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EUR/USD and Gold Await the ECB and Fed Chairman’s Speeches

EUR/USD and Gold Await the ECB and Fed Chairman’s Speeches

Equities rally on weaker risk-off sentiment and the greenback remains stable. How markets started this week?

The Chinese GDP (Q3) of 4.9% came in lower than expected of 5.2% however, this read was far better than the prior read of 3.2%. The Chinese industrial production of September climbed to 6.9% above the expected 5.8% and the prior print of 5.6%. Additionally, the Chinese Retail Sales of 3.3% came in better than expected of 1.8% and better than the prior of 0.5%. This data sends mixed signals about the Chinese economic recovery.

Equities

Hopes of a possible agreement on US fiscal stimulation and news about a possible registration of Pfizer Coronavirus vaccine have calmed down risk-off sentiment. Asian stock markets traded higher on Monday amid the better than expected industrial Chinese data.

The house speaker Nancy Pelosi stated that there are too many issues that should be agreed on with the White House however, they are not far from an agreement. Although, President Trump advisors said that it would be difficult to execute the relief package before the US elections.

Stock Market

Change %

S&P 500

-0.5%

Dow Jones

-0.01%

NASDQ

-0.9%

Japan 225

+0.1%

DAX 30

+1.1%

FTSE 100

+0.8%

CAC 40

+0.8%

EUR/USD and Main Currency Pairs

The greenback rose last week and closed on Friday in the green due to the risk-off sentiment in the market mainly from the delay in passing the US stimulus package and the increasing numbers of the Coronavirus in the US and Europe. Technically, the US Dollar index is still trading below 94.04 and this means that the index could fall towards 91.78.

The EUR/USD closed below the 50-day moving average reflecting bull’s weakness and tested 1.1713 twice. A daily close below that level could send the pair towards 1.1621.

The GBP/USD consolidated in the trading zone 1.2773- 1.3048. The price of the pair does not reflect at the moment any hard-Brexit risk as markets believe that the EU/UK will eventually end up with a deal. A daily close below 1.2773 may cause a further fall towards 1.2505.

Gold and Oil

Oil prices benefited from positive Chinese data showing a significant increase in industrial production. Technically, the Brent Crude rallied and remained above $42.50 last week however, the coronavirus increasing numbers in the US and Europe would keep any rally in check. The US Crude closed last week above the 50-day moving average and opened on Monday with an upward gap. A failure in closing above $42.23 could reverse the price’s direction towards $38.37.

The Gold traded in a sideways move creating higher lows with lower highs. A failure in closing above $1,921 could send the price for a test of $1,861/oz.

Looking Ahead

EUR/USD and Gold traders will follow the Fed Chairman Powell’s speech at 1:00 PM (GMT) and the ECB Lagarde’s speech at 1:45 PM. Investors will fallow also the Fed member William’s, Clarida, Bostic, and Harker's speeches at 3:00 PM, 4:45 PM, 7:20 PM, and 8:00 PM, respectively.

This information/research prepared by Mahmoud Alkudsi does not take into account the specific investment objectives, financial situation or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk. The research provided does not constitute the views of JME Financial Services (Pty)Ltd nor is it an invitation to invest with JME Financial Services (Pty)Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of the date the report is published, the research analyst and his/her spouse and/or relatives who are financially dependent on the research analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities). The research analyst in not employed by JME Financial Services (Pty)Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation or particular financial needs before making a commitment to invest. The laws of the Republic of South Africa shall govern any claim relating to or arising from the contents of the information/ research provided.