Home Markets WEEKLY NEWSLETTER (FX-INDICES-COMMODITIES)

WEEKLY NEWSLETTER (FX-INDICES-COMMODITIES)

WEEKLY NEWSLETTER (FX-INDICES-COMMODITIES)
by admin

18/05/2020

 

General Comment

Latest news from USA were quite dramatic but expected. The Unemployment Rate in April was 14.7%, which is a record rate for the postwar years. However, the US dollar strengthened and stock market boosted. Also, the US oil prices had a remarkable rise, in between the optimism for a demand increase in the near future. In the current week, all eyes are on the Q1 2020 GDP announcements for Eurozone, UK and Germany which will show, more or less, the recession level in the economies of those countries.

 

EURUSD

Bearish was the last week for EURUSD with a weekly close at 1.0834, significantly lower than the weekly open of 1.0969. The tension between USA and China seems to subside and USD during the current crisis has become one of the most safe-haven investing solutions. The Unemployment Rate increased dramatically but on the other hand, Eurozone retains its well-known issues and conflicts between North and South countries. The chairman of the German constitutional court Andreas Vosskuhle,  claimed on Tuesday that the European Central Bank’s bond buying did not respect the “principle of proportionality” and so Bundesbank may no longer participate. There must be a solid bullish breakout of 1.10 in order for an uptrend to be confirmed and a solid bearish breakout of 1.08 for a downtrend. The last five weeks, EURUSD cannot escape from this tight channel so we’ll keep on trading in the range unless we’ll have a breakout, either of 1.10 or 1.08.

 

GBPUSD

Marginally bearish was the last week for GBPUSD with a weekly open at 1.2482 and a weekly close at 1.2404. Boris Johnson claimed that after seven weeks and 30,000 deaths, still it’s not time to end the lockdown. The pair is in a consolidation the last six weeks and lately its range is tighter, between 1.2350 and 1.25. The weakness of a bullish breakout of 1.25 though, shows a general weakness for GBP so we’ll open sell positions this week, targeting the price area of 1.2280.

 

USDJPY

Slightly bearish week for USDJPY which closed at 106.62, just 16 pips below the weekly open. The 10-years US bond rate (which is strongly correlated with the specific pair) is moving higher, close to 0.7% and US seems strong. Early this Monday, the pair is moving higher, trying to reach the area of 107. Such a breakout, will give extra hopes for a downtrend reversion and it will open the appetite of the buyers for price levels close to 110 again. Buy positions is our selection this week.

 

EURJPY

Another strongly bearish week for EURJPY which closed at 115.54 from 117.20 which was the starting point of the last week. The heavy downtrend that has started from the beginning of the year carried on but during the last days of the previous weeks, we saw some recovery attempts that continue at this week as well. The pair has reached the price of 116 and by expecting to see more recovery tendencies, we’ll try some buy positions this week with main target the area of 117.30

 

EURGBP

Marginally bearish was the last week for EURGBP with a weekly close at 0.8730 and the volatility to lower even more. GBP is not in its better shape due to lockdown extension in UK and we may see uptrend reactions which needs a confirmation above 0.8830 in order to become solid. We’ll try buy positions this week.

 

USDCAD

Bearish movements we saw last week for USDCAD which closed at 1.3919, below the milestone price level of 1.40. The higher oil prices strengthened CAD but the big problems of the Canadian economy and the Canadian banks are still there. In case of a solid bearish breakout of 1.3840, there is a serious probability for a heavy short-term downtrend, especially combined with new oil prices rise. In the long-run though, the scenario of prices above 1.40 still gathers the bigger probability. We’ll trade USDCAD this week, according to its behavior day by day: below 1.3840 we’ll open sell positions but above 1.40 we’ll open buy positions.

 

USDCHF

Bullish was the last week for USDCHF, just in a way to reach the balance price of the last period which the area of 0.97. There must be a solid bullish breakout of 0.98 or a solid bearish breakout of 0.96 in order to exist a serious probability of escaping the sideways trend of the last weeks. We’ll try buy or sell positions according to the breakout, otherwise we’ll retain our range strategy positions.

 

AUDUSD

Continuation of the uptrend, even heavier one, we saw for AUDUSD last week with a weekly open at 0.6412 and a weekly close at 0.6530. It was the 5th in a row bullish week and the pair is approaching the important resistance of 0.6665. A possible breakout of this price level will bring AUDUSD back to its price area, before the big drop that started a few months ago. Australian economy had minimum impact from the coronavirus pandemic and the optimism in better relationship between USA and China give fresh air to AUD but we cannot exclude corrective movements because USD is expected to be stronger and also because some AUDUSD buyers may close their positions for profit taking reasons. We will wait for an elementary bearish movement and we’ll try sell positions. If the bullish trend carries on, we’ll do nothing.

 

SP500

Furious bullish trend for SP500 which managed to close at 2,929.5 points with profits very close to 4%. The Index returned back to last March’s price before the big issues appear from coronavirus pandemic. It mostly took advantage of the huge liquidity that is offered lately. However, two weeks ago, there was a certain weakness of exceeding 2,950 points and if it happens again this price level will be confirmed as a very strong resistance that may cause trend reversal. On the contrary, a bullish breakout will bring euphoria and the investors will put their eyes on 3,000. We’ll trade accordingly this week: we’ll open short positions that we may close after a bullish breakout of 2,950 points that will trigger long positions.

 

DAX30

Bullish was the last week for DAX30 which managed to close the gap of the previous Monday by closing at 10,912 points. Early this Monday, the Index is moving above 11,000 points and this is a serious clue for the uptrend continuation. On the other hand, such an optimistic outlook is not perfectly justified so we may see corrections. We’d better stay out this week.

 

FTSE100

A bullish week for FTSE100 which closed at 5,892 points and profit like 2.8%. The futures of early Monday are profitable by 1.2% and Index battles to recover the 6,000 points. In such a case, the uptrend is favoured even more but just like at the other Indices, we may see corrections since the real economies suffer. We’ll wait until we see a bearish confirmation and after that, we’ll try short positions.

 

Gold

Gold prices moved more or less in the same levels last week with a weekly close at $1,704.5 and light losses like 0.3%. Gold, as the safest haven asset is favored in such periods and if it starts approaching the area of $1,745 then most likely will perform its big rise that many analysts and investors expect. We remain buyers in gold and we’re keen to increase our size above $1,745.

 

US Oil

Bullish reaction for the oil prices last week since the spot price closed at $9,57 last Friday with weekly profits that touched 16%. The announced production cuts from OPEC started taking place but the demand is still very low. Baker Hughes announced by the end of last week that the number of active U.S. rigs drilling for oil, dropped for an 8th week in a row, confirming a big decline in oil production in USA but under these circumstances the restoring problem is still on. The price rise of the last two weeks makes perfect sense as a reasonable bullish reaction to the latest breakdown but the current conditions favour the bears. We’ll try short positions this week.

 

Bitcoin

Until last Thursday, Bitcoin was performing a remarkable really that brought it above $10,000 (ahead of halving at 11/5 which will reduce the production and the supply) but from Friday and on we saw strong pressures and finally the week closed negatively at $8,731 and losses more than 2%. This behaviour confirms that the uptrend since mid-March had more to do with the halving rather than fundamental reasons. Early this week, the downtrend carries on and we’ll open short positions, targeting the price area of $8,000.

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