Global equity market
(Source: KVB PRIME)
After a short rebound, the US equity market declined once again –the Dow Jones closed down by 1.92%at 26763.13, the NASDAQ lost another chunk (3.16%)to close at 10833.33 and the S&P 500 saw a 2.37% decrease, closing at 3236.92. Technology, green energy vehicles and vaccine equity stocks led the fall.
The European market fared much better: the DAX increased 0.39% to 12642.97, while the FTSE rose 1.2% to 5899.26.
Meanwhile, the Chinese market reconsolidated upwards: the Shanghai Stock index rose 0.18%, the SZSE Component index climbed back 0.67% and the GEM index went 1.74% higher.
Crude oil forward contracts
WTI was weak yesterday; despite the price climbing to $40 during the European session and hitting daily highs of $40.69 during the North American trading hours, it closed down by 0.05% at $39.56 per barrel.
Additionally, Brent oil fell 0.65%to $ 41.49 per barrel.
Precious metal forward contracts
Gold suffered another fall, edging down to $1860 and hitting a bottom at $1855. Despite the price slightly recoveringas the US market opened, it closed down by 1.95% at $1862.76 per ounce.
Silver kept dropping, to a maximum degree of 7%, closing at $22.76 per ounce.
Currency pairs
· USDXup to 94.36 (0.426%)
· EUR/USD down to1.16573 (-0.415%)
· GBP/USD down to1.2721 (-0.084%)
· AUD/USD down to 0.70731 (-1.307%)
· NZD/USD down to 0.65512 (-1.177%)
· USD/CAD up to1.33768 (0.566%)
· USD/JPY up to105.324 (0.373%)
Global Fundamentals
United States
Federal Reserve Chairman Jerome Powell was grilled by Congress on how the Fed is helping main street; Powell urged the Fed and Treasury to let commercial real estate (CRE) borrowers tap Main Street loans.
Federal Reserve Vice Chairman Richard Clarida noted that, even as the economy is recovering,11 million labours are still jobless and small and medium sized corporations still face pressures.
The Fed is planning to provide further monetary support and pledged that until the labour market recovers and the 2% inflation target is achieved, the US will not see a rise in interest rates.
The US ECON-Market flash September composite PMI came in at 54.4, down from 54.6 in August. Meanwhile, the manufacturing PMI came in at 53.5, beating both initial expectations and the figure of 53.1 from August. However,the services PMI recorded a figure of 54.6, down from 55 in the previous month.
Japan
The Bank of Japan (BoJ) said it expects to pump around 110 trillion Yen ($1trn) into the Japanese economy via its market operations and lending facilities, which are aimed at combating the hit from the current health crisis. Bank of Japan Governor Haruhiko Kuroda listed the country’s inflation target as 2%.
New Zealand
The Reserve Bank of New Zealand (RBNZ) announced base interest rates would not change,sticking at 0.25% as per market expectations.
Major asset intraday analysis
EUR/USD and GBP/USD
Both the Euro and pound kept dropping yesterday, but the rate of decline slowed;suggesting the current movement is a reconsolidation rather than a legitimate turn.
While ever the deadline of the Brexit agreement looms, there will be continued drama between the UK and EU. Additionally, due to growing fears of a second wave of coronavirus, currencies across whole Europe are expected to perform poorly.
Nevertheless, our mid-term support prediction remains the same: 1.16 for EUR and 1.27 for GBP, both of which will likely be tested several times.
If the GBP price drops through 1.27,then the next support will potentially be around 1.262. In the short term, both prices need to be reconsolidated.
In terms of resistance, the Euro’s 1.170 boundary, and the GBP’s 1.275 level,deserve our attention today.
[EUR/USD, four-hour chart] (Source: KVB PRIME)
[GBP/USD, four-hour chart] (Source: KVB PRIME)
AUD/USD
Compared to European currencies, the Australian dollar is much weaker. The drop sped up, while last month’s data suggests the current price is now 1.7 derivations away from the weekly average. The price is also close to our key support at 0.706.
The AUD is expected to fall further over the medium and long term - but in the short term, the price may climb back (with some resistance) at 0.712 due to the Aussie being oversold; this should be the focus of our observations intraday.
[AUD/USD, four-hour chart] (Source: KVB PRIME)
Gold
Gold holders and buyers seem nervous, and many ran from the market yesterday. The price hit our expected support at $ 1878 and progressed a further $15.
Based on the trend from February, our next support will likely be at $ 1830.
An influx of investors may join the market due to the current low price, but they are not likely to participate for long due to the looming US election.
[XAU/USD, four-hour chart] (Source: KVB PRIME)
USD Index
The USDX seems to be unstoppable and is edging closer to our key resistance at 94.8 - even the US equity market is going down whilst the European market grows stronger.
The pessimistic equity market is currently supressed by uncertainty surrounding the US election; we expect there will be another market shuffle afterwards.
Our previous resistance prediction of $ 94.8 remains valid today, while we will adjust our expected support level to 94.03.
The USDX could even test 96 today in the event of further developments in the UK-EU Brexit drama.
[USDX, four-hour chart] (Source: KVB PRIME)
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