 500.

The smattering of data in hand isn’t stopping some segments of the markets from trying to pre-empt the final result. The Dollar index’s initial attempt to reclaim the psychologically-important 94.0 handle was also indicative of the dampened expectations that the US Senate will adopt an obvious blue hue. The Greenback is advancing against all of its G10 peers, and its gains are in turn suppressing Gold prices.

To be clear, these moves in the DXY and Nasdaq 100 futures are not enough to break out of recent trends. This presidential race could still throw up a host of outcomes. Biden could still be declared the eventual winner. It’s also entirely possible that President Trump could still get a second term, and avoid becoming the first one-term US President since George H.W. Bush in 1992. Such odds set up a potentially blockbuster finale to the US elections, with these slower-counting states set to have a big say on who will hold the POTUS title over the next four years. And whoever wins the upcoming presidential elections will have a major say on how various asset classes perform over the next four years.

Until we reach a conclusive end the 2020 US presidential election, investors must continue braving this fog of political uncertainty. If there are growing signs pointing to a contested outcome, riskier assets may struggle to hang on to recent gains, to the benefit of safe haven assets.

But for now, the wait continues.

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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.

Buckle up for a Wild Market Ride

Multiple factors deterred investors from taking risk including renewed lockdowns across several nations in Europe, growing fears of a double-dip recession and most importantly, the chances of contested US presidential elections.

The world may stay awake Tuesday night and Wednesday morning to discover who will lead the US for the next four years. However, the increase in mail-in ballots and the time it takes to count them may delay the announcement for several days and possibly weeks if early counted votes are indecisive. That’s why investors need to be prepared for a wild ride in market volatility.

With Democratic challenger Joe Biden eight to ten points ahead nationally and continuing to lead narrowly in key swing states, the former vice-president appears to be in a stronger position heading into tomorrow’s Election Day. However, memories of the 2016 presidential election remain fresh in investors’ minds when Trump battled against the odds and won the presidency despite losing the popular vote.

While a Biden victory is now considered a more bullish scenario for US and global equity markets with massive fiscal stimulus and less disruptive trade relations accompanying his presidency, the challenger’s policies may hit a roadblock if Democrats cannot take hold of both houses of Congress.

However, a ’blue wave’ can initially take markets to new heights. Our base-case scenario for a blue sweep is value stocks outperforming growth, emerging markets outpacing developed ones and a weaker dollar due to the massive fiscal deficit and debt issuance. The performance of the big tech names is likely to be very interesting under that scenario as higher taxes and more regulation should act as a drag, but on the other side of the equation, we still have a virus showing no signs of slowing down and hence tech companies will continue to benefit.

A Biden win and a Senate under Republican control is likely to be the worst outcome for investors, at least in the short run. Expect to see a further steep correction in US equities with a possible 10 to 15% drop. That would be mainly due to delays in passing new bold stimulus plans. However, that also largely depends on the virus trajectory. If a vaccine becomes available by year-end or early 2021, the US economy can continue to recover but at a slower pace than if supported by fiscal measures.

The least anticipated outcome is a Trump win and Republicans continue to hold the Senate. That could be the second-best case scenario, in which US equities continue to rise but the strategies would differ, in that growth continues to outperform value and the beaten-down energy sector likely recovers while alternative energy takes a back seat for a while. Oil prices would be volatile in the weeks ahead.

Whatever the outcome of the election, let’s hope the results will be known on the night itself or Wednesday. Otherwise, volatility will remain elevated with voting closer than the polls predicted and the increased potential for a refusal of the results, which would mean several weeks or months of intense uncertainty.

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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.

Live Market Analysis and Q&A – Webinar Oct 29

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.

Monthly Outlook for November – Webinar Nov 02

This interactive presentation reveals potential trading opportunities following the US Presidential outcome on November 3rd, and reveals what could be in store for the USD, Gold and the S&P 500. 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 November! 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 Lukman’s full profile

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 Han’s full profile

Virus Is Out of Control, So Are the Markets

The S&P 500 plunged 3.5% in its biggest drop since June, with all sectors falling more than 2%. Technology stocks were hit the hardest falling 4.38%, followed by Energy and Industrials which declined 4.18% and 3.47% respectively. Those seeking to protect their portfolios through put options are now finding it much more expensive, with the VIX index closing above 40 for the first time since 11 June.

