USD/JPY Fundamental Weekly Forecast – Combination of No Stimulus, Weak Risk Appetite Keeping Prices in Check

The Dollar/Yen edged lower last week as the tug of war continued between these two safe-haven assets. In watching the price action, one probably observed that the U.S. Dollar strengthened when the fiscal stimulus talks reached another stalemate, and the Japanese Yen rose on stock market weakness. We expect to see this type of price action to continue this week and possibly into the U.S. Presidential election on November 3.

Last week, the USD/JPY settled at 105.405, down 0.225 or -0.23%.

In other news, Bank of Japan (BOJ) Governor Haruhiko Kuroda stressed a week ago this readiness to take additional monetary easing steps, saying the central bank had not run out of tools to cushion the economic blow from the COVID-19 pandemic.

Kuroda said Japan’s economy had hit the bottom in April-June and that the general picture looked ‘much better” than a few months ago, with exports, output and capital expenditure ‘fairly robust,” Reuters reported.

But consumption, particularly for services, was quite weak and likely to stay so far some time, unless the world gets hold of an effective vaccine to contain COVID-19, he added.

“We will closely monitor the impact of COVID-19 and not hesitate to take additional easing measures as necessary,” Kuroda told an online seminar hosted by the Institute of International Finance.

“The BOJ hasn’t run out of policy tools. We have a lot of policy tools to counter (the damage from COVID-19). We are flexible, innovative when considering measures to take.”

Kuroda also said Japan’s inflation rate would likely remain negative for some time as COVID-19 suppressed consumer demand “considerably”. But he added that prices would likely rebound next year as the economy recovered.

He also defended the BOJ’s negative interest rate policy, saying the -0.1% rate was imposed on only a limited portion of commercial banks’ reserves parked with the central bank.

“We maintain 10-year JGB yields around zero. But at the same time, 20-, 30- 40- year JGB yields are quite positive,” Kuroda said. “We have been allowing longer-term interest rates to move in a positive range. That would certainly help pension funds, life insurance companies and institutional investors.’

Weekly Forecast

All eyes will remain on a possible U.S. fiscal stimulus deal and risk appetite. New stimulus is coming, but probably not ahead of the election. If the White House, Republicans and Democrats can’t reach an agreement then look for a smaller package shortly after the election on November 3.

If Joe Biden wins the election then look for an even bigger stimulus deal early next year.

Negative fiscal stimulus news will be supportive for the U.S. Dollar because this will mean fewer greenbacks floating around in the system. A weaker U.S. stock index will likely pressure the USD/JPY as this would boost the safe-haven appeal of the Japanese Yen.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD and NZD/USD Fundamental Weekly Forecast – Aussie, Kiwi Face Rate Cut Pressure

The Australian and New Zealand Dollars closed lower last week with both currencies pressured by potentially bearish actions by their respective central banks. Lower demand for higher-yielding assets and a stronger U.S. Dollar also weighed on the Aussie and the Kiwi.

The greenback was primarily supported by safe-haven demand after U.S. policymakers strongly suggested a much anticipated fiscal stimulus deal would not likely be agreed upon before the U.S. presidential elections on November 3.

Last week, the AUD/USD settled at .7077, down 0.0164 or -2.26% and the NZD/USD finished at .6605, down 0.0067 or -1.01%.

Australian Dollar

The Australian Dollar weakened last week after a top Reserve Bank of Australia (RBA) official said monetary easing would become more effective as the economy loosens its coronavirus restrictions, an indication another cut to the official cash rate was likely.

RBA Governor Philip Lowe also said the board was studying the benefits that might come from buying longer-dated government bonds as part of its monetary stimulus package to boost jobs and growth.

“When the pandemic was at its worst and there were severe restrictions on activity we judged that there was little to be gained from further monetary easing,” Lowe said in a speech in Sydney.

The solutions to the problems the country faced lay elsewhere,” Lowe added referring to fiscal policy, which he said, has provided “welcome support” to the economy.

“As the economy opens up, though, it is reasonable to expect that further monetary easing would get more traction that was the case earlier.”

Lowe emphasized that creating jobs was the RBA’s “main focus”, with data on Thursday showing the unemployment rate had ticked up to 6.9% in September.

The implications of larger balance-sheet expansion by other central banks were another consideration as the RBA works at potential policy options, Lowe added.

“These are three of the complex issues we have been considering at our recent Board meetings,” Lowe said. “The Board will continue to review these and other issues at our upcoming meetings.

Weekly Forecast

Lowe’s speech prompted economists at Commonwealth Bank of America to revise their call to now predict a cut to the cash rate next month and additional bond purchases to lower yields on 5-10 year government bonds. They previously saw 0.25% as the lower bound of the current easing cyclWith the futures markets trending toward a rate cut and bond purchases by the RBA, prices are likely to feel pressure until they hit a value zone that is attractive to buyers. This is not likely until after the November 3 RBA meeting since there is always the possibility of a surprise in its monetary policy announcements.

Meanwhile, gains could be capped in the NZD/USD because of safe-haven demand for the greenback, and worries that the Reserve Bank of New Zealand is comfortable with taking its benchmark interest rate into negative territory in early 2021.

For a look at all of today’s economic events, check out our economic calendar.

Bitcoin and Ripple’s XRP – Weekly Technical Analysis – October 19th, 2020

Bitcoin

Bitcoin rose by 1.18% in the week ending 18th October. Following a 6.53% gain from the week prior, Bitcoin ended the week at $11,518.0.

It was a choppy start to the week. Bitcoin fell to a Monday intraweek low $11,111.0 before finding support.

Steering clear of the first major support level at $10,782, Bitcoin bounced back to a Monday intraweek high $11,740.0.

Coming up against the first major resistance level at $11,746, Bitcoin fell back to $11,210 levels and into the red on Friday.

A relatively bullish end to the week, coming off the back of 2 consecutive days in the green delivered the upside for the week.

4 days in the green that included a 1.54% gain on Monday delivered the upside for the week. A 1.60% slide on Friday, limited the upside for the week, however.

For the week ahead

Bitcoin would need to avoid a fall through $11,456 pivot to support a run the first major resistance level at $11,802.

Support from the broader market would be needed for Bitcoin to break out from last week’s high $11.740.0.

Barring an extended crypto rally, the first major resistance level and last week’s high $11,740.0 would likely cap any upside.

In the event of a breakout, Bitcoin could test resistance at $12,000 before any pullback. The second major resistance level sits at $12,085.

Failure to avoid a fall through the $11,456 pivot would bring the first major support level at $11,173 into play.

Barring an extended sell-off, Bitcoin should steer clear of sub-$11,000 support levels. The second major support level sits at $10,827

At the time of writing, Bitcoin was down by 0.31% to $11,482.0. A mixed start to the week saw Bitcoin hit an early Monday morning high $11,550.0 before falling to a low $11,459.1.

Bitcoin left the major support and resistance levels untested at the start of the week.

BTC/USD 19/10/20 Daily Chart

Ripple’s XRP

Ripple’s XRP slid by 5.21% in the week ending 18th October. Reversing a 3.07% gain from the previous week, Ripple’s XRP ended the week at $0.24216.

It was a mixed start to the week. Ripple’s XRP rose to a Tuesday intraweek high $0.25998 before hitting reverse.

Falling short of the first major resistance level at $0.2638, Ripple’s XRP slid to a Friday intraweek low $0.23783 and into the deep red.

Ripple’s XRP fell through the first major support level at $0.2438 before finding support through the weekend.

In spite of 2 consecutive days in the green, however, Ripple’s XRP failed to break back through the first major support level.

3-days in the red that included a 2.89% slide on Tuesday and a 2.36% fall on Friday delivered the downside for the week.

For the week ahead

Ripple’s XRP would need to move through the $0.2467 pivot level to support a run at the first major resistance level at $0.2555.

Support from the broader market would be needed, however, for Ripple’s XRP to break back through to $0.2550 levels.

Barring an extended crypto rally, the first major resistance level and last week’s high $0.25998 would likely cap any upside.

In the event of a breakout, Ripple’s XRP could test resistance at $0.26 before any pullback. The second major resistance level sits at $0.2688.

Failure to move through the $0.2467 would bring the first major support level at $0.2333 into play.

Barring an extended crypto market sell-off, however, Ripple’s XRP should steer clear well clear of sub-$0.23 levels. The second major support level sits at $0.2245.

At the time of writing, Ripple’s XRP was down by 0.01% to $0.24214. A mixed start to the week saw Ripple’s XRP rise to an early Monday morning high $0.24281 before falling to a low $0.24203.

Ripple’s XRP left the major support and resistance levels untested at the start of the week.

XRP/USD 19/10/20 Daily Chart

Doji Clusters Show Clear Support Ranges On The S&P500

Clusters of Doji shaped candles have, for centuries, illustrated very clear levels of support/resistance in price action.  Whenever multiple Doji candles appear in a cluster-like formation, traders should pay attention to these levels as future support/resistance ranges for price action.  In the case of the S&P500 E-Mini Futures Daily Chart, we can clearly see three separate support zones – the highest one being right where price closed on Friday (near 3475).

As the US elections near, we do expect increased volatility to become a factor in the US markets.  Currently, our predictive modeling systems are suggesting a Bullish trend bias is in place in the markets.  Therefore, we expect the bias of the trend to continue to push higher.  Yet, these Doji Cluster support levels become very clear downside targets if increased volatility prompts any broad market rotation over the next few days/weeks. These three levels are :

  • 3445~3495
  • 3330~3390
  • 3185~3225

We are suggesting that IF any deeper market rotation takes place, support near these Doji Cluster levels would likely act as a major price floor – prompting some price support and a potential for a quick upside price reversal near these levels.  If the lowest level, near 3200, is breached by deeper price rotation, then a new price correction phase may setup.

Traders should use these levels to prepare for the expected volatility spike as we near the US elections.  We believe price will become more volatile as traders/investors attempt to reposition assets away from risk before the elections.  We are particularly concerned of a breakdown in the Technology sector related to recent threats to increase liability related to a special clause (230) that protects companies like Facebook and Twitter from the same Publisher Liability as major newspapers.

Given the renewed focus on these social media sites and the content posted/restricted on these sites, it appears they have become the target of investigations and the US Congress.  This could lead to some very big volatility spikes in the NASDAQ and the Technology sector over the next few weeks and months.  This could result in some very good trade setups as price levels may rotate wildly because of the elections and the pending decisions related to these social media firms.

Want to learn how we help traders stay ahead of these bigger trends and setups?  Visit www.TheTechnicalTraders.com to learn more about my swing trade alert and passive long-term signals services. Stay ahead of the market and protect your wealth by signing up today!

For a look at all of today’s economic events, check out our economic calendar.

Chris Vermeulen
Chief Market Strategist
www.TheTechnicalTraders.com

NOTICE AND DISCLAIMER: Our research does not constitute a trade recommendation or solicitation for our readers to take any action regarding this research.  It is provided for educational purposes only.

Oil Price Fundamental Weekly Forecast – Rangebound Trade but COVID-19 Remains Wildcard

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures finished marginally higher last week in a rather tricky trade that saw traders basically absorbing dire forecasts of weak demand due to a possible second-wave of COVID-19 and warnings of increased supply.

The markets treaded water most of the week with all of its gains attributed to an impressive rally on Thursday that erased an early session setback.

Last week, December WTI crude oil futures settled at $41.12, up $0.21 or +0.51% and December Brent crude oil closed at $42.93, up $0.08 or +0.19%.

Essentially we saw two catalysts last week, the bearish catalyst was new coronavirus lockdowns that raised concerns about fuel demand. The bullish catalyst was a drop in crude, gasoline and distillate inventories.

Despite the volatile price swings and the higher weekly close, the markets essentially remained rangebound for a fifth consecutive week.

Oil Eases as New Lockdown Raise Concern About Fuel Demand

Oil prices eased at times last week as new restrictions to stem a surge in COVID-19 infections dimmed the outlook for economic growth and fuel demand.

In Europe, some countries were reviving curfews and lockdowns to fight a surge in new coronavirus cases, with Britain imposing tougher COVID-19 restrictions in London on Friday. The reinstatement of pandemic restrictions is expected to cripple short-term demand forecasts.

In other potentially bearish news, OPEC and its allies are due to taper production cuts in January by 2 million barrels per day (bpd), from 7.7 million bpd currently. Additionally, Baker Hughes reported another increase in drilling platforms.

US Crude, Fuel Stockpiles Drop Sharply Amid Hurricane – EIA

U.S. crude stockpiles fell sharply last week, as offshore oil production was shut due to Hurricane Delta, while distillate inventories posted their biggest drop since 2003 as refiners shut as well, the Energy Information Administration (EIA) said last Thursday.

Crude inventories fell by 3.8 million barrels in the week to October 9 to 489.1 million barrels compared with analysts’ expectations in a Reuters poll for a 2.8 million-barrel drop.

Gasoline stocks fell by 1.6 million barrels, the EIA said, in line with expectations. Distillate inventories fell by a record 5.5 million barrels, according to the data.

