Market Overview
Two key factors are at play in the markets today, the dollar strength is resuming and oil is pushing higher once more. The dollar bull run that had threatened to wane after the disappointing Non-farm Payrolls has come back strongly once more in the wake of a somewhat acrid second Presidential debate (and the dreadful revelations in the Trump video). Hillary Clinton is seen as a dollar positive victor in the Presidential race and polls suggest her lead is widening. The US dollar bulls are subsequently flexing their muscles once more and this means that Dollar/Yen is closing in on a key breakout once more, Cable is dropping once more and even EUR/USD is threatening a break. The oil bulls have also regained their poise after Russia have claimed that they are also ready to take part in some sort of production freeze or perhaps even a cut was possible. The June high was breached on a closing basis on Brent Crude (although WTI is lagging slightly) to take the price to its highest since September 2015.
Equity markets took this as a positive and risk appetite was positive into the close on Wall Street (S&P 500 +0.5%) with Asian markets also positive (Nikkei +1.0%). European markets are a little more cautious in the early moves and it will be interesting to see if the bulls will take up the challenge today. In forex markets the dollar strength is showing once more across the board, however interestingly, once more the euro is fighting hard and trying its hardest to resist. Gold and silver are bucking the dollar strength strategy and are trading higher on the day, although their recent recoveries are struggling to gain much traction. The oil price has just unwound slightly in the early moves.
Again there is little on the economic calendar, but traders will be watching out for the German ZEW Economic Sentiment at 1000BST which is expected to improve to 4.3 (from 0.5 last month), coming a day after the Eurozone Sentix investor confidence indicator beat estimates.
Lucky 8 – FX Trader of the Year 2016 competition update
I am now moving on to look at a new set of Lucky 8 instruments for Week 2 of our competition that we are running throughout October. I will be giving daily updates on how the Lucky 8 instruments of the week are performing.
• GBP/USD – The market has just resumed its slide backwards again and the hourly chart shows a series of lower highs as the market is moving back towards a test of an intraday low from Friday at $1.2223. Resistance is at $1.2375 and $1.2400. (See below for more detail).
• NZD/USD – The completed top below $0.7220 continues with the bears in increasing control. The support at $0.7085 has now been breached to now open $0.6950. Bearishly configured momentum suggests further downside potential with rallies being sold into.
• EUR/GBP – A minor consolidation day yesterday with a doji, but the euro bulls (or should that be sterling bears) retain control and the market is rising again. The Stochastics are still impacted by the huge intraday pullback on Friday, but other momentum remains negative. A decisive breach of £0.9040 opens £0.9100 again. Support is at £0.8975.
• EUR/AUD – The mild recovery on the daily chart took a hit on yesterday’s sell off, but the early bounce today shows that this remains a consolidation play for now. Although support is now down to 1.4630, hourly momentum indicators suggesting playing this as a range with resistance at 1.4780.
• USD/ZAR – The pivot support on the hourly chart around 13.685 is holding and keeps the near term bulls just in control. This now needs to break above the 13.950/14.008 resistance otherwise it will turn into a range play.
• FTSE 100 – With continued sterling weakness, FTSE 100 should be tracking higher. Can it breakout to an all-time high above 7122? Corrections are still being bought into, with a higher low at 7024 protecting 7000 support.
• WTI Oil – The bulls surged back in yesterday on verbal intervention of Russia. The crucial June high at $51.67 is now being tested (interestingly the high has already been breached on Brent Crude). A breach would open $53.90 but realistically $60 is the start of the next main resistance. (See below for more detail).
• Cocoa (CCc1) – The bears retain control and pressure has broken the market to a new multi-year low below the key February 2015 low at 2669. The daily chart shows this is a critical support breach could drive the price back towards 2568 or even 2400. Daily RSI shows that downside potential remains across momentum indicators and rallies should be sold into. Near term resistance 2708, 2799 and 2848.
Should you have any questions and would like to discuss this competition further, please don't hesitate to contact us at info@hantecfx.com or give us a call on +44 020 7036 0850.
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