Financial markets prepare for action packed week

28 November, 2016

An air of caution swept across the financial markets during trading on Monday as doubts of a successful OPEC deal weigh heavily on global sentiment. Stock markets were noticeably shaky with Asian shares trading in a lacklustre fashion after oil’s sharp depreciation soured investor risk appetite. European markets may be vulnerable to losses if the mounting political instability in Italy ahead of its referendum encourages participants to scatter away from riskier assets. Although Wall Street concluded last week near historical highs, losses could be realised if Asia’s and Europe’s bearish contagion contaminate American shares.

An action-packed week lies ahead and such could place stock markets on another chaotic rollercoaster ride if the upcoming OPEC meeting; US GDP figures and heavily anticipated NFP create explosive levels of volatility.

Dollar bulls on a tea break

The Greenback retraced from gravity-defying levels on Monday as investors booked profits ahead of a data-packed week which could reinforce the firm expectations of the Fed raising US rates in December. November has been a game changer for the Dollar with Trump's market shaking victory, repeated positive US data and hawkish comments from Fed officials ensuring Dollar strength remains a recurrent theme. Sentiment remains firmly bullish towards the Dollar with any depreciation seen as a correction for bulls to propel the Greenback even higher. Much attention may be directed towards the pending third quarter GDP release and November’s NFP which could provide a clearer picture of how the world’s largest economy is faring. A solid GDP and rising employment may be critical chess pieces to solidify the already firm expectations of a December US rate increase.

The Dollar Index remains firmly bullish on the daily timeframe with bulls remaining in firm control above 100.00.

ECB Draghi discusses Brexit

The Brexit contagion has slowly spread its tentacles of uncertainty into the Eurozone economy which may place the nation under further pressure. Mario Draghi is due to testify on Monday in Brussels on economic developments and consequences of Brexit to Europe which should attract investor attention. It is widely known that the Eurozone is entangled in a losing battle with faltering growth while political instability in Italy has left the Euro vulnerable to losses. A resurgent Dollar against the Euro is making the EURUSD a sellers dream with the parity reality materialising in the medium to longer term as bears install repeated rounds of selling. From a technical standpoint, the EURUSD may be in the process of a technical bounce with a breakdown back below 1.06 sparking a selloff towards 1.050.

Oil sinks lower

WTI Crude found itself vulnerable to painful losses last week Friday with prices sliding towards $46 as doubts were revived over the ability of OPEC members securing a meaningful freeze deal on Wednesday’s formal meeting in Vienna. Saudi Arabia’s absence from Monday’s pre-OPEC meeting coupled with Iran’s incessancy to an exemption from the output has sparked concerns over the success of the pending meeting. Although OPEC may be repeatedly commended on their ability to create speculative boosts in oil via freeze deal hopes this may come at a very heavy price if nothing is achieved on Wednesday. The classical prisoner’s dilemma OPEC members face coupled with the persistent oversupply woes could ensure low oil prices remains a recurrent theme in the medium to longer term. From a technical standpoint, bears are back in town and a breakdown below $45 could spark a further selloff towards $43.

Commodity spotlight – Gold

Gold displayed its safe-haven status on Monday with the metal edging higher towards $1195 as OPEC jitters triggered a wave of risk aversion. In times of uncertainty Gold is man’s best friend and such could become the theme this week if the combination of Dollar weakness and anxiety attract bullish investors. While bulls may enjoy the limelight in the short term, upside gains could be capped on Friday if the NFP exceeds expectations.

From a technical standpoint, intraday bulls have taken centre stage with prices bullish on the hourly timeframe. Previous intraday resistance at $1190 could transform into a dynamic support which encourages a further incline higher towards $1200. Intraday bulls remain in control above $1180.


Source link  
Sterling steady ahead of UK inflation data

Having successfully moved into phase 2 of Brexit talks, the focus will shift back to economic data in the UK. Today’s November CPI will likely be a market...

Market waits on Bank of Canada

With a US tax bill and a Brexit currently flying around in the markets it's hard not to get lost on the bigger picture for other countries as well.

Investors rotate from Tech to Financials

U.S. stock indices ended mixed on Wednesday. While the Dow-Jones industrial average closed at a record high after U.S. GDP showed the...


Consumer confidence hits record high

Consumer confidence was the star of the show today as it came in with its strongest reading since 2000. The reading of 129.5 (124 exp), is one of...

SP500 lifts to record high on US housing

The US market continued to steal the spotlight today in Monday trading as it continued to look robust as usual. New home sales m/m came...

Equities slide ahead of a busy week

Despite a record high close on the S&P 500 last Friday, Asian equities edged lower, led by Korean markets. Chinese stocks continued to decline...


Yen bulls jump on weak FED inflation

FOMC meeting minutes are always greeted warmly by the markets, as a glimpse of the potential future direction of the FED going forward...

S&P 500 hits record high

The US equity markets jumped sharply today on the back of positive economic data as US home sales m/m came in strongly at 5.48M (5.40M exp)...

European currencies dip on German politics

The Euro had a pause for concern in the evening trading session as the coalition talks in Germany fell apart leading to a political crisis in Germany.

  


Share: