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UK demands 'change in approach' from EU on Brexit, Australia retains low interest rates

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UK demands 'change in approach' from EU on Brexit, Australia retains low interest rates

(Source: https://markets.businessinside...)

 

The US equity market went down on Monday, with the manufacturing and anti-virus treatment sections both performing weakly.

The Dow Jonesclosed down by 1.44% at 28195.42, while the NASDAQ and S&P500 fell 1.63% to 3426.92 and 1.84% at 11634.35 respectively.

European stock markets also declined - the DAX closed down by 0.42% to 12854.66 and the FTSE dropped 0.59% to 5884.65.

 

Moreover, Chinese stocks kept reconsolidating downwards after opening high following the public holiday. The Shanghai Stock index dropped 0.71%, the SZSE Component index decreased 0.82% and the GEM index went down 1.28%.

 


Crude oil forward contracts

WTI crude oil went down to daily lows at $40.8 after opening, but the price rebounded during the US trading hours and hit daily highsof $ 41.45. After that,WTI turned weaker and edged below the $41 support level, closing at $40.92 per barrel.


Brent crude oil also went down by 1.326%, closing at $42.72per barrel.

 

Precious metal forward contracts

Gold hit daily highs of $1918 after breaking the key $1910 resistance during the Europeansession. After the US market opened, the price kept dropping and lost 80% of its recent increase, closing at $1904.09 per ounce, marking an increase of just 0.25%. 


Currency pairs

·        USDX down to93.41 (-0.288%)

·        EUR/USD up to1.17659 (0.429%)

·        GBP/USD up to1.29383 (0.288%)

·        AUD/USD down to0.70623 (-0.208%)

·        NZD/USD down to0.66017 (-0.073%)

·        USD/CAD up to1.31869 (0.007%)

·        USD/JPY up to105.418 (0.026%)


Global Fundamentals

United States

US House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin made some progress during their latest coronavirus stimulus talks, according to Pelosi’s office.


However, Senate Republicans - who plan to vote on a more narrow aid bill this week - could still oppose any possible agreement Pelosi and Mnuchin reach.1


UK

The door is ‘still ajar’ for talks with the EU over a post-Brexit trade deal but only if Europecedes ground in key areas, UK Chancellor of the Duchy of Lancaster Michael Gove has said.

 

Goveopined: “We have drawn the conclusion that unless their approach changes, they are not interested and they have, in effect, drawn stumps.”

 

He also noted the UK was preparing for a range of outcomes, including leaving on what he described as ‘Australian terms’, which would see trade between the two partners default to World Trade Organization rules.2


UK Prime Minister Boris Johnson’s government has set a new deadline of middayon Tuesday for political leaders in Greater Manchesterto agree to tighter coronavirus restrictions or face new rules being imposed against their will.


The PM is still holding out against implementing nation-wide measures across England; as Johnson’s official spokesman James Slack revealed: “We keep all our measures under review, but the prime Minister has made it very clear that he doesn’t want to see a return to something like a national lockdown.”3


The latest news comes as the government’s Chief Scientific Adviser Sir Patrick Vallancestated that an effective vaccine for COVID-19 would likely not be available in the UK until spring next year.4


Australia

The Reserve Bank of Australia's (RBA) Chris Kent said this morning that interest rates will not be raised until inflation meets the bank’s 2%-3% target. Before that, the monetary policy will remain flexible. 


Additionally, the Australian Government will purchase bonds on regular basis to ensure bond yield ratesare stable and remain low. Kent noted he also thinks the nation’s debt level is currently under control.5


Crude oil

OPEC has published a draft version of its latestJoint Ministerial Monitoring Committee (JMMC)meeting minutes, revealing that the oil supply cut did not meet expectations as it came in at 0.19million barrels per day. 


The cartel will not provide further advice or guidanceuntil January, butwarned theprice of oil will face pressure throughout 2021. The next JMMC and Joint Technical Committee (JTC) meetings will be held in 16th and 17th November.6



Today’s major assets analysis

EUR/USDand GBP/USD

Yesterday, both the pound and euro rebounded. The EUR is currentlythe stronger of the two, though the price usually reconsolidates after big drop and rise.

After last week’s price drop, the shared currency rebounded and tested the medium-term support at 1.178 and now stands above both moving averages.

As shown in theKDJ chart, the D value is around20, while the K value is climbing at present. In the near term, the support is at 1.175, while the resistance is around 1.179.

In terms of the pound, after the price rise and subsequent drop, it is now below both EMAs; its KD is also in the middle of its standard value range. Today’s support is around 1.289 and the resistance is around 1.296. 


UK demands 'change in approach' from EU on Brexit, Australia retains low interest rates

[EUR/USD, four-hour chart] (Source: KVB PRIME)

UK demands 'change in approach' from EU on Brexit, Australia retains low interest rates

[GBP/USD, four-hour chart] (Source: KVB PRIME)

 

 

AUD/USD

Yesterday, most major currencies turned warmer - but not the Australian dollar. The Aussie went further down after this morning’s RBA speech, which revealed the bank is planning to release more liquidity into the market.

Currently, the price is under both the daily and weekly EMAs, while the K and D levels both meet around 20. The support for today is around 0.7 and the resistance is around 0.708.

UK demands 'change in approach' from EU on Brexit, Australia retains low interest rates

[AUD/USD, four-hour chart] (Source: KVB PRIME)

Gold

Gold moved upwards and broke the 1910 resistancebefore hitting 1918 as many non-USD assets rose yesterday.

Despite this, both the price range and trading volume are shrinking today and now the price is around 1900.

The K and D values are in the middle of the range and the price is under both the EMAs. Intraday, the support level is around 1895 and the resistance is around 1910. 

UK demands 'change in approach' from EU on Brexit, Australia retains low interest rates

[XAU/USD, four-hour chart] (Source: KVB PRIME)


USDX

The USDX fell during both the Asian and Europeantrading hours. The price tested the 93.2 support and then climbed back to 93.4,which was still under the two EMAs.

As the for DK indicators, K dropped fast whilst the D is consolidating around 80. Over the short term, the resistance is around 93.55 and the support level is around 93.28. 

UK demands 'change in approach' from EU on Brexit, Australia retains low interest rates

[USDX, four-hour chart] (Source: KVB PRIME)

 

References

1.CNBC(2020),Pelosi and Mnuchin make progress in stimulus talks, plan to speak again Tuesday, https://www.cnbc.com/2020/10/1...

 

2.BBC (2020), Brexit: Door 'still ajar' for EU trade talks, says Gove, https://www.bbc.com/news/uk-po...

 

3. The Edge Markets (2020),UK sets Tuesday deadline for deal on Manchester Covid-19 plan, https://www.theedgemarkets.com...

 

4. The Guardian (2020), Covid vaccine will not be available in UK until spring, says Vallance,https://www.theguardian.com/wo...

 

5. AFR (2020), RBA's Chris Kent talks up $200b TFF, https://www.afr.com/policy/eco...

 

6. OPEC(2020),JMMC priority is full conformity by all DoC members, https://www.opec.org/opec_web/...

Edited 21 Oct 2020, 13:46

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