Weekly Forecast

An international Energy Agency (IEA) forecast released last week sums up exactly why we believe in the rangebound trade continuing over the near-term.

The experts at the IEA provided a balanced assessment of the market saying that the global oil stocks which rose during the height of the pandemic are being steadily reduced. However, they also added that a second wave of the coronavirus is slowing demand and will complicate efforts by producers to balance the market.

The IEA comments were not too bearish and not too bullish so we expect more two sided rangebound trading.

For a look at all of today’s economic events, check out our economic calendar.

Price of Gold Fundamental Weekly Forecast – Bullish Traders Patiently Waiting for Catalyst

Gold futures posted their first weekly decline in three weeks, as fading chances of a U.S. stimulus package before the November 3 presidential election dented the dollar-denominated metal’s appeal as an inflation hedge, while increasing the appeal of the safe-haven U.S. Dollar.

While sentiment for gold remains bullish over the long-run, without a strong short-term catalyst, it looks like it is going to have trouble sustaining a rally. The short-term catalyst seems to be another fiscal stimulus aid package. Without the stimulus bill, gold prices could drift sideways to lower over the near-term.

Last week, December Comex gold futures settled at $1906.40, down $19.80 or -1.03%.

One thing we did learn late last week is that better than expected economic data could help support gold if it weakens the U.S. Dollar. On Friday, U.S. retail sales data came in better-than-expected, pressuring the greenback while underpinning gold. However, gold did give back some of those gains after U.S. industrial production fell more than expected.

As far as a financial aid deal is concerned, Democrats and Republicans seemed to agree on a U.S. stimulus deal before Election Day even as coronavirus cases continue to rise and a labor market recovery stalls.

The latest COVID-19 news reveals that fresh restrictions to combat COVID-19 have been introduced across Europe, and the U.S. Midwest is battling spikes in new cases, threatening to derail the country’s economic recovery from the coronavirus shock.

This news is potentially bullish for gold prices if it encourages U.S. policymakers to move faster toward passing a stimulus bill, but so far it hasn’t been able to appeal to their sense of urgency.

Weekly Forecast

Despite the lower weekly close, the sideways trade suggests gold investors are still anticipating a stimulus deal despite the current stalemate in Washington. However, they probably accepted that it won’t be coming before the November 3 election.

We’ve seen weakness, but we haven’t seen a price crash which probably means the longer-term bulls are buying on weakness or the dips. This further supports the notion that all it is going to take is a catalyst to trigger a breakout to the upside.

Investors are fairly certain the stimulus is coming. They just don’t know when or how big the financial aid package will be. If you’re a short-term trader, it may be a good idea to keep your powder dry until after the election. If you’re a long-term investor then continue to accumulate gold when it trades at a value area.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Fundamental Weekly Forecast – Time Running Out for Demand to Alleviate Storage Concerns

Natural gas futures finished higher last week in a relatively choppy trade. The market gapped higher on Monday in reaction to the damage to platforms from Hurricane Delta. Traders initially thought there would be prolonged production shutdowns, but that wasn’t the case, and prices retreated from the gap high.

Prices edged lower most of the week as weather forecasts flipped from cold to average temperatures, but losses were primary offset by fresh demand for liquefied natural gas.

By the end of the week, traders were monitoring the October 28 to November 1 time period for a possible increase in heat-related demand, but there was enough uncertainty being fueled by the U.S and European weather models to cap gains.

Last week, December natural gas futures settled at $3.271, up 0.067 or +2.09%.

US Energy Information Administration Weekly Storage Report

The EIA reported last Thursday that domestic supplies of natural gas rose by 46 billion cubic feet (Bcf) for the week ended October 9.

Total stocks now stand at 3.877 trillion cubic feet (Tcf), up 388 Bcf from a year ago, and 353 Bcf above the five-year average, the government said.

Natural Gas Intelligence (NGI) reported that “Ahead of the EIA report, a Wall Street Journal survey of 11 analysts expected injections to range from 47 Bcf to 65 Bcf, with an average build of 56 Bcf. A Bloomberg survey of seven market participants had a tighter range of projections, which produced a median of 53 Bcf. Reuters polled 14 analysts, whose estimates ranged from increases of 46 Bcf to 74 Bcf, with a median injection of 55 Bcf. NGI estimated a 54 Bcf injection.”

Based on the estimates, the report was construed as bullish, but the news wasn’t earth-shattering enough to suggest the notion of a prolonged rally.

Short-Term Weather Outlook

According to NatGasWeather for October 16 to October 22, “A strong early season cold shot will sweep into the Midwest, Plains, and east-central U.S. the next several days with rain, snow and chilly lows of 15-38 Fahrenheit for stronger national demand.

The rest of the U.S. will be comfortable to warm with highs of 60s to 80s besides hotter 90s from California to Texas. Demand will ease this week as cold shots impact the Rockies and Plains, while comfortable most elsewhere with highs of 60s to 80s. Overall, national demand will be high through Monday, then low Tuesday – Friday of this week.”

Weekly Forecast

December natural gas futures posted another week of volatile two-sided trading as traders assessed the impact on wavering weather outlooks and LNG demand uncertainty. Concerns over storage also pressured prices.

The direction of the market this week is likely to be determined by weather and LNG export demand. If both come in on the high side then look for prices to rally as this news would help alleviate some of the concerns over storage containment.

Another price driver will be the forecast for October 28 – November 1. If the forecasts call for cold temperatures at this time and beyond then look for prices to pop higher. If the forecasts continue to conflict, then look for a sideways to lower trade.

Essentially, in generate a bullish outlook beyond November 1, we’re going to need to see rising LNG demand coupled with above average heating demand.

For a look at all of today’s economic events, check out our economic calendar.

The Week Ahead – U.S Politics, COVID-19, Brexit, and Private Sector PMIs in Focus

On the Macro

It’s a busy week ahead on the economic calendar, with 57 stats in focus in the week ending 23rd October. In the week prior, 56 stats had been in focus.

For the Dollar:

It’s a relatively quiet week ahead on the economic data front.

On Tuesday, Wednesday, and Thursday, housing sector figures for September are in focus.

With mortgage rates hovering close to historic lows, the numbers are unlikely to have a material impact on the Dollar.

On Thursday, however, U.S jobless claims figures will influence ahead of private sector PMIs on Friday.

October’s prelim services, manufacturing, and composite PMIs are due out at the end of the week.

Expect the Services PMI to be the key driver. The markets will be looking for a pickup in service sector activity…

Away from the economic calendar, we are just over 2-weeks away from the U.S Presidential Election. Wednesday’s final live televised Presidential debate will garner plenty of attention as will chatter from Capitol Hill. We can also expect increased interest in the Senate Election polls.