While US election uncertainty remains a considerable factor impacting risk assets, the selloff this time was driven by fears the pandemic is entering a new phase. The US, Italy, Spain and many other nations are seeing new daily records of Covid-19 infections and hospitals are filling up at a very fast pace. Over the past several days it has become evident that the virus is becoming out of control and the only way to fight back is through new lockdowns. France have already announced a second national lockdown until at least the end of November and Germany will impose an emergency lockdown which includes the closure of restaurants, gyms and theatres. As a result, the German Dax and French CAC fell 4.17% and 3.37% respectively.

US futures indices are currently indicating a rebound of more than 1% after yesterday’s sharp selloff, but that can be put down to bargain buying rather than a shift in fundamentals. Expect volatility to remain elevated for the next several days.

With another stimulus package dead and buried for the time being, US consumers who are the biggest driver of the economy will have more reasons not to spend, especially if new State lockdowns emerge leading to more job firing. Today’s Q3 GDP report is expected to show a 31% increase in real growth but given that analyst estimates range from 8% to 37.1%, there is room for surprise. Although this data is a lagging indicator, it can still lead to big market moves if it deviates largely from expectations. It will require a significant positive surprise to encourage investors to buy the dips, especially given that Q4 doesn’t look promising with the latest developments.

With the chances of a double dip on the rise, the European Central Bank is under more pressure to act given that several countries are undergoing new lockdowns and there still doesn’t seem to be any cohesive fiscal response to the pandemic. We are expecting the central bank to hold fire for now and set expectations for December easing, but given the fast pace of deterioration in the region we cannot rule out the announcement of new easing measures. The Euro remains under significant pressure whatever the outcome from the ECB meeting today. However, if a new easing package is announced, we are likely to see EURUSD drop towards the 1.15 – 1.16 range.

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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.

Bullish Yen Through Year-End

Such expectations are captured in the uptrend evident in the FXTM Japanese Yen index, which reflects the JPY’s performance against a basket of six major currencies, namely the US Dollar, Euro, Pound, Australian Dollar, New Zealand Dollar, and the Swiss Franc, all evenly-weighted. After registering its lowest level since 2019 on August 31st, this index has gained about 3.2 percent and is trading well above its 50-day simple moving average.

Compared to all other G10 currencies, markets appear most bullish on the Japanese Yen for the remainder of the year, judging by the positioning in the 25-delta risk reversals. Investors are well aware that November features major event risks such as the US presidential elections and also the final stretch of post-Brexit trade negotiations, and that both events have the potential to deliver outsized shocks across global markets. Coupled with the troubling resurgence of Covid-19 across the US and Europe, a phenomenon which threatens to derail the global economic recovery, no surprise then that demand for the safe haven Yen has been rising of late.

A rising tide of risk aversion over the coming weeks could see the FXTM JPY index breaking above the 103.317 mark for the first time since June, with a higher high adding further confirmation to its uptrend.

BOJ expected to hold policy rate

Keep in mind that the Bank of Japan is set to announce its latest monetary policy decision on Thursday, although the central bank is expected to leave things unchanged. The second wave of Covid-19 cases in Japan is abating, allowing the country to resume its economic recovery which diminishing the need for more financial support.

Still, any revisions to the BOJ’s GDP and inflation outlooks for fiscal 2020 will be closely monitored to assess the state of the world’s third-largest economy, and any major shift in expectations could be reflected in the JPY’s performance this week.

The downtrend in USDJPY is still very much intact, with the 50-day SMA guiding the currency pair downwards. USDJPY could retest the 104.0 psychological level over the coming days, especially if the US Dollar resumes its weakening bias once there’s more certainty after the US presidential elections.

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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.

FXTM Invest Applied – Webinar Oct 28

This presentation is designed for those keen to learn more about our innovative copy trading programme FXTM Invest and how it can contribute to their long-term portfolio. Participants will receive a detailed overview of the programme itself, as well as simple risk management scenarios and possible outcomes. Finally, attendees will also have the chance to learn more about FXTM’s excellent array of educational resources. Don’t miss out on the chance to learn from one of our FX experts 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.

Investors Bracing for Busy Week Ahead

Fiscal stimulus had been the dominant topic over the past few days and the chances of passing any kind of package ahead of next week is declining, while coronavirus infections hit records in the US and several European countries.

