S&P 500, DAX & FTSE Outlook: FOMC in the Spotlight This Week
By Paul Robinson
The coming week is highlighted by the FOMC rate decision on Wednesday, but with the market expecting rates to rise another 25 bps the market’s attention will be on Fed Chair Powell’s press conference. ‘High’ impact data events for the week include Consumer Confidence on Tuesday; Trade Balance, GDP, Core PCE (QoQ), and Durable goods on Thursday, and finally Core PCE (YoY) on Friday.
The trend is pretty clearly up and with the market hanging out in record territory, regardless of one might think of the market fundamentally, none of that will matter until we see price roll over and start taking out support levels. As long as all stays intact, so does a bullish bias towards new highs.
In addition to the FOMC in the U.S., German CPI on Thursday along with German unemployment figures and Euro-zone CPI on Friday. Should we see a sizable move in U.S. markets on Wednesday’s Fed meeting look for a gap of some sort to possibly start Thursday’s trade.
The DAX has been recovering with the help of general risk appetite staying firm. Recapturing the 12104 level has gone a long way towards helping make a case for higher prices. However, now there is the bottom of the Feb 2016 trend-line and another running lower not far ahead to contend with. This is an important test as the trend still remains pointed lower.
The market may continue to trade higher, but conviction on the top-side is still lacking as larger forces from a long-term topping pattern continue to remain a broader negative. This week, the FTSE will contend with the August 15 low and 200-day MA. Another round of selling may not come in initially as the market tries to build on Friday’s momentum first.
JPY Rate Forecast: JPY Bears Eye 113 Level
By Justin McQueen
Fundamental Forecast for JPY: Bearish
The beginning of the week will see the $200bln worth of tariffs on Chinese goods come into effect with a levy rate of 10%, as opposed to previously touted 25%. With price action somewhat muted for the Japanese Yen upon the announcement from the Trump administration, it is likely that the imposition will also be met with a muted reaction. Elsewhere, with the US equity markets printing fresh record highs, risks to USDJPY remain tilted to the upside as risk trends continue to spur outflows from the Yen.
The recent rise in USDJPY faces a big test this week amid a slew of key risk events, which include the Federal Reserve rate decision, US-Japan trade talks and a summit between Trump and Abe. With the Federal expected to raise rates at the upcoming meeting and reaffirm its current rate path, the JPY is vulnerable to slipping past 113 against the Dollar.
EURUSD Price Analysis: Expect Market Volatility All Week
By Nick Cawley
On the economic calendar there is a raft of high importance releases, all capable of initiating a market move, while on Wednesday the FOMC is fully expected to raise interest rates by 0.25% for the third time this year. Federal Reserve chair Jerome Powell will hold a press conference after the decision and his updated views on the US economy, and the latest Dot Plot will shape the US dollar for the weeks ahead.
And on the left-hand side of EURUSD, the euro will be watching the Italian Budget projections on Thursday before they are submitted to the European Union later in October. The ruling League and Five Star want to increase the budget deficit to pay for their election promises which includes a guaranteed EUR780 monthly income for all unemployed Italians. However, Italy’s technocratic finance minister is pledging to keep the country’s budget deficit at or around 1.6% leaving little room for the ruling government’s spending pledges to be put in place.
Oil jumps 2 percent as market tightens, more gains seen
By Christopher Johnson
Oil prices rose more than 2 percent on Monday as U.S. sanctions restricted Iranian crude exports, tightening global supply, with some traders forecasting a spike in crude to as much as $100 per barrel.
Commodity traders Trafigura and Mercuria said on Monday that Brent could rise to $90 per barrel by Christmas and pass $100 in early 2019, as markets tighten once U.S. sanctions against Iran are fully implemented from November.
J.P. Morgan says U.S. sanctions on Iran could lead to a loss of 1.5 million bpd, while Mercuria warned that as much as 2 million bpd could be knocked out of the market.
A source familiar with OPEC discussions told Reuters on Friday that OPEC and other producers have been discussing the possibility of raising output by 500,000 bpd.
“We expect that those OPEC countries with available spare capacity, led by Saudi Arabia, will increase output but not completely offset the drop in Iranian barrels,” said Edward Bell, commodity analyst at Emirates NBD bank.
J.P. Morgan said in its latest market outlook, published on Friday, that “a spike to $90 per barrel is likely” for oil prices in the coming months due to the Iran sanctions.
Why Coