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US Dollar, Gold , Dow Jones, Sterling, US Stimulus, NFPs



Global risk appetite continued to sour this past week. In the United States, the Dow Jones and S&P 500 declined while the tech-heavy Nasdaq Composite managed to inch out a cautious rise. The haven-linked US Dollar outperformed its major peers, seeing its best 5-day performance in about 6 months. This likely weighed against anti-fiat gold prices.

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Investors might have been growing increasingly impatient with a lack in expediency of additional US fiscal stimulus. At a congressional testimony, Fed Chair Jerome Powell stressed the need for further support from the government. Still, volatility cooled into the end of the week. The VIX ‘fear gauge’ failed to accumulate material upside momentum.

Might volatility pick back up? This coming week is certainly filled with event risk. All eyes will turn to the US House of Representatives where the chamber may vote on a $2.4 trillion fiscal package. This is as Donald Trump takes on Joe Biden on Tuesday during the first presidential debate ahead of what is likely to be a tense election come November.

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The Euro has been seeing some selling pressure, particularly as coronavirus cases in parts of Europe pick up pace. Might the British Pound regain some lost ground as the EU and UK head into another round of Brexit talks? All eyes at the end of the week turn to the US non-farm payrolls report. Chinese manufacturing PMI will also be watched to gauge the health of global growth.

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Fundamental Forecasts:

Euro Forecast: EUR/USD Outlook Still Bearish But Bounce Due

EUR/USD fell sharply last week and there are few signs yet that the selling is over. However, a bounce is likely before the decline resumes.

USD Volatility Ahead? Presidential Debate, Stimulus Talks & NFPs on Deck

The US Dollar will be bracing for a cascade of political risks including the first presidential debate, ongoing stimulus talks, the Supreme Court vacancy against the backdrop of key employment data.

Oil Price Rebound Stalls Ahead of Monthly High with OPEC on Sidelines

The price of oil may continue to trade in a narrow range as the rebound from the September low ($36.13) appears to have stalled ahead of the month high ($43.43).

S&P 500 Price Forecast: US Presidential Election May Spook Volatility

The S&P 500 index may struggle with a consolidation in view of several headwinds. The US presidential election may cool risk appetite and spook volatility.

Mexican Peso Fundamental Forecast: Banxico Tries to Aid Economic Recovery

USD/MXN pushes higher as a long-awaited correction in the US Dollar gets underway

GBP/USD Weekly Forecast: Cautious Optimism Signals a Brexit Deal is Near

GBP turbulence persists as investors eye the next round of EU-UK Brexit negotiations. Cautious optimism signals a deal is near.

Gold Price Outlook: Rising US Dollar Sinks XAU/USD, Will Losses Extend?

Anti-fiat gold prices suffered the worst week since August as the US Dollar gained ground. Will losses extend? All eyes turn to fiscal stimulus hopes and non-farm payrolls data.

Australian Dollar May Extend Fall Despite Easing Covid-19 Restrictions

The Australian Dollar may extend its slide lower despite the planned easing of Covid-19 restrictions, as the market continues to price in an RBA rate cut on October 6.

Technical Forecasts:

Gold Price Forecast: XAU/USD Plummets, Are the Bulls Done For?

Gold prices have plunged nearly 11% off the record highs with a breakout risking further losses. Here are technical trade levels that matter on the XAU/USD weekly chart.

Pound Technical Outlook: GBP/USD Sell-off Set Up to Continue

Cable looks set up for another leg lower as a new week is set to roll around; levels and lines to watch.

US Dollar Technical Forecast: EUR/USD, AUD/USD, USD/CAD, GBP/USD

The US Dollar continues to show tones of reversal as Q3 winds down. Can buyers drive the currency through the Q4 open?

Nasdaq 100, DAX 30, FTSE 100, CAC 40 Forecasts for the Week Ahead

Weakness in equity markets continued last week as losses built and technical patterns hint further bearishness might be ahead.


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Currency market volatility jumps before U.S. election outcome By Reuters




© Reuters. FILE PHOTO: U.S. dollars and other world currencies lie in a charity receptacle at Pearson international airport in Toronto

LONDON (Reuters) – Gauges for implied currency swings in the $6.6 trillion a day foreign exchange markets jumped to their highest levels in nearly seven months on Wednesday as traders anticipated more volatility before the outcome of the U.S. elections next week.

Contracts for euro and Japanese yen one-week implied volatility versus the U.S. dollar expiring in a week climbed to their highest levels since early April before the U.S. Presidential elections on Nov. 3.