US political drama will continue to be the major market moving factor for the upcoming week and probably beyond. So far betting odds continue to show Biden in the lead with a 66% chance of winning the election, according to RealClearPolitics. However, chances of a blue wave have dropped to 50% suggesting a more volatile market reaction to the result on 3 November. Markets still seem positioned for a Democratic sweep, given how infrastructure and renewable energy stocks have surged over the past four months relative to sectors dependent on a Republican win such as energy, financial and defense stocks.

Currency traders also share a similar belief, with the Dollar lower against most major peers year-to-date, and expecting the inverse correlation between the Greenback and risk assets to continue to hold over the foreseeable future.

Investors should be prepared for more noise across asset classes as we approach Election Day, especially if Trump manages to tighten the race with a few days remaining.

Away from politics, it is a big week for earnings. Tech giants Apple, Amazon, Alphabet and Facebook are among the 186 companies due to announce third quarter results this week. If positive earnings surprises continue to hold at around 84%, that could provide a further boost to large cap stocks, but if virus infections hit new records this should cap the gains.

Monetary policy meetings are also on the radar of investors this week with the Bank of Canada Wednesday, and European Central Bank and Bank of Japan both announcing decisions on Thursday. Deflation has become a major threat in Europe and despite the ECB increasing the size of its Pandemic Emergency Asset Purchase Program (PEPP) to €1.35 trillion from €750 billion, economic activity in the Eurozone appears to stall, according to the latest service PMI’s. The absence of a cohesive fiscal response is making the job harder for the ECB, and while challenges continue to mount from rising Covid infections, a Brexit trade deal and the risk of a double dip recession, the central bank is expected to pave the way for more stimulus. However, this won’t likely come before December.

The Bank of Japan is also expected to keep policy unchanged on Thursday, but the downgrade in economic forecasts will be crucial for the Yen and Japan’s equities.

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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.

Big Week for Big Tech

On October 28, the CEOs of Facebook (Mark Zuckerberg), Google (Sundar Pichai), and Twitter (Jack Dorsey) are set to testify before a Senate hearing about how these tech giants manage hate speech, misinformation, and privacy on their respective platforms. This will be a closely-followed hearing, considering that it comes mere days before the hotly contested US presidential elections on November 3.

Then, a day after the Senate hearing, Amazon, Apple, Alphabet (Google’s parent company), Facebook, and Twitter are all scheduled to release their respective Q3 results after US markets close on October 29.

Given that these tech titans are set to feature prominently in market headlines this week, such prospects may make for volatile trading, and the price swings may be captured within the FXTM Social Media index.

FXTM Social Media Index beats major US benchmarks

This index, which comprises four, evenly-weighted constituents, namely Google, Facebook, Twitter, and Snapchat, has nearly quadrupled the gains seen in the major US benchmark indices so far in October. Since US markets closed on September 30th, the FXTM Social Media index has soared by 11.5 percent. Compare that to the Nasdaq Composite index, which managed 3.4 percent during the same period, while the S&P 500 index has a month-to-date climb of 3.04 percent.

The FXTM Social Media index’s gains of late were amplified by Snapchat’s inclusion, while the stock is absent from the Nasdaq 100 and Nasdaq Composite indices. Shares of the loss-making social media platform have soared by an astonishing 65.34 percent on a month-to-date basis, setting multiple record highs after reporting a blowout Q3 quarterly earnings last week.

At home and bored: Social media’s dream

Advertisers ramped up their spending on Snapchat, knowing that users are spending a lot more time on the platform amid the pandemic, given the disruptions to their daily routines and physical interactions. Snapchat has already added 31 million new daily active users in the first nine months of 2020, all while managing to steer clear of the negative headlines that have engulfed other platforms such as TikTok and Facebook.

Should Alphabet, Facebook, and Twitter also announce a Snapchat-esque Q3 earnings bonanza, one that’s fueled by ad spending, that could spell even more upside for the FXTM Social Media index before the week is up, provided that the Senate’s grilling of Zuckerberg, Pichai, and Dorsey on Wednesday do not heighten concerns surrounding these companies.

Potential slips for social media

However, from a technical perspective, the FXTM Social Media index could be headed for an immediate-term pullback, given that its 14-day relative strength index is closing in on the 70 mark, which typically denotes overbought conditions.