The Dollar Spot Index ended the week up by 0.67% to 93.682.

For the EUR:

It’s also a relatively busy week ahead on the economic data front.

On Tuesday, German wholesale inflation figures are due out ahead of a busier 2nd half of the week.

On Thursday, Germany is back in focus, with November consumer climate figures due out.

Prelim October private sector PMIs from France, Germany, and the Eurozone will be the key drivers on Friday, however.

We can expect plenty of sensitivity to the numbers. A new spike in new COVID-19 cases in France and other parts of the EU may have impacted activity at the start of the quarter.

Away from the economic calendar, Brexit and COVID-19 will need monitoring throughout the week.

The EUR/USD ended the week down by 0.91% to $1.1718.

For the Pound:

It’s a busy week ahead on the economic calendar.

The markets will have to wait until Wednesday, however, for the first set of numbers.

Inflation figures for September are due out ahead of CBI industrial trend orders on Thursday.

We would expect the Pound to be sensitive to the inflation figures ahead of a busy end to the week.

On Friday, retail sales figures for September and prelim October private sector PMIs will provide direction.

With the BoE open to negative rates, dire numbers will test support for the Pound.

Of greater influence in the week, however, will be Brexit and COVID-19 news.

The GBP/USD ended the week down by 0.93% to $1.2915.

For the Loonie:

It’s a relatively busy week ahead on the economic calendar.

At the start of the week, wholesale sales figures for August are in focus on Monday.

We don’t expect too much influence from the numbers, however.

On Wednesday, September inflation and August retail sales figures will provide direction.

From elsewhere, expect GDP numbers from China and prelim private sector PMIs from the Eurozone and the U.S to also influence.

Away from the economic calendar, risk appetite will likely be dictated by COVID-19 and the U.S Presidential Election polls. There’s also the final presidential debate to consider on Wednesday.

The Loonie ended the week down by 0.52% to C$1.3189 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a particularly quiet week ahead on the economic calendar.

There are no material stats due out of Australia to provide the Aussie with direction.

The lack of stats will leave the Aussie Dollar firmly in the hands of market risk sentiment in the week.

Expect China’s GDP numbers and prelim PMIs from the Eurozone and the U.S to influence

On the monetary policy front, the RBA meeting minutes at the start of the week will garner interest. There has been the talk of an RBA move next month, the minutes could reveal what is on the cards…

The Aussie Dollar ended the week down by 2.20% to $0.7081.

For the Kiwi Dollar:

It’s also a relatively busy week ahead on the economic calendar.

In the 1st half of the week, 3rd quarter business confidence figures are due out. A pickup in confidence would provide support to the Kiwi ahead of a busy Friday.

Trade data for May and 3rd quarter inflation figures will influence at the end of the week.

While the stats will provide direction, however, economic data from China and COVID-19 will likely be the key drivers.

The Kiwi Dollar ended the week down by 0.96% to $0.6602.

For the Japanese Yen:

It is a relatively quiet week on the economic calendar.

Trade data for September will draw interest at the start of the week ahead of inflation at the end of the week.

We don’t expect the numbers to have too much influence on the Yen, however.

The key driver for the Japanese Yen, however, will be COVID-19 news and U.S politics.

The Japanese Yen ended the week up by 0.21% to ¥105.40 against the U.S Dollar.

Out of China

It’s a busy week ahead on the economic data front.

3rd quarter GDP numbers due out on Monday will be the key driver for the Yuan and market risk sentiment.

September’s industrial production, retail sales, and unemployment figures will also influence.

Barring particularly dire numbers, the fixed asset investment numbers should have a muted impact.

On the monetary policy front, the PBoC is in action on Tuesday. The markets are expecting the PBoC to leave loan prime rates unchanged. Any unexpected rate cut could spook the markets…

The Chinese Yuan ended the week down by 0.04% to CNY6.6976 against the U.S Dollar.

Geo-Politics

UK Politics:

On Friday, Boris Johnson announced that Brexit negotiations were over. Downing Street added the EU chief negotiator Barnier does not need to return to London in the week ahead.

Following the EU’s attempts to leave the ball in Britain’s court, with Fisheries a key issue, it now rests with the EU to compromise. Johnson has been clear that it would not leave fishing access unchanged, despite Macron’s attempts to strong-arm Britain into yielding.

For French fishermen, it would ultimately mean no access to UK fisheries should Britain leave without a deal…

Also at the start of the week, the British Prime Minister is due to announce more containment measures. With the number of new COVID-19 cases continuing to rise, further restrictions would be Pound negative.

U.S Politics

After last week’s individual town hall sessions, the final live televised debate will take place on Wednesday.

It will be a chance for Trump to narrow the gap ahead of the 3rd November Election.

If past performance is any indicator of future performance, however, it could just give Biden a greater edge.

As the markets begin to write-off a Trump victory, the focus will likely shift to the Senate Elections.

A blue wave is expected that would support further stimulus in the New Year.

U.S Mortgage Rates Slide to another All-Time Low

Mortgage rates fell to another all-time low in the week ending 15th October. Following a 1 basis point fall in the week prior, the 30-year fixed rate fell by 6 basis points to 2.81%.

Compared to this time last year, 30-year fixed rates were down by 88 basis points.

30-year fixed rates were also down by 213 basis points since November 2018’s most recent peak of 4.94%.

Economic Data from the Week

Economic data was on the lighter side in the 1st half of the week.

Key stats included September’s inflation figures ahead of the jobless claims figures on Thursday.

Inflation held steady at the end of the 3rd quarter, with the annual core rate of inflation unchanged at 1.7%. Economists had forecast a pickup to 1.8%.

Consumer prices saw modest increases in the month of September, however. Core consumer prices and consumer prices increased by just 0.2% following 0.4% increases in August.

Wholesale prices saw a pickup. The producer price index rose by 0.4% in September, following a 0.3% increase in August. Core wholesale prices also rose by 0.4%, following a 0.4% increase from the month prior.

While the stats were mixed, a lack of progress towards a stimulus Bill on Capitol Hill and COVID-19 weighed on Treasury yields.

Freddie Mac Rates

The weekly average rates for new mortgages as of 15th October were quoted by Freddie Mac to be:

  • 30-year fixed rates decreased by 6 basis points to 2.81% in the week. Rates were down from 3.69% a year ago. The average fee fell from 0.8 points to 0.6 points.
  • 15-year fixed rates fell by 2 basis points to 2.35% in the week. Rates were down from 3.15% a year ago. The average fee fell from 0.7 points to 0.5 points.
  • 5-year fixed rates rose by 1 basis point to 2.90% in the week. Rates were down by 45 points from last year’s 3.35%. The average fee also remained unchanged at 0.2 points.

