The week in which America lays to rest one of its former presidents, republican heavyweight George W. Bush Snr, also sees one of the most fundamentally volatile and opportunity-filled week all year in the markets. Tuesday saw global indices rocked by a cocktail of events, leading to a 3.5% slide in the likes of the DOW, DAX, FTSE to name a few.
The creation of this cocktail would include, Brexit, US/China trade war, OPEC Oil price uncertainty, and also anticipated US Non-Farm jobs numbers this Friday. As far as traction Brexit has stolen the limelight ahead of the other mentioned events. With a vote expected next Tuesday on whether Theresa May’s proposal will be pushed through parliament. Whispers, rather screams seem to suggest this may be rejected, and a potential no-confidence vote, putting her future in jeopardy.
This uncertainty has set the tone for markets so far this week, now the question being posed is how will this mature in the coming days? With US markets closed on Wednesday, the open on Thursday could be interesting to witness. Below we analyze some of the markets which may be heavily affected.
Cable has again started trading on its long-term floor of $1.27, with markets essentially closing near open price so far this week, creating doji’s which are known by technical traders to signify huge uncertainty. Volumes see this pair neither oversold nor bought and MA of 10/25 day positioned from the next swing. The catalyst could be a better jobs day than the 199K expected this Friday? Or further UK parliamentary unrest in the days leading to the vote on the PM’s Brexit deal.
With markets in perceived turmoil, XAUUD activated it’s safe haven umbrella, with many running to the metal for shelter from the current rains of uncertainty. On the approach of the 300-day resistance of $1,239, markets retraced slightly, after the US sell-off became to waiver. However the question here is come Thursday open, will this resistance continue to hold, or will we see buying volumes from shelter seekers overwhelm this ceiling and finally break?
After the biggest sell-off since 2014 where markets saw the initial decline in Oil price, the recent bear run found a perceived floor at $49 per barrel. Trump, one of the antagonists of the re-emergence of increasing prices, happy to see the decline unfold. This along with the unrest within OPEC’s supply targets and whether this should be above or below 1m barrels a day have seen markets resist further declines until more certainty is gained from this coming Thursday’s meeting of the cartel.
A lot of questions left unanswered heading to the tail-end of this week, however with key events due to unravel imminently, markets hope the shedding of light can bring some stability as we head into the winter break.
Senior Market Analyst