And the fundamentals of these social media giants could be clouded by the bipartisan campaign against Big Tech. Note that Zuckerberg and Dorsey are set to attend a separate Senate hearing on November 17th, which is two weeks after the US elections polling day, while Google is contending with a massive antitrust lawsuit by the US Justice Department.

While the legislative scrutiny could weigh on the performance of social media stocks, these downside risks may not be fully manifested for years more. As long as the tailwinds in this pandemic era remain intact, there could potentially be more gains to be had while waiting for these dark regulatory clouds to dissipate.


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.

Lukman’s Week Ahead: Market Themes to Watch Out For – Webinar Oct 26

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.

Earnings Preview: Tesla in Focus

Such mouth-watering gains have made it the best performer on the Nasdaq in 2020 and golden child of the automaker industry.

This is incredible stuff, especially when considering how the coronavirus pandemic has severely punished the majority of stocks across the globe. Although the phenomenal rally witnessed over the past few months make Tesla one of the star performers in 2020, the upside has lost momentum recently with shares on their longest losing streak since mid-March. Stocks tumbles as much as 2.4% on Tuesday, bringing losses to losses to as much as 8.3% over the past four days – the biggest fall over such a period since September 25.

All eyes will be on Tesla’s latest earnings report which is scheduled to be released after US markets close on Wednesday. Wall Street is expecting earnings of $0.56 a share, up from the $0.37 seen in the same period last year. Revenue is pegged at $8.26bn, a hefty 31% increase on last year’s $6.3bn. If the company is able to dish out an upside surprise, this could inject Tesla bulls with enough inspiration to elevate prices back to all-time highs.

Digger deeper, Tesla already offered an appetizer over what to expect for its earning after revealing that it produced 139,000 cars during the third quarter of 2020. This was over 50% more than Q2 thanks to a jump in demand for the Model 3 and new Model Y. While such a performance would be a welcome development for stocks, investors are more concerned whether Tesla will be able to deliver 500,000 vehicles this year.

The million dollar question is whether Tesla can deliver 500,000 cars in 2020. 318,777 cars have already been created during the first three quarters of 2020. This means that Tesla needs to sell at least 181,223 cars during the final quarter of 2020 to achieve this ambitious target. Whatever the outcome of the pending earnings report, it will certainly have an impact on Tesla stocks.

Talking technicals, prices have been under pressure on the past few weeks after investors reversed from Tesla stocks following Elon’s Musk’s flat Battery Day. A sense of anticipation is mounting ahead of the earnings report. Will Tesla bulls be instilled with enough inspiration to send prices back towards $500 or will a disappointing report bring bears back into the picture? Time will tell.


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.

Stimulus Hopes Keep Stocks Afloat

The dollar was little changed against its major peers, gold traded slightly higher and crude oil fluctuated ahead of today’s OPEC+ Joint Ministerial Meeting.

China’s Q3 missed expectations

China’s GDP grew 4.9% in Q3 compared to last year, coming up short of market expectations for 5.2% growth. Despite the miss, China remains the only major economy to post growth for the first nine months of 2020. Other indicators are also pointing towards a broader recovery which could be reflected in GDP for the final quarter of the year, if sustained.

Fixed asset investments turned positive for the year, increasing 0.8% in the first nine months of 2020. Retail sales rose 3.3% year-on-year in September in a clear indication that consumers are confident enough to open their wallets again. Finally, also released today was the industrial output figure which was another bright spot, growing 6.9% in September, the fastest since December 2019. This should make China more appealing to investors as fundamentals are catching up with stock market performance, while most major economies still have a tough road ahead towards full recovery.

Stimulus Hope

Market participants are fed up with US politicians as the deadline for coronavirus relief continues to be pushed further out, with House Speaker Nancy Pelosi setting this Tuesday as the latest line in the sand. A stimulus package is certainly required at the moment with US infections topping 50,000 for a fifth straight day while millions of Americans need aid with rising economic stress. Given recent history, it’s hard to say whether a bill will be approved or not, however the earlier the bill is signed the better it is for households, the economy and equity markets. The slight rise in US Treasury yields and futures are signs of optimism that a deal could be reached before 3 November, but chances of disappointment remain high.

