ALPHA Market Update 08 October 2018

08.10.2018

Market Update

 

 

United States

  • Affected by the hurricane of Florence, the US nonfarm payroll employment population fell below expectations in September, and it was the lowest since September 2017.
  • Last Friday, the US Commerce Department released data showing that the US trade deficit in August was 53.2 billion US dollars, a record high of nearly 6 months.
  • New York Fed President Williams said the US economy is still in the “blonde girl” state, there is no sign of inflation out of control, and now it is far from the neutral interest rate. If the US economy maintains its current development path, the gradual rate hike is correct, which is consistent with Fed Chairman Powell.
  • The media quoted an anonymous government official as saying that the US government is actively considering giving a national embargo exemption to significantly reduce Iranian crude oil imports, and will eventually strive to reduce Iranian crude oil exports to zero.

 

Europe

  • THE dust has settled on a number of Brexit’s biggest rows and for the first and most critical time the European Union and United Kingdom are singing off the same hymn sheet as they hope to seal a deal within the next 10 days. Last week, European capitals breathed a sigh of relief as ambassadors were told Brussels is moving “closer and closer” to a deal with Britain after months of stalled negotiations on the thorny issue of the Irish border and other outstanding issues. Prior to a crunch meeting on Friday night, a member of the bloc’s chief negotiator Michel Barnier’s team told member states a deal was “very close”, however, the so-called “Coreper” discussion of top officials has revealed even more about how the deal will be done. For a fairly routine discussion between ambassadors ahead of the European Council summit in little over a week’s time, members of the EU27’s left feeling a new sense of direction in the negotiations.

United Kingdom

  • GBP/USD pair jumped to 1.3122, its weekly high last Friday and closed not far below the level, on headlines indicating that the EU is willing to offer the UK a “super-charged” free-trade deal. According to the report which cited EU officials, Brussels’ proposal will be presented to the UK news Wednesday. Not far detail was known, but the fact that if covers between 30 to 40% of UK PM May’s demands. Seems unlikely that UK authorities will give up to most of the Chequers’ plan to agree with this upcoming idea, but in the meantime, market players believe that both parts will work hard to avoid a no-deal. The Pound held on to gains above the 1.3000 level after the US employment report fell short of impressing dollar bulls.
  • The pair bottomed for the week at 1.2921 and closed it up some 200 pips above this last, and despite closing with gains, it settled below a major Fibonacci resistance at 1.3170 and established a third consecutive lower low, a sign that the pair is far from bullish. In the daily chart, the price recovered up to a flat 20 DMA, while technical indicators head higher around their midlines, living a neutral technical stance. In the 4 hours chart, the pair recovered above its 20 SMA and 200 EMA, with the shortest gaining upward traction, while technical indicators near overbought readings before losing upward strength, holding anyway nearby, supporting an upward extension up to the mentioned resistance. A strong static support comes at 1.3060, with a break below the level putting the pair on the bearish path short-term.

Commodities

  • This week the State Department accused OPEC of hiding spare capacity exceeding 1.4 million barrels daily. It urged the cartel to use it to stop the oil price rally that has continued uncomfortably close to midterm elections. The request—or demand, depending on your interpretation—is unprecedented and it might do more harm than good.
  • Minister of Energy and Industry H E Dr Mohammed bin Saleh Al Sada said yesterday that the oil market is now in balance between supply and demand, noting that the price could even rise due to shifts in sentiment and geopolitical changes.
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