Financial market research and analysis

The week started with a mixed risk sentiment.

The US dollar index eased to a two-month low on Friday and lacked a clear direction against the G10 currencies on Monday. Gold (+0.32%) consolidates gains between mid-upper Bollinger bands ($1’280/1’295). Positive breakout could see more resistance by $1’300/1’306 (psychological resistance / Oct high). Buyers are eyed at $1’265 (lower Bollinger band & 200-day moving average).

Asian stock markets closed the first trading day of the week on a negative note.

The FTSE 100 edged lower at the open. Energy (-0.14%) and mining stocks (-0.67%) traded under pressure, as COMEX copper futures slid 1.25% and WTI crude (-0.83%) bounced lower from $59/barrel. OPEC and its allies will meet in Vienna this week; they are expected to extend the output cut agreement from March 2018 (current deadline) to September 2018 the earliest. This is widely priced in, therefore deeper cuts or a longer engagement may be needed for a sustainable attempt above the $60 level.

Cable consolidates last week’s gains above its 50-day moving average (1.3249). The next natural target for GBP-longs is 1.3400. The Bank of England (BoE) Financial Stability Report could curb the pound appetite on Tuesday and trigger some profit taking. In the dirt of important economic data, the pound traders will shift their focus to the Brexit issues. The UK should submit its official offer for a Brexit settlement in less than a month to unlock talks regarding the future of the EU/UK trade relationship. Hence, pound traders will likely opt for short-term long positions, as longer duration bets are too risky and will not give traders a peace of mind before a concrete outcome on Brexit negotiations.


EUR eyes the 1.20 threshold

German Chancellor Angela Merkel is looking for alternatives to form a government. According to the latest news, she will meet with SPD's Martin Schulz on Thursday. The EURUSD advanced to 1.1948. Trend and momentum indicators are comfortably positive. Resistance is eyed at 1.20 (psychological level), before 1.2090 (2017 high). There are call options by 1.20, yet no option barriers at this level, suggesting that traders are mostly hedged against a further euro appreciation against the greenback.


US stocks boosted by Black Friday

The US stocks renewed record on Friday. The S&P500 closed above the $2’600 level. Black Friday sales topped $5 billion for the first time according to Adobe Systems and Cyber Monday will likely be the biggest online shopping day in the US history, with estimated $6.6 billion sales. US equity futures retraced a part of the recent gains in Asia and Europe due to a global risk-off trading environment, yet buyers could rapidly kick in and reverse the intra-day trend. There are no signs of anxiety in the market. The VIX index stands at 9.67%.


AUD lacks carry traders’ support

The AUDUSD is offered, despite the ongoing recovery in iron ore futures. Without the support of carry traders, the pair may not avoid a slide toward the 0.75 level. The carry-less market is also reflected in other crosses. The USDJPY remains capped by its 200-day moving average (111.71), the AUDJPY consolidates losses below 85.00 level, the EURAUD advanced to the highest level since February 2016. The rate differential is not a key market driver at the moment.

Risk-traders seek interest in equity and bond markets, rather than high-yielding money markets.


The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced. Losses can exceed deposits.