Prepare for a no Brexit deal

The pound moved sharply lower on Friday after British Prime Minister Boris Johnson announced that it’s time to prepare for no trade deal. GBPUSD declined almost 100 pips in a matter of less than a minute after Johnson’s announcement. However, the currency managed to pare the losses throughout the day and closed where it started. Many traders might have been shocked by the Pound’s reaction, especially those who are not used to Johnson’s Brexit statements. Currency markets are simply saying do not believe what he says, as it could be just another tactic he’s using to get some concessions from the EU.

A no Brexit deal means that the Bank of England would take interest rates into negative territory and 10-year yields would drop below zero (they are currently 18 basis points above zero). That’s clearly not priced into Sterling. Markets still believe the base case scenario is a last-minute deal which could send GBPUSD towards 1.35. However, if they are wrong, get ready for a 1,000pip drop.


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.

Candlestick Trading Strategies – Webinar Oct 22

Designed for both new and intermediate traders alike, this presentation will teach attendees about the most popular candlestick reversal patterns and reveal the trading psychology behind each one. Guests will discover the Tweezers, Harami and Piercing patterns, among others. Ali will also provide participants with practical, step-by-step demonstrations in order to help traders improve their overall trading confidence. 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.

US Banks Get No Love

Net income for these five firms came in at US$23.2 billion in Q3, which is more than triple the figures reported for Q2. This profit recovery appears to be happening at a faster clip compared to the two years it took for major lenders to stage an earnings recovery during the Global Financial Crisis.

Yet, markets don’t seem to care.

The S&P 500 has shed 1.29 percent over the past two days, with the financials sector being the worst performing sector on the US benchmark index for the period. The S&P 500 Financials index has fallen 2.91 percent over Tuesday and Wednesday combined. On a year-to-date basis, financial stocks are still lower by 19.52 percent, beating only energy stocks which are almost nearly 50 percent lower compared to where they were at the start of 2020. This despite the S&P 500 itself being up nearly eight percent so far this year. At the time of writing, the S&P 500 Minis point to further losses at the Thursday open, although the FXTM Trader’s Sentiments remain net long on this instrument.

The price movements of banking stocks do not correlate with what’s being reported out of Wall Street Banks, which once again demonstrates the notion that fundamentals hold very little sway in today’s markets. Despite these major financial institutions proving their ability to generate earnings even amid a pandemic and a recession, investors are hardly flocking to financial stocks at the moment. Even after Goldman Sachs reported a record earnings per share of US$9.68, which was nearly double of what markets had predicted, yet the bank’s stock only managed a meagre 0.2 percent increase on Wednesday.

Perhaps investors are wary that the US$50 billion in loan loss provisions will eventually have to all be used up in the not-so-distant future. Already major corporations have announced more layoffs are set to happen in the remainder of the year, which could drive up the number of loan defaults.

The US weekly jobless claims data due later today would offer another signal over the state of the jobs market. Markets are expecting 825,000 initial jobless claims in the past week, with about 10.5 million Americans still receiving unemployment benefits. Should the unemployment rate start to tick up from September’s 7.9 percent in the absence of more US fiscal support, that could weigh negatively on US banking stocks, which are seen as a proxy to the overall health of the US economy.

Next up is Morgan Stanley, which is due to announce its Q3 results before US markets open on Thursday. Perhaps even a positive earnings surprise may not have a desired impact on Morgan Stanley’s shares, given how markets have scarcely reacted to the positive results from Morgan Stanley’s larger peers in recent days. Morgan Stanley remains some 12 percent lower compared to its 2020 high.

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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: Are Dollar Bulls Back in Town?

Dollar bulls were injected with a fresh dosage of inspiration yesterday after the IMF warned that COVID-19 would cause “lasting damage” to the global economy. Appetite towards the Greenback was sweetened further by dimming hopes for more fiscal stimulus before the U.S election after House Speaker Nancy Pelosi a $1.8 trillion relief proposal from the White House. With rising coronavirus cases across the globe draining investor confidence and fostering a sense of unease, king Dollar could make a return in Q4.

What are the technicals saying?