According to Freddie Mac,

  • Many people are benefitting from a 10th record low this year, with refinance activity remaining strong.
  • It is worth noting, however, that not all people are able to take advantage of low rates given the effects of the pandemic.

Mortgage Bankers’ Association Rates

For the week ending 9th October, rates were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA, remained unchanged at 3.12%. Points increased from 0.32 to 0.35 (incl. origination fee) for 80% LTV loans.
  • Average interest rates for 30-year fixed with conforming loan balances decreased from 3.01% to 3.00%. Points fell from 0.37 to 0.32 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances decreased from 3.31% to 3.30%. Points increased from 0.30 to 0.35 (incl. origination fee) for 80% LTV loans.

Weekly figures released by the Mortgage Bankers Association showed that the Market Composite Index, which is a measure of mortgage loan application volume, decreased by 0.7% in the week ending 9th October. In the week prior, the index had increased by 4.6%.

The Refinance Index slipped by 0.3% and was 44% higher than the same week a year ago. In the week prior, the index had jumped by 8%.

The refinance share of mortgage activity increased from 65.4% to 65.6%. In the week prior, the share had risen from 63.3% to 65.4%.

According to the MBA,

  • Mortgage applications for refinances and home purchases both decreased slightly despite 30-year fixed rates falling to a new MBA survey low.
  • Applications for government mortgages offset some of the overall declines by increasing 3%.
  • Refinance and purchase activity continues to run well ahead of last year’s pace, fueled by record-low rates and strong homebuyer demand.
  • House supply is a challenge for many aspiring buyers. Buying activity should continue to stay strong for the rest of the year, however.

For the week ahead

It’s a quiet 1st half of the week on the U.S economic calendar.

Key stats include September building permits and housing start figures from the U.S.

We would expect the numbers to have a muted impact on U.S Treasury yields, however.

Economic data from late last week will be a test in the early part of the week. Disappointing weekly jobless claims was yet another red flag.

From elsewhere, 3rd quarter GDP numbers out of China will set the tone at the start of the week.

While we can expect the stats to influence yields, the focus will remain on Capitol Hill and the Presidential Election race. The final live televised presidential debate on Wednesday will garner plenty of attention.

Expect COVID-19 news to also influence. A continued rise in new COVID-19 cases will test market risk appetite that could deliver another record low for mortgage rates.

European Equities: A Week in Review – 06/10/20

The Majors

It was a bearish week for the European majors in the week ending 16th October.

The DAX fell by 1.09% to lead the way down, with the CAC40 and EuroStoxx600 seeing losses of 0.22% and 0.77% respectively.

With economic data on the lighter side in the week, it was geopolitics and COVID-19 that weighed on the majors.

A continued rise in new COVID-19 cases across the EU weighed heavily on the European majors in the week. The reintroduction of lockdown measures delivered greater uncertainty over the economic outlook.

Brexit woes also tested market risk sentiment, with the EU and the UK failing to progress towards a Brexit deal.

From the U.S, fading hopes of a COVID-19 stimulus Bill ahead of the U.S Presidential Election was also market negative.

It could have been much worse, however, with a Friday rally paring some of the losses from earlier in the week.

The Stats

It was a relatively busy week on the Eurozone economic calendar.

In the early part of the week, ZEW Economic Sentiment figures for the Eurozone and Germany were in focus. Concerns over Brexit and the U.S Presidential Election led to a slide in the respective indicators for October.

Germany’s Economic Sentiment Indicator fell from 77.4 to 56.1, with the Eurozone’s falling from 73.9 to 52.3.

The focus then shifted to economic data from the Eurozone that included industrial production, inflation, and trade data.

In August, industrial production rose by just 0.7%, following a 5% jump in July. More significantly, however, was a marked narrowing in the Eurozone’s trade surplus. The surplus narrowed from €27.9bn to €14.7bn.

According to Eurostat,

  • Exports of goods to the rest of the world fell by 12.2%, compared with August 2019, to €156.3bn.
  • Imports from the rest of the world fell by 13.5%, compared with August 2019, to €141.6bn.
  • In August 2019, the trade surplus had stood at €14.4bn.
  • For the period January to August 2020, exports to the rest of the world fell by 12.4%, with imports down by 13.1%.
  • Intra-euro area trade fell by 12.3% when compared with the same period in 2019.

Inflation figures for the Eurozone also failed to impress at the end of the week, with annual inflation down to 0.3% in September. In August, annual inflation had been down by 0.2%.

According to Eurostat,

  • Greece (-2.3%), Cyprus (-1.9%), and Estonia (-1.3%) had the lowest annual rates of inflation.
  • The highest contribution to the annual euro area inflation came from food, alcohol, & tobacco (+0.34 pp) and services (+0.24pp).

From the U.S

It was a busy week on the economic data front.

Key stats included September’s inflation and retail sales figures, October manufacturing data, and the weekly jobless claims.

It was a mixed bag for the Dollar in the week. The annual rate of core inflation held steady at 1.7%. Month-on-month increases in consumer prices, however, were softer than in August.

Wholesale inflation was marginally better, with the producer price index rising by 0.4% in September. In August, wholesale prices had risen by 0.3%.

For October, the NY Empire State Manufacturing Index fell from 17.0 to 10.5, while the Philly Manufacturing Index rose from 15.0 to 32.3.

At the end of the week, retail sales and consumer sentiment figures were positive, supporting riskier assets.

In September, core retail sales rose by 1.5%, with retail sales jumping by 1.9%. Economists had forecast increases of 0.5% and 0.7% respectively.

Consumer sentiment also improved in October, with the Michigan Consumer Sentiment Index rising from 80.4 to 81.2. The improved sentiment came in spite of dire labor market conditions.

In the week ending 9th October, initial jobless claims came in at 898k, which was up from 845k from the week prior.

The Market Movers

From the DAX, it was a mixed week for the auto sector. Continental and Daimler rose by 0.25% and by 2.12% respectively, with Volkswagen eking out a 0.01% gain. BMW bucked the trend, however, sliding by 2.48%.

It was a bearish week for the banking sector. Commerzbank slid by 8.09, with Deutsche Bank ending the week down by 0.25%.

From the CAC, it was a particularly bearish week for the banks. BNP Paribas and Credit Agricole slid by 3.62% and by 4.30% respectively. Soc Gen saw a more modest 2.90% loss following last week’s 12.5% rally.

