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Nasdaq 100, US Dollar, Gold, Stimulus, GBP, Brexit, Earnings

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The anti-risk US Dollar and Japanese Yen weakened this past week as a revival in fiscal stimulus hopes bolstered global market sentiment. The S&P 500 gained 3.84% in its best week since late June. The tech-heavy Nasdaq Composite soared 4.56%. Anti-fiat gold prices capitalized on weakness in the Greenback, rallying for a second consecutive week alongside crude oil prices.

USD Forecast

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What is the road ahead for the US Dollar in Q4?

US policymakers inched closer towards a package. After initially calling off stimulus talks until after the November election, President Donald Trump turned a 180 as he signaled that he wants a larger package than what both parties have offered. The Democratic-proposed bill is about $2.2 trillion with Republicans now looking at a $1.8 trillion outcome.

Heading into the new week, Senate Majority Leader Mitch McConnell said that he doesn’t know if there can be a deal or not. Sentiment will also continue being influenced by polling data. Joe Biden’s widening lead against Trump has raised prospects of a larger-than-expected stimulus package. Meanwhile, the Federal Reserve seems to be sitting on the sidelines for the time being.

Brexit talks are supposedly heading into the final push this week, opening the door to British Pound volatility. UK Prime Minister Boris Johnson picked October 15th as the last do to potentially strike a deal with the EU. The third-quarter earnings season is also kicking off in the US with major financial institutions reporting. Australia releases its next jobs report. What else for markets next?

Equities Forecast

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What is the road ahead for equities in Q4?

Fundamental Forecasts:

Gold Price Outlook Dictated by Presidential Polls, Fiscal Aid Hopes

Gold’s resilience in the wake of fading fiscal aid hopes suggests that the price of Bullion may hinge on polling data ahead of US Presidential Elections in November.

S&P 500 and FTSE 100 Forecasts for the Week Ahead

Path of least resistance is higher for S&P 500 in the absence of notable catalysts. FTSE 100 eyes de-facto Brexit deadline

Sterling (GBP) Weekly Outlook: EU/UK Trade Talks – It’s Time to Decide

The UK voted to leave the European Union over four years ago and we are now heading into the week when both sides, potentially, will finally say ‘deal or no-deal’.

Crude Oil Torn Between Earnings, Fiscal Stimulus Updates & Brexit Woes

Crude oil prices may seesaw between fiscal talks and corporate earnings with Brexit woes and the policy implications for a growing number of Covid-19 cases.

US Dollar Outlook: Election Polling, Economic Data, Q3 Earnings Season

The US Dollar could weaken as the markets bet on more fiscal stimulus. However, lackluster economic data could offset those losses as earnings season gets underway.

Technical Forecasts:

GBP Price Forecast: Pound Sterling Volatile Amid Brexit Talks

The Pound Sterling has popped higher over recent trading sessions against the US Dollar but struggles to make headway against the Euro. GBP price action also remains jumpy around Brexit headlines.

Australian Dollar Technical Forecast: AUD/USD Snaps Back from .7000

Despite a post-RBA sell-off from a huge zone of resistance, AUD/USD bulls put-in a higher-low and prices jumped for the final three days of this week.

Oil Price Rebound Undermined by Negative Slope in 200-Day SMA

The 200-Day SMA ($38.75) undermines the recent rebound in the price of oil as the simple moving average continues to track the negative slope from earlier this year.

Gold Price Forecast: XAU/USD Recovery Faces First Test

Gold prices surged 4.2% off the September lows with the rally now approaching downtrend resistance. Here are technical levels that matter on the XAU/USD weekly chart.

Euro Forecast: EUR/USD Outlook Murky Ahead of Crucial EU Summit

EUR/USD and EUR/GBP can be expected to tread water ahead of the European Council meting that starts Thursday and will discuss both the Covid-19 pandemic and EU-UK relations post Brexit.

Mexican Peso Technical Forecast: Looking for Invalidation of Key Support

USD/MXN tries to take advantage of market optimism to invalidate a key support level.

S&P 500 Eyes Key Resistance Level at 3,500 With Upward Momentum

The S&P 500 index cleared higher highs after forming a bullish “AB=CD” pattern. An immediate resistance can be found at 3,500 – the 100% Fibonacci extension.

US Dollar Weekly Performance Against Currencies and Gold

Markets Week Ahead: Nasdaq 100, US Dollar, Gold, Stimulus, GBP, Brexit, Earnings





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Index on its Backfoot as Virus Cases Accelerate

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IBEX 35 Index, Covid, Economic Outlook – Talking Points:

  • IBEX 35 Index drops as Covid infections accelerate
  • Index continues to underperform regional peers
  • GDP outlook and deficit pose headwinds for economy

The Ibex 35 Index finished Wednesday’s trading session on its backfoot – down 1.67% – amid a worsening outbreak of Covid infections across the country and the broader European Union. Year to date performance for the Spanish index sits nearly -29 percent lower. This compares to the Euro Stoxx 50 index at -15 percent, and the FTSE 100 at -23 percent.

IBEX 35 Index (Daily Price Chart)

IBEX 35 Price Chart

Created with TradingView

While other EU countries are seeing rising cases, Spain continues to size an outsized rate of infections. The total case count rose above the 1 million-mark Wednesday afternoon, as Spain’s Health Ministry reported 16,973 new confirmed cases. A new round of prevention measures, including perhaps government mandated shutdowns, is likely to keep any bullish momentum from forming in the index.