While general currency market volatility remains elevated this week as Europe experiences a surge in coronavirus cases, the spurt in short-end volatility indicators indicate concerns around the U.S. election outcome, even though odds have stabilised this week.

In equity markets, the widely watched VIX index () held below a June 2020 high.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Canadian Dollar Poised to Fall Ahead of Bank of Canada Rate Decision




Canadian Dollar, CAD/JPY, USD/CAD, Bank of Canada, Covid-19 Second Wave – Talking Points:

  • A mixed day of trade during the APAC session saw the Australian and New Zealand Dollars outperform their major counterparts.
  • The Canadian Dollar could come under pressure as global market sentiment sours, ahead of the BoC interest rate decision.
  • USD/CAD eyeing a push back towards the monthly high.
  • CAD/JPY rates at risk of extended declines after snapping below key support.

Asia-Pacific Recap

It proved to be a relatively mixed Asia-Pacific trading session, with risk-associated assets pegging back lost ground late into the close after tumbling in early trade.

The Australian and New Zealand Dollars were the best performing currencies, as investors seemed to put a premium on assets from countries with a lower Covid-19 case count.

Australia’s ASX 200 index nudged 0.1% higher, while China’s CSI 300 index rose 1.1%.

The Euro lost ground against all of its major counterparts, as a record surge in coronavirus cases forced several European governments to tighten restrictive measures.

Gold and silver nudged marginally higher, while yields on US 10-year Treasuries remained unchanged at 0.76%.

Looking ahead, the Bank of Canada’s interest rate decision headlines the economic docket alongside EIA crude oil inventories for the week ending October 23.

Canadian Dollar Poised to Fall Ahead of Bank of Canada Rate Decision

Market reaction chart created using TradingView

Souring Sentiment May Hamper CAD Ahead of BoC

The cyclically-sensitive Canadian Dollar is at risk of further losses against the Japanese Yen and US Dollar, as souring market sentiment weighs on the performance of risk-associated assets.

A record surge of Covid-19 infections has forced governments across Europe to impose growth-hampering restrictions, while the number of active coronavirus cases in Canada has more than doubled in the last 30 days.

In fact, Canada’s chief public health officer Theresa Tam has warned that “as hospitalizations and deaths tend to lag behind increased disease activity by one to several weeks, the concern is that we have yet to see the extent of severe impacts associated with the ongoing increase in Covid-19 disease activity”.

Canadian Dollar Poised to Fall Ahead of Bank of Canada Rate Decision

Source – Apple Mobility Data

The tightening of restrictions in several Canadian provinces is likely to fuel regional investors’ concerns that the nation’s economic recovery is at risk of stagnating, or perhaps even reversing, as high-frequency mobility data shows all three mobility trends continuing to trend lower after peaking in early September.

However, deteriorating health outcomes may not be enough to force the Bank of Canada to adjust its monetary policy settings at its upcoming meeting, given Governor Tiff Macklem and his colleagues are expected to release upward revisions to their economic growth projections.

Moreover, Macklem has previously stated that “as much as bold policy response as needed, it will inevitably make the economy and financial system more vulnerable to economic shocks down the road”, adding that “the bottom line is that the private and public sectors together need to acutely aware of financial system risk and vulnerabilities as the economy recovers”.

Canadian Dollar Poised to Fall Ahead of Bank of Canada Rate Decision

USD/CAD comparison chart created using TradingView

This could indicate that Canadian policymakers are becoming more sensitive to the potential impact of alternative policy measures and may hesitate to do more unless it is absolutely necessary.

Nevertheless, the lack of action from the BoC may fail to underpin the Loonie in the near-term, as pre-election jitters and Covid-19 second wave concerns gnaw at market sentiment.

Therefore, the Canadian Dollar may come under pressure against its anti-risk counterparts, should the current risk-off dynamic continue to fuel haven inflows.

CAD/JPY Daily Chart – Trend Break Hints at Further Losses

Canadian Dollar Poised to Fall Ahead of Bank of Canada Rate Decision

CAD/JPY daily chart created using TradingView

From a technical perspective, the CAD/JPY exchange rate is at risk of extending its losses, after slicing through the uptrend extending from the May low (74.79).

With the RSI and MACD indicators tracking below their respective neutral midpoints, the path of least resistance seems skewed to the downside.

A daily close below the psychologically imposing 79.00 mark would probably ignite a push to test the 78.6% Fibonacci (78.46), with a break below the 50% Fibonacci (77.87) needed to bring the May low (74.79) into focus.

