Weekly Fundamental Forecast: Trade Wars and Emerging Market Pressures to Mix with Rate Decisions and Liquidity Next Week
By John Kicklighter , Ilya Spivak , Michael Boutros , David Song , Christopher Vecchio, CFA , Paul Robinson , Justin McQueen , Daniel Dubrovsky , Tyler Yell, CMT , James Stanley , Renee Mu , David Cottle , Nicholas Cawley
US Dollar Forecast – US Dollar Aims Higher on Haven Demand, Yield Appeal
The US Dollar is poised to continue higher, finding compelling narratives to drive demand in both risk on and off trading conditions.
Japanese Yen Forecast – USD/JPY Initiates Bearish Sequence Amid Failed Run at August-High
USD/JPY may exhibit a more bearish behavior ahead of the Non-Farm Payrolls (NFP) report as it initiates a bearish sequence after failing to test the August-high (112.15)
New Zealand Dollar Forecast – NZD/USD Vulnerable to US Tariffs & Trade War Fears, BoC Hike Bets
New Zealand Dollar seems vulnerable to US tariffs on China as trade war fears rise, sending the S&P 500 lower. Also, the BoC preparing markets for a hike bodes ill for NZD/USD prices.
UK Week Ahead: Renewed Brexit Fears Weigh on Sterling
By Nick Cawley
On Tuesday, BoE governor Carney is one of four MPC members who will answer from the Treasury Select Committee. While the TSC will ask about the thought process behind the recent rate hike, governor Carney may be asked about whether he will extend his tenure past his expected end date of late-June 2019. If Carney does extend – due to Brexit – Sterling may get a slight boost ahead of Wednesday’s services and composite PMIs.
CAD Rate Forecast: Short Term CAD Outlook Dependent on NAFTA Outcome
By Justin McQueen
Headline risk for the Canadian Dollar remains at elevated levels as Canada looks to reach a NAFTA agreement in principle with the US. As such, the near-term direction for the Loonie is very much dependent on the outcome from the latest NAFTA talks, with an agreement likely to support the Canadian Dollar, which would likely see USDCAD retest the recent lows at 1.29. The trend for USDCAD remains bearish provided the pair holds below 1.30 with 1.2850 eyed as the next significant target. Failure for Canada and the US to reach an agreement could see the pair breach the top of the bearish channel around 1.3110 to make a run in on 1.32.
Market pricing for a rate hike at Wednesday’s Bank of Canada rate decision are relatively low at 20%, which suggests that the BoC will hold off for now (most likely scenario of October rate hike).
Another key risk event on the economic schedule for the Loonie will be the latest jobs report at the backend of the week.
PRECIOUS-Gold hovers above $1,200, under pressure from trade tensions
By Zandi Shabalala
U.S. President Donald Trump said on Saturday there was no need to keep Canada in the North American Free Trade Agreement and warned Congress not to meddle with negotiations or he would terminate the trilateral trade pact, which also includes Mexico.
Meanwhile, Bloomberg News reported that Trump was prepared to quickly ramp up a trade war with China and had told aides he was ready to impose tariffs on $200 billion more in Chinese imports as soon as a public comment period on the plan ends on Thursday.
“For as long as the trade war fears that are helping dollar strength continue, gold is going to come under pressure,” said ETF Securities commodity strategist Nitesh Shah.
Major U.S. economic data due this week, such as a manufacturing survey on Tuesday and an employment report on Friday, could influence gold’s moves as investors are looking for clues on the pace of U.S. interest rate hikes.
Oil prices higher as U.S. sanctions limit Iran exports
By Christopher Johnson
Oil prices rose on Monday, supported by concerns that falling Iranian output will tighten markets once U.S. sanctions bite from November, but gains were limited by higher supply from OPEC and the United States.
U.S. sanctions are already curbing exports from Iran.
“Exports from OPEC’s third-biggest producer are falling faster than expected and worse is to come ahead of a looming second wave of U.S. sanctions,” said Stephen Brennock, analyst at London brokerage PVM Oil Associates. “Fears of an impending supply crunch are gaining traction.”
Meanwhile, trade disputes between the United States and other major economies including China and the European Union are expected to hurt oil demand if they are not settled soon.
China’s manufacturing activity grew at the slowest pace in more than a year in August, with export orders shrinking for a fifth month, a private survey showed on Monday.
Netflix May Rebound by 15% on Bullish Momentum
By Michael J. Kramer
Netflix Inc.’s (NFLX) stock has almost doubled thus far in 2018. But shares of the streaming media company fell by more than 24% in the middle of July after reporting disappointing subscriber additions in the second quarter.
The stock has recovered some, and the technical chart suggests the stock may rise 7% more in the coming weeks.
Shares of Netflix broke out at the start of August when it crossed above a bearish downtrend. However, the stock still struggled for some time before beginning its rebound. Now the stock is rising and could climb back to $400, an increase of 8 from the current price. The stock created a gap when it fell from $400 to $380 following the disappointing earnings results. Now the stock is working to refill that gap.
Another positive is the relative strength index which has now hit oversold levels at 30 two times. It could signal a reversal of the bearish momentum.
At least for the time being it would seem Netflix stock is starting to see some bullish momentum again.
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