Trading Week Ahead: 27th – 1st October
Important Data Releases & EventsSunday EUR German Federal Elections Tuesday GBP BOE Gov Bailey Speaks – USD PPI Thursday GBP BOE Gov Bailey Speaks – USD Fed Chair Powell Speaks FridayCAD GDP – USD Core PCE Price Index SaturdayUSD ISM Manufacturing PMI
Hi traders, last week we saw further gains from the USD and the Japanese Yen had a very choppy week. Risk majors moved lower to the USD while trade to the Yen was flat, but we saw wide weekly ranges. Market influences came from a few directions. We saw the possible fall of the world’s largest property developer to a raft of data that hit us on Thursday.
Risk Majors – Roundup
Last week started firm for the risk and we saw the key majors and gold move higher to the USD and Yen. The AUD pushed lower as iron ore prices continued to hit new monthly lows.
Risk sentiment changed on Thursday after the FOMC meeting. The Fed continued to talk tapering but left us with no firm meat. Many watching are now discounting tapering and looking more closely at interest rates. The hint came in that rates could increase, and there is a lot of speculation on if the increase will happen earlier than expected. The USD jumped after the FOMC but quickly fell away last Thursday. Gold was hammered because of the rates talk and cut away the weeks gains to move back into the 17387 area. Thursday’s risk rally was short-lived as sellers took over on Friday and moved back into the safe havens. The USD ruled the week as it also had a strong showing to the Yen hitting new multi-week highs after retaking 110.
Indexes Opened the Week on Sell
Stock indexes followed the rollercoaster with selling seen the prior week hitting on Monday’s session last week. Indexes opened the week on sell and we saw some solid falls. The ASX200 CFD was pummeled dropping over 2.60% as tanking iron ore prices also bit. Evergrande the world’s largest property company has been in the headlines lately as it faces unmanageable debt issues and rumours suggest it’s set to fall. This fall has opened up fears around exposure and demand loss due to its demise. Discussions suggest the CCP won’t bail out the company and focus remains on if they will meet their required interest payments. Information that was released midweek seems to suggest that the fall could happen, but this is one story we will be keeping an eye on.
Back to Thursday, the Bank of England met and held rates as expected, inflation worries continue to remain and the focus is on if we will see a rate rise from the BOE and possibly when? German flash PMI data came in lower than expected and showed a slow down in the EU’s largest economy over that period.
Indexes posted a solid recovery mid-week pulling back Monday’s losses. Later on in the week, we saw sellers return with pressure resuing on last Friday’s session.
China’s Impact on Crypto
Cryptos were hit with heavy selling on few sessions last week. They hit last Monday on the sell and after a brief fightback were back under the seller’s hammer last Friday. Cardano, Ethereum and Solana dropped over 20% during the week and Bitcoin lost over 17%. The Evergrande issue looked to have some impact on Monday as advised by some analysts but Friday’s selling was around new hard words out of China. The Central government backing up the previous dialogue that all and anything related to cryptocurrencies is illegal in China.
What’s Happening This Week?
This week starts with the German elections. The focus will remain on the fallout from Evergrande and if it defaults. We don’t have a mass of data like last week but traders will be looking at central bank speakers from the BOE and the FED. Will we see any further talk around policy adjustments due to ongoing inflation pressure? Staying with inflation attention will be on Friday’s Core PCE Price Index.
The focus will remain on the USD as the index gets back to 93.52 resistance. A break of this level starts the changes the picture a little on the weekly chart. After a wild week will we see stock indexes find direction? Buyers sure returned after low’s were hit but can it carry forward?
We’re seeing several lower highs setting up on weekly crypto pairs. Could selling be warning us of new extensions lower or will the markets shake off last weeks negatives and look to get buying back on track?