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EUR/USD and Gold Eye Key Tech Levels- What Moves Markets?

EUR/USD and Gold Eye Key Tech Levels- What Moves Markets?

Equities extend losses amid risk-off sentiment, while a Democrat win in the US elections may not be bad for markets.

The Australian unemployment figure for September released earlier of 6.9% came in better than expected of 7.1% however, the data was higher than the prior month of 6.8%. On the other hand, the Chinese inflation rates for September of 1.7% came in lower than expected of 1.8% and far lower than the previous month of 2.4%. That said, the data did not have any observable effect on their respective currencies.

Equities

Most of the global stock market closed in the red on Wednesday as hopes of a new US stimulus package faded further with the US administration officials saying that reaching a deal would be more likely after elections. Additionally, the coronavirus uptrend in Europe increases concerns of possible lockdowns in some countries, while the US/China tensions escalate as the US thinks to blacklist the Chinese Ant group.

On the other hand, markets expect a bigger fiscal stimulus package should the Democrat candidate Joe Biden become the new resident of the White House. Biden may restore certainty in global trade and lower tensions with China, while could increase corporate taxes.

Stock Market

Change %

S&P 500

-0.7%

Dow Jones

-0.6%

NASDQ

-1.2%

Japan 225

+0.07%

DAX 30

-0.2%

FTSE 100

-1.1%

CAC 40

-0.6%

EUR/USD and Main Currency Pairs

Investors moved this week to the greenback as a hedge against uncertainty coming from the delay in the Jonson & Johnson coronavirus vaccine and the US elections. The US Dollar index stabilized above the 50-day moving average highlighting a risk-off sentiment therefore, the price could be for a test of 94.04.

The EUR/USD retreated further on Wednesday however, remained above 1.1713. A daily close below that level could send the price towards 1.1621.

The GBP/USD trader's eyes will be on the European Council meeting taking place today and tomorrow. The European leaders may put more pressure on London to compromise on key negotiations points such as fisheries and fair competition. The pair could fall towards 1.2773 while below 1.3048.

Gold and Oil

This week, oil was under pressure however, crude oil rallied on Wednesday with increased Chinese demand and reduced output from UAE OPEC countries after overstepping production in August. Investors will keep an eye on the US inventory data today.

Brent oil closed above the 50-day moving average on Wednesday. A lower than expected US data would be supportive for the price and may rally the US Crude towards $42.23, while a higher than expected could reverse it towards $38.37.

The Gold corrected its downtrend on October 7 and created a higher low at $1,872, since then the price has traded without any clear trend. The precious metal steadied below $1,921 due to a stronger US dollar and could be on the way for a test of $1,861/oz.

Looking Ahead

The EUR/USD and Gold traders will follow the US initial jobless claims at 1:30 PM (GMT) and the US change in inventories at 4:00 PM then the ECB president Lagarde’s speech.

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.