Cumulative Covid-19 cases in Key European Economies

Cumulative covid cases Spain EU

Source: Our World in Data

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Spain’s budgetary problems also pose a problem for its economy – a problem that existed before the pandemic, and now exacerbated by it with the loss of economic output. Spain does plan to use just over 70 billion in grants made available from the EU recovery fund. However, it is not clear yet if Spain will accept more funding in the form of loans from the EU. The existing budgetary concerns are possibly giving Spanish policy makers concern over adding to the deficit.

IMF Economic Outlook Projections

IMF Economic Outlook

Source: IMF World Economic Outlook

Moreover, Spain faces one of the deepest economic contractions within the Euro Area according to the IMF’s latest economic outlook projections, with this year’s drop in GDP forecasted at -12.8%. However, the IMF expects Spain to outperform for 2021 with a projected 7.2% climb in growth versus France at 6.0%, and Germany at 4.2%. A value play could be argued at current prices, but the uncertainty given the virus and other factors in play would make that a highly uncertain gamble.

–Written by Thomas Westwater, Contributor for DailyFX.com

Contact and follow Thomas on Twitter @FxWestwater





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EUR/USD May Challenge 2-Year Resistance. Fiscal Talks Making Headway

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2020 Election, EUR/USD, Presidential Debate, EUR/USD Analysis, Polling Data – Talking Points

  • Third presidential debate ahead – will there be greater clarity this time around?
  • Democrats, Republicans are making progress on fiscal talks, lifting sentiment
  • EUR/USD could challenge 2-year resistance area between 1.1936 and 1.1965

13 DAYS UNTIL THE US PRESIDENTIAL ELECTION

It is officially less than two weeks until the November 3 election and polls continue to show Democratic nominee Joe Biden in the lead. However, the spread between him and incumbent President Donald Trump has somewhat narrowed after it burst open following the first presidential debate. Looking ahead, markets will be closely watching the third and final one on Thursday.

2020 US Election Polls

Chart showing 2020 election

Source: RealClearPolitics

Fiscal talks continue to dominate market mood as policymakers scramble to put a bill forward. House Speaker Nancy Pelosi’s spokesman said both sides are “closer to being able to put pen to paper to write legislation”. The big question continues to be whether another stimulus bill can be passed before the November 3 election, with issues like local government aid and liability protection for firms prolonging talks.

The third and final presidential debate is coming up in less than 36 hours, and the non-partisan Commission on Presidential Debates (CPD) has made an interesting new amendment. The organization said that while each candidate is speaking, it will mute the microphone of the other candidate to ensure each has enough time to convey their message.

How to Use IG Client Sentiment in Your Trading

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EUR/USD Analysis

EUR/USD has bounced from the previously-broken 1.1698-1.1720 support range and may now challenge 2-year resistance zone between 1.1936 and 1.1965. Capitulation could signal an underlying lack of confidence in the pair’s upside potential – at least in the short run. On the hand, breaking that multi-layered ceiling could signal the start of a bullish resumption.

EUR/USD – Daily Chart

Chart showing EUR/USD

EUR/USD chart created using TradingView

— Written by Dimitri Zabelin, Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or@ZabelinDimitrion Twitter





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Tesla Beats Earnings Expectations, Shares Pop

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Nasdaq 100 Price Forecast:

Nasdaq 100 Outlook: Tesla Beats Earnings Expectations, Shares Pop

Fan-favorite electric carmaker Tesla (TSLA) released its quarterly report after the close Wednesday, treating investors with an earnings beat and a quick rally in share prices. The reported outline a continuation of profitability for Tesla, despite a decline in the average price of vehicles sold. Still, the more affordable models should begin to pressure competitors in the increasingly competitive space.

Suffice it to say, Tesla shareholders might have reason to remain optimistic in the months ahead as the company continues to expand its production plants across the globe. An increase in production capability should allow Tesla to reduce its cost per vehicle, simultaneously decreasing sale prices – pressuring competitors further. Either way, a rise in Tesla’s share price should help the Nasdaq 100 in the second half of the week as it is responsible for more than 3% of the index.

Elsewhere, earnings from companies that would be considered more closely aligned with a traditional economy also outperformed expectations. Rail company CSX (CSX), appliance-maker Whirlpool (WHR) and Chipotle (CMG) all beat Wallstreet estimates, seeing CSX and WHR shares rise in after-hours trading. Critically, the upbeat earnings from all three corporations might hint at a subtle recovery in the underlying economy that may be required for continued strength in the broader US indices.

Nasdaq 100 Price Chart: 4 – Hour Time Frame (September 2020 – October 2020)

nasdaq 100 price chart

In terms of price action, the Nasdaq 100 appears to be contained by resistance around the 11,800 mark and support near 11,600. Together, the two horizontal barriers may see the tech-heavy index trade sideways until big-ticket earnings from Apple, Amazon and Facebook are released next week. Nevertheless, a break through either level might see a continuation unfold. In the meantime, follow @PeterHanksFXon Twitter and check back at DailyFX for earnings coverage from a macroeconomic perspective.

Equities Forecast

Equities Forecast

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–Written by Peter Hanks, Strategist for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX





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