Well, the Dollar Index (DXY) is under pressure on the monthly timeframe. It is still nursing deep wounds inflicted during Q3 as vaccine optimism and stimulus hopes turbocharged risk sentiment. There is something about the 94.00 resistance which has acted a dynamic level over the past few years. A solid monthly close above this point could open a path back towards 97.50 in the medium term. Alternatively, if 94.00 proves to be reliable resistance, then prices may slip back towards 92.00.

Weekly timeframe paints similar picture

Prices remain in a downtrend on the weekly charts as there have been consistently lower lows and lower highs. Prices are trading below the 20 Simple Moving Average while the MACD trades to the downside. If Dollar bulls are unable to break above the 94.80 lower high, the next key point of interest may be found around 92.00. Although technicals are in favour of bears, the fundamentals could throw the Dollar a much-needed lifeline.

A quick peek into the fundamentals

Speaking of fundamentals, US inflation rose in September at the slowest pace in four months, signalling little threat of rising inflation as the US economy heals. Consumer prices 0.2% from the prior month after 0.4% gain in August. So much for the Feds policy shift to let inflation rip higher….

Investors will direct their attention towards the latest unemployment claims data on Thursday and retail sales report on Friday. After increasing by a tepid 0.6% month-over-month in August, retail sales are forecast to rise by 0.7% in September.

Back to the technicals

It’s all about the 94.00 resistance level on the daily charts. Bulls need to secure a solid daily close above this point to encourage a move towards 94.65 and 96.00. Prices are trading below the 20 and 50 SMA but the MACD trades to the upside. If the risk-off mood drags on amid fading stimulus hopes, election jitters and rising coronavirus cases, king Dollar may defy technicals by exploding higher.

Commodity spotlight – Gold

Just can’t help but feel that it has been the same old story with Gold.

Prices remain rangebound despite the stimulus developments and rising coronavirus cases across the globe. If the Dollar continues to weaken on dimming stimulus hopes, this could drag Gold prices lower despite the risk-off mood. Looking at the technical picture, the metal is down almost 2% this week with a breakout/down setup in play. If $1890 proves to be unreliable support, prices could decline back towards $1858 and $1845. Alternatively, an intraday breakout above $1935 could open the doors towards $1965.

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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 Moving Average Spring Strategy Applied – Webinar Oct 14

Designed for both new and intermediate traders alike, this presentation will teach attendees how to use this popular strategy on MetaTrader 4 using a variety of time frames on both live and historical live charts. Theunis will also demonstrate how to define good entries and exits, and talk guests through the dangers of over-analysing. 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 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.

UK-EU Play Chicken as Brexit Deadline Looms

The UK has been trying since March to seal a post-Brexit trade deal with the EU, with little progress to show for it. Over the weekend, PM Johnson reached out to German Chancellor Angela Merkel, and French President Emmanuel Macron, to try and break the deadlock, just days before EU leaders are due to gather for a two-day summit beginning October 15th, where Brexit would surely rank high on the agenda. French government officials are already pushing back, saying they are willing to take a hard Brexit over a bad deal.

When PM Johnson announced his latest deadline back on September 7th, the Pound went on to weaken by some four percent against the Euro, before paring its losses. EURGBP is now testing its 50-day simple moving average (MA) as a key support level.

GBPUSD on the other hand its testing its 50-day MA as a key resistance level, having weakened by as much as 4.5 percent since the looming deadline was unveiled, only for the currency pair to climb some 2.9 percent since its September-bottom.

Although markets are pricing in an uptick in volatility in both EURGBP and GBPUSD over the week, the price swings are expected to be relatively tame compared to extremes over recent years, judging by the 1-week implied volatility for both currency pairs. The keen and seasoned observer would note that delayed deadlines have become somewhat of a norm amid the Brexit saga, and previous displays of brinkmanship have yet to see either side walk away from talks, despite multiple threats of doing so.

Still, that isn’t a line that Sterling can necessarily afford to cross.

Should the UK indeed leave the EU without a trade deal in place by December 31, the repercussions on the Pound would be seismic, potentially sending EURGBP much closer to parity! Still, the FXTM Trader’s Sentiments are overwhelmingly short for EURGBP.

As for GBPUSD, with traders having grown accustomed to Brexit-related blusters, perhaps the November 3 US Presidential elections would have more of an impact on cable. The FXTM Trader’s Sentiments are currently net long on cable.

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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.

Lukman’s Week Ahead: Market themes to Watch Out for – Webinar Oct 12

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.