News & Analysis

Dow 165 point surge, Catalonia deepens, Abe sweeping victory

Oct 23, 2017 | Daily Market Outlook

Key data and releases coming up:


Friday, US markets continued to roar. Tax reform is edging closer, GE rebounded strongly erasing a 6.3% loss. The Senate approved 4 billion budget measure by 51-49. Buyers on the ask as the Dow Jones clocked up another 165 points to close at 23,328.63. The S&P500 added 13.11 to close at a new record 2575.21.

The USD was boosted by tax reform on Friday as it posted its biggest daily gain in a month. The USDJPY posted a three month high adding 96 pips to close at 113.48. Canadian CPI and Core Retail Sales both came in worse than expected. This combined with USD strength fueled the USDCAD to surge 140 pips higher for the day. The Loonie is now trading back at AUG 17 levels.

Europe, the FTSE closed slightly higher to 7523.23, the DAX added 1.18 points closing below 13,000. The GBP finished week stronger, adding to the Japanese Yen and USD. The EUR gained on most pairs but lost ground to a higher USD. The EURUSD finished 75 pips lower. Catalonia heated up over the weekend as Spain stated they will revoke the Catalonian regional government and force an election. Catalan President Carles Puigdemont has vowed to fight any direct rule from Madrid. Unlike Thursday, the recent developments have failed to influence the markets as we witnessed on Thursday.

Exit polls show Shinzo Abe looks to have a sweeping victory in the Japanese election over the weekend. The JPY continued to weaken this morning as most pairs opened with a gap higher. The USDJPY gaped higher this morning by 37 pips and has added 8 pips to be trading 113.93 closing in on 114.00.

Mixed start to Monday with risk currencies opening lower to USD but off lows. Gold gapped lower this morning after Friday’s falls, 1275.92 the current daily low. The ASX200 has started the week stronger adding 17.60 points.

SPX500 daily chart, Friday’s surge took price to another record high. Buying has continued this morning. It’s a real utopia for socks buyers at the moment.

USDJPY daily chart, when two opposite driving forces line up to give price clear one way direction. 144.00 reached this morning. Price is back at July levels having added 578 pips since early September.

Good trading from Eightcap.

Sources Reuters, CNBC
All times are AEDST

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