The French auto sector saw green, however. Peugeot rose by 3.22%, with Renault rallying by 4.74%.

Air France-KLM partially reversed an 11.25% gain from the previous week with a 6.07% slide, while Airbus fell by 3.65%.

On the VIX Index

It was the 3rd week in the green from 4 for the VIX. In the week ending 16th October, the VIX rose by 9.64%. Reversing a 9.52% loss from the previous week, the VIX ended the week at 27.41.

A lack of progress towards a U.S Stimulus Bill, rising COVID-19 cases, and uncertainty over the U.S Presidential Election supported the VIX.

Economic data delivered mixed signals, also raising concerns over the pace of the economic recovery.

In spite of the risks being tilted to the downside and the rise in the VIX, it was a positive week for the U.S majors. In the week ending 16th October, the S&P500 and the Dow rose by 0.07% and by 0.19% respectively. The NASDAQ led the way, however, gaining 0.79%.

VIX 17/10/20 Weekly Chart

The Week Ahead

It’s a relatively quiet week ahead on the Eurozone economic calendar.

After a quiet start to the week, consumer confidence figures for Germany and the Eurozone are in focus on Thursday.

With the latest spike in new COVID-19 cases, a marked decline in confidence will raise concerns regarding consumption.

At the end of the week, the focus will shift to October’s prelim private sector PMIs. Another fall in the services PMIs will be a test for the majors, with the ECB looking for a consumption-driven economic recovery.

We can expect manufacturing PMI numbers to also influence…

From elsewhere, 3rd quarter GDP numbers due out of China on Monday will set the tone for the week.

From the U.S, it’s a relatively quiet week on the economic data front. The weekly jobless claims on Thursday and private sector PMIs on Friday will influence.

Away from the economic calendar, U.S politics, COVID-19 news, and Brexit will also continue to provide direction.

The Weekly Wrap – Brexit, COVID-19, and U.S Politics Drive the Majors

The Stats

It was a busier week on the economic calendar, in the week ending 16th October.

A total of 56 stats were monitored, following 43 stats from the week prior.

Of the 56 stats, 24 came in ahead of forecasts, with 21 economic indicators came up short of forecasts. 11 stats were in line with forecasts in the week.

Looking at the numbers, 20 of the stats also reflected an upward trend from previous figures. Of the remaining 36 stats, 27 reflected a deterioration from previous.

For the Greenback, it was back into the green after 2 consecutive weeks in the red. The Dollar Spot Index rose by 0.67% to 93.682. In the week ending 9th October, the Dollar Spot Index had fallen by 0.87% to 93.057.

Market risk appetite waned in the week. There were a number of factors driving demand for the Dollar. A lack of progress towards a U.S stimulus bill and a spike in COVID-19 cases were front and center in the week.

Disappointing economic data and Brexit woes also supported the demand for the safety of the Dollar.

Out of the U.S

It was a relatively busy week on the economic data front.

Inflation figures drew interest early in the week. In the 2nd half of the week, however, jobless claims and retail sales figures were the key drivers. Prelim October consumer sentiment figures were also in focus late on Friday.

In the week ending 9th October, initial jobless claims stood at 898k, which was up from 845k from the week prior. The numbers reinforced the view that the labor market recovery had stalled.

A combination of dire labor market conditions, rising new COVID-19 cases, and a lack of further stimulus was a bad combination.

At the end of the week, retail sales impressed, however. In September, retail sales rose by 1.9%, with core retail sales rising by 1.5%. Economists had forecasted increases of 0.5% and 0.7% respectively.

Aligned with the retail sales figures was a further pickup in consumer sentiment. The Michigan Consumer Sentiment Index rose from 80.4 to 81.2 in October, according to prelim figures. The Expectations Index increased from 75.6 to 78.8.

The only negative on the day was an unexpected 0.6% fall in industrial production.

In the equity markets, the NASDAQ rose by 0.79%, with the Dow and S&P500 gaining 0.07% and 0.19% respectively.

Out of the UK

It was a relatively busy week on the economic data front.

Key stats included August unemployment rate and employment change and September claimant count figures.

While claimant counts came in lower than expected, employment fell by more than expected over the 3-months to August.

A 153k fall in employment led to an increase in the unemployment rate from 4.1% to 4.5%.

While the stats provided direction, it was ultimately Brexit and COVID-19 that sank the Pound in the week.

A continued rise in new COVID-19 cases and a new round of containment measures were Pound negative.

More significantly, however, was a lack of progress towards a Brexit agreement, with the EU pushing for more talks next week.

On Friday, Boris Johnson announced that it was time to prepare for a no-trade deal Brexit unless the EU changed its stance. Downing Street also stated that there was no point in EU negotiator Michel Barnier returning to London in the week ahead.

In the week, the Pound fell by 0.93% to $1.2915. In the week prior, the Pound had risen by 0.78% to $1.3036.

The FTSE100 ended the week down by 1.61%, partially reversing a 1.94% gain from the previous week.

Out of the Eurozone

It was a relatively busy week on the economic data front.

Early in the week, key stats included ZEW Economic Sentiment figures for the Eurozone and Germany.

The indicators flashed red for October. Germany’s Economic Sentiment Indicator fell from 77.4 to 56.1, with the Eurozone’s falling from 73.9 to 52.3. A lack of progress on Brexit and jitters over the U.S Presidential Election weighed in October.

Mid-week, industrial production figures for the Eurozone came up short of expectations, rising by just 0.7%. In July, production had jumped by 5.0%.

In the 2nd half of the week, Eurozone trade data and finalized inflation figures for September were in focus.

Inflation figures reaffirmed market concern over deflationary pressures. Trade data also failed to impress, with the Eurozone’s trade surplus narrowing from €27.9bn to €14.7bn in August.

While the stats provided direction, a marked increase in new COVID-19 cases weighed on the EUR in the week. France and other member states were forced to reintroduce containment measures amidst the 2nd wave.

For the week, the EUR fell by 0.91% to $1.1718. In the week prior, the EUR had risen by 0.94% to $1.1826.

For the European major indexes, it was a bearish week. The CAC40 and EuroStoxx600 fell by 0.22% and by 0.77% respectively, with the DAX30 declining by 1.09%.

For the Loonie

It was a quiet week on the economic data front.

Key stats included August’s foreign security purchases and manufacturing sales figures.

Neither set of numbers had an impact, however, as the fresh spike in new COVID-19 cases weighed on market risk sentiment.

The threat of a reintroduction of lockdown measures pegged back crude oil prices in the week.

In the week ending 16th October, the Loonie fell by 0.52% to end the week at C$1.3189. In the week prior, the Loonie had risen by 0.87%.

Elsewhere

It was a bearish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 16th October, the Aussie Dollar slid by 2.20% to $0.7081. The Kiwi Dollar ended the week down by a more modest 0.96% to $0.6602.

For the Aussie Dollar

It was a relatively quiet week on the economic calendar.

Key stats consumer confidence and employment figures.

It was a mixed bag for the Aussie Dollar. While consumer confidence continued to improve, employment figures were somewhat disappointing.

The unemployment rate rose from 6.8% to 6.9%, driven by a 29.5k fall in employment.

For the Aussie Dollar, it was ultimately market sentiment towards monetary policy and risk aversion that did the damage. There is the talk of an RBA next month…

For the Kiwi Dollar

It was a relatively quiet week on the economic calendar.

Key stats included electronic card retail sales figures and business PMI numbers.

The stats were Kiwi Dollar positive, with retail sales up by 5.4% and the PMI rising from 50.7 to 54.0.

While positive, however, market risk aversion pegged the Kiwi Dollar back in the week.

For the Japanese Yen

It was also a relatively quiet week on the economic calendar.

August’s core machinery orders and finalized industrial production figures were in focus.

The stats were skewed to the negative in the week. Core machinery orders rose by just 0.2%, following a 6.3% jump in July. Industrial production was revised down from 1.7% to 1.0%.

Ultimately, however, it was market risk sentiment that delivered the support for the Yen.

The Japanese Yen rose by 0.21% to ¥105.4 against the U.S Dollar. In the week prior, the Yen had fallen by 0.31%.

Out of China

It was a relatively busy week on the economic data front following last week’s holiday.

Key stats included September’s trade data and inflation figures, which were skewed to the negative.

China’s U.S Dollar trade surplus narrowed from $58.93bn to $37.00bn, driven by a 13.2% jump in imports. Exports rose by a more modest 9.9%.

Inflationary pressures also softened at the end of the quarter. China’s annual rate of inflation softened from 2.4% to 1.7% in September. Wholesale deflationary pressures picked up marginally. The producer price index fell by 2.1%, following a 2.0% decline in August.

In the week ending 16th October, the Chinese Yuan slipped by 0.04% to CNY6.6976. In the week prior, the Yuan had risen by 1.42%.

The CSI300 rose by 2.36%, with the Hang Seng gaining 1.11%.

S&P 500 Weekly Price Forecast – Stock Markets Show Signs of Exhaustion

The S&P 500 went back and forth during the course of the week, as we are getting towards the extreme highs again. Ultimately, the market is likely to see a lot of noise in general as we worry about the idea of stimulus, which of course is good for stocks as we have seen over the last 12 years. That being said, it is likely that we will continue to see a lot of noise in general, and now the 3600 level above continues to be massive resistance. To the downside, the 3400 level underneath is likely to see massive amounts of support, and every 100 points underneath.

S&P 500 Video 19.10.20

Looking at this chart, the market is likely to continue to find buyers given enough time, and as a result it is simply a matter of waiting for value underneath. I do believe that longer-term traders will continue to look for the market dipping and offering the ability to go higher. However, even if we break down at this point, I think it is only a matter of time before the Federal Reserve would jump in and lift the markets as much as they can.

That is the way this market has been functioning for the last 12 years or so, and I do not see anything changing anytime soon. If we were to break above the 3600 level, then the next obvious target would be the 4000 handle. Because of this, I do believe it is only a matter of time before you can pull back, buy little bits and pieces, and then build up a larger position as most money managers have been doing.

For a look at all of today’s economic events, check out our economic calendar.

Silver Weekly Price Forecast – Silver Contines to Show Volatility

The silver markets initially tried to rally for the week, but then rolled over to show signs of weakness. The market broke below the $24 level, only to turn around and close above it. Nonetheless, we are looking to the markets in a very cautious manner. The market is likely to find buyers at lower levels, and this is how I am looking to trade the markets. The $22 level underneath is another longer-term area of demand that I think we might test. After that, the $20 level is a major figure that the markets will more than likely pay attention to.

SILVER Video 19.10.20

The fact that central banks around the world continue to loosen monetary policy should continue to drive up demand for hard assets such as silver and therefore I think it is only a matter of time before we continue to climb. However, when I look at the huge red candlestick that we have not come close to wiping out yet, I anticipate that there is probably more downward pressure coming. This is not to say that I would be a seller of silver, rather that I would be looking for value underneath.

I believe that the $20 level is a perfect area, due to the fact that on the daily chart you see the 200 day EMA coming into play, and on the weekly chart you see the 50 week EMA coming into the picture. I do not know if we go that low, but I will be looking for buying opportunities on these pullbacks that I am almost positive are coming going forward.

For a look at all of today’s economic events, check out our economic calendar.

Crude Oil Weekly Price Forecast – Crude Oil Markets Eke Out Gains

WTI Crude Oil

The WTI Crude Oil market initially pulled back during the week, breaking below the $40 level but has turned around to show signs of life again, which was exacerbated by a slightly better than anticipated inventory figure coming out of the United States. This of course is bullish, but at this point we still have to worry about the longer-term demand. After all, a lot of the economies around the world are starting to slow down and even lock down now, which of course cannot be good for the idea of crude oil demand.

Just above current trading is the 50 week EMA, and of course a major supply area in the $43.50 region. Because of this, I believe that it is only a matter of time before the markets start to see selling pressure yet again. Alternately, if we break down below the bottom of the candlestick for the week, then we probably drop down towards the $37.50 level. Looking at this chart, I think we could get a little bit of a short-term pop, only to see sellers jump back in.

WTI Oil Video 19.10.20

Brent

Brent markets of course are going to act very much the same but have a little bit further to go to the upside before the major supply comes into the technical analysis. The US dollar looks likely to make another attempt to strengthen sometime next week, so that will probably coincide with what is the inevitable pullback. Just as in the WTI market, if we break down below the hammer for the week, then we go much lower.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Weekly Price Forecast – Natural Gas Building Pressure

Natural gas markets have been rather noisy during the trading sessions making up this past week, reaching down towards the 200 week EMA before turning around to form a bit of a hammer shaped candlestick. This does not mean that the market is necessarily ready to take off to the upside, but it clearly has a proclivity to gain. Because of this, I like the idea of buying dips and of course this lines up quite nicely with the time of year as more demand for natural gas is typically the norm. With that in mind, the market is likely to be a “buy on the dips” scenario, but I think that eventually we will try to break above the $3.00 level.

NATGAS Video 19.10.20

Breaking above the $3.00 level, then we would be looking at a potential move towards the $3.25 level, possibly even followed by the $3.50 level. I do not like the idea of shorting this market, at least not this time of year. There is a lot of noise underneath and of course that means that there is a lot of order flow. That order flow gives the opportunity for traders to take advantage of liquidity, thereby buying more contracts.

If we were to break down below the $2.40 level, then we may have to “reset” closer to the 50 week EMA, and of course the psychologically important $2.00 level. All things being equal though, between the hurricanes in the threats to supply disruption, we have had a nice little rise higher and what typically would be the case anyway. I believe buying dips should continue to work.

For a look at all of today’s economic events, check out our economic calendar.

Gold Weekly Price Forecast – Gold Pulls Back for The Week

The gold markets continue to be noisy in general, as we still have not decided what is going on with stimulus in the United States. The markets are ripe for continued pullbacks, mainly because the US dollar continues to see a bit of a bid, mainly due to the fear trade out there, and of course the EU is seeing more virus numbers and as a result the markets are selling the Euro.

Gold Price Predictions Video 19.10.20

The overall structure is one of a potential bullish flag, and this could also ignite more potential buying. The markets pulling back would also find plenty of value hunters underneath, especially near the $1850 level, where the market bounced from before. The $1800 level is an area that is even more important, as it was the scene of a major breakout. The area should continue to see “market memory.” The 50 week EMA is approaching that region as well, and this should continue to offer yet another reason for buying.

The market is likely to go towards the $2000 level given enough time, but between now and the election, I believe that we will see more of a sideways move, perhaps with a slow downward tilt. However, this should be thought of as a potential value play, as stimulus will certainly come after the election, and central banks of course continue to be very loose with monetary policy worldwide. This drives money into “hard assets.” Gold is one of the best markets to avoid devaluation of the fiat currencies around the world. The market is not one that I have any interest in selling.

For a look at all of today’s economic events, check out our economic calendar.

USD/JPY Weekly Price Forecast – Conflicting Candlesticks Show Consolidation

The US dollar has initially fallen during most of the week to reach down towards the ¥105 level again. This is an area that has been supportive in the past, and now that we have recaptured it is likely that we are going to see a lot of choppiness, especially considering that the market looks a little bit like it is forming a hammer during the week, just as the previous week formed a bit of an inverted hammer, showing that we are going back and forth.

USD/JPY Video 19.10.20

Looking at this chart, if we can break down below the ¥105 level it is likely that we go down towards the ¥104 level. A breakdown below there then opens up the possibility of a move down to ¥102. Ultimately, this is a market that is moving on a couple of different reasons, not the least of which would be the stimulus package coming out the United States is probably going to be huge, and of course Japanese bonds are paying more in interest than American ones are, which is a complete surprise based upon historical norms.

That being said, I do think that there is plenty of resistance above, but we are in a relatively tight market, so it is probably going to continue to be short-term based more than anything else. I do favor the downside in general, but I also recognize that it might be a bit quiet between now and the presidential election as well as many other potential economic announcements. Looking at this chart, we have been grinding lower for quite some time and quite frankly nothing has changed.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Weekly Price Forecast – Pulls Back From Major Figure

The British pound initially tried to break higher during the course of the week but found the area above the 1.30 level but pulling back from that area, we crashed into the 1.29 handle. By the end of the week, we have formed a bit of negativity, but ultimately the market looks as if it is trying to simply figure out which way to go. This makes quite a bit of sense that the market would be a bit confused considering that Brexit is a major issue.

GBP/USD Video 19.10.20

The 50 week EMA underneath is closer to the 1.2750 level, which of course is very important due to previous action, and if you draw a horizontal line at that level you can see that the market has flipped back and forth several times. Unfortunately for the British pound, we are still at the mercy of the latest Brexit headline, so that of course is going to cause major issues. I think at this point it is very likely that we will continue to be choppy so it is more than likely going to be a scenario where we have to trade from shorter-term charts more than anything else. In fact, you can make an argument for a consolidation area between the 1.31 handle and the 1.2750 level.

The other part of the equation is of course the US dollar and as you can imagine there is still a lot of noise around the idea of stimulus, so that something that we need to pay attention to as well. In other words, I think you can count on a lot of noise in this market so the default scenario for something like that is going to be choppiness.

For a look at all of today’s economic events, check out our economic calendar.

GBP/JPY Weekly Price Forecast – British Pound Crashes for the Week

The British pound has fallen during the course of the week, reaching towards the ¥135 level. Ultimately, that is where the market has seen the ¥135 level offering a bit of support and resistance, so I think it is going to continue to be very choppy and noisy. Because of this, the market is going to continue to be very noisy due to the fact that the pair is so highly influenced by risk appetite, which of course people are all over the place with.

GBP/JPY Video 19.10.20

The most obvious influence will be the Brexit situation and all of the noise that continue to come from headlines. John that, the Japanese yen is considered to be a safety currency, so that of course is something to pay attention to as well. Ultimately, the ¥135 level is going to be very important, so above there you would have to think the buyers are still in control, but if we were to break down below the ¥135 level then it would take a decidedly negative turn.

At that point, we could be looking at a move to the ¥133 level, and then possibly the ¥130 level. On the other hand, if we break to the upside it is likely that the market goes looking towards the ¥138 level, followed by the ¥140 level. With this, I think you are looking at a very choppy and sideways market as we need to find some type of catalyst that traders can sink their teeth into to put money to work.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Weekly Price Forecast – Euro Pulls Back From Trendline

The Euro has initially tried to break above the previous uptrend line for the week, but then broke down towards the 1.17 level. That being the case, the market is likely to see a lot of choppiness going forward. The market breaking down below the candlestick for the week probably opens up a move towards the 1.16 handle, and then eventually the market will go looking towards 1.15 handle. That is an area that is going to be interesting, mainly because on the daily chart you can see the 200 day EMA reaching towards it. Beyond that, the 1.15 level is of course very interesting due to the fact that it is such a big figure.

EUR/USD Video 19.10.20

The European Union is starting to see a lot of downward pressure economically due to the lockdowns coming, and it now appears that stimulus is probably going to be delayed in America. That could lead to a potential pullback, and quite frankly when you look at this chart you can see quite easily that it has gotten a bit ahead of itself anyway, so a pullback makes sense.

Even if we do break above the uptrend line, the market is likely to see a lot of noise all the way to the 1.20 level, so even on a breakout I would still be a bit suspicious because there are too many problems with the Euro region, and of course the technical “rounding top” that had formed. If we were to break above the 1.20 level, the Euro is going to take off.

For a look at all of today’s economic events, check out our economic calendar.