For as long as I can recall, August has always been viewed as the “quiet” month in the world of financial markets. Putting profits aside, many take their summer holidays with hopes of staying in the sun long enough to tan, but not burn. Besides the pressures of which factor sunscreen to apply, most try to avoid the usually muted noise in the markets, however this August has been anything but muted and with only 2 weeks in, the noise is ready to pick up.
So far in August we’ve seen China further weaken its currency, in what many said could be the start of a currency war. Trump continued to tweet his disapprovement of the FEDs monetary policy. The Pound fell to a new low against the Dollar. Gold reached a 7 year high, giving greater voice to those who have been suggesting a crash is coming. If this sounds like a season recap of your favorite Netflix series, keep watching, otherwise it could be cancelled, as Netflix also suffered a 10% drop in value. So with all of this happening in the last 2 weeks, what could the remaining weeks in August look like, and more importantly which markets could be ready to move as a result?
With cable at near historical lows since Boris took office as PM in the UK, many look to the past to help guide their decisions on where this pairing could be headed into the future. History shows at the current floor, buyers usually look for longing opportunities, and with Trump pushing the agenda for a weaker USD, the question here is could this be headed back towards the next resistance $1.25 in the next few weeks?
Many during the 2016 US elections said that a Trump victory would see Gold gain towards historical highs if he won. History now shows that many at that time were wrong, as investors didn’t seek shelter in safe havens, but rather helped drive up equities and indices to record feats. 3 years late however those predictions are aging well. With the trade war with China, Nuclear threat from Iran and North Korea, and ongoing domestic disturbance, Gold has gone on a tear, climbing $134 in value in August so far. This however has led to the resistance of $1,534 being hit. With this metal now overbought, is a sell-off imminent?
Many speculate Trump could reveal his Superman costume underneath his suit, and save the day by getting a deal with China, setting him up for re-election in 2020. If a deal were to be agreed, most of the current market turbulence could settle, with many fleeing safe havens.
Every other day seems to see another Oil tanker seized. General geopolitics and uncertainty from OPEC has also seen Crude bounce between a $53 support and $57 resistance. If a breakout is possible which way could it be?
Senior Market Analyst