Conversely, if psychological support holds firm a retest of the 100-day moving average (79.56) is hardly out of the question.

USD/CAD Daily Chart – Short-Term Rebound at Hand?

Canadian Dollar Poised to Fall Ahead of Bank of Canada Rate Decision

USD/CAD daily chart created using TradingView

USD/CAD rates could be poised to rebound back towards the September 9 high (1.3260) and Descending Channel resistance, after surging away from the monthly low set on October 21 (1.3081).

A bullish crossover on the MACD indicator, in tandem with the RSI holding above 40, suggests that the path of least resistance could be higher.

A daily close above confluent resistance at the trend-defining 50-day moving average (1.3236) could signal a potential shift in sentiment and generate a push back towards the June low (1.3316), with a break and close above the 100-DMA (1.3328) needed to invalidate the bearish continuation pattern.

Having said that, with price tracking below all four moving averages, a topside push may prove to be a mere short-term correction.

With that in mind, continuation of the primary downtrend looks likely if price fails to breach the 38.2% Fibonacci (1.3328), with a daily close below the 1.3100 mark needed to carve a path to test the yearly low (1.2994).

Canadian Dollar Poised to Fall Ahead of Bank of Canada Rate Decision

Retail trader data shows 70.49% of traders are net-long with the ratio of traders long to short at 2.39 to 1. The number of traders net-long is 6.45% higher than yesterday and 3.92% higher from last week, while the number of traders net-short is 17.51% lower than yesterday and 26.94% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/CAD prices may continue to fall.

Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed USD/CAD trading bias.

— Written by Daniel Moss, Analyst for DailyFX

Follow me on Twitter @DanielGMoss

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Gold Price Coils Up in Tight Range. Will US Election Trigger Breakout?





  • Gold prices ranged above a key support level at US$ 1,900 amid souring sentiment
  • The US election may serve as a catalyst for gold trading next week
  • 79% of the retail gold traders (within IG)are in long positions, slightly higher than a week before

Gold prices consolidated at above US$ 1,900 this week amid souring market sentiment due to a resurgence in coronavirus cases around the globe. The absence of geopolitical catalysts and a relatively muted US Dollar index have led gold prices to consolidate within a tight range between US$ 1,900 – 1,910. Some traders may prefer to sit on the sidelines until the political skies are cleared after the US election, which is only one week from now.

Although Democratic presidential candidate Joe Biden appears to have a comfortable lead in national polls, the potential tail risk of a Trump-win scenario can’t be neglected. This renders the risk-averse US Dollar susceptible to a strong haven bid should the election outcome derails from the poll forecasts. A strengthening US Dollar is likely to weigh on precious metal prices, especially when ‘risk off’ sentiment is prevailing.

of clients are net long.

of clients are net short.

Change in Longs Shorts OI
Daily -1% 4% 0%
Weekly 5% -4% 3%

The medium-term outlook, however, appeared biased towards the upside as the Fed continued to expand its balance sheet, albeit at a much slower pace compared to earlier this year (chart below). The Federal Reserve balance sheet hit an all-time high of 7.177 trillion in October, surpassing the previous record seen in early June. Ample liquidity and ultra-low interest rates may buoy the medium-term outlook for precious metal prices, albeit short-term pressure remains.

Gold Price Coils Up in Tight Range. Will US Election Trigger Breakout?

Source: Bloomberg, DailyFX

Technically, gold prices came off the all-time high (US$ 2,075) in early August and have since entered a three-month consolidation. Prices attempted to stabilize since end September after finding a strong support at US$ 1,870 (the 76.4% Fibonacci retracement).

Gold prices have also formed a few bearish harmonic pullbacks (highlighted in black straight lines) before entering into an “Ascending Channel” in October. Immediate support levels can be found at US$ 1,900 (50-Day SMA), followed by US$ 1,883 (lower Bollinger Band). A narrowing Bollinger Band width suggests that tight range-trading may continue.

Gold PriceDaily Chart

Gold Price Coils Up in Tight Range. Will US Election Trigger Breakout?

IG Client Sentiment indicates that retail gold traders are heavily leaning towards the long side, with 79% of positions net long, while 21% are net short (chart below). As gold prices consolidate, retail traders have trimmed long (-1%) positions and added short (+7%) bets overnight. Compared to a week ago, traders have added to both long (+4%) and short (+1%) exposure.

Gold Price Coils Up in Tight Range. Will US Election Trigger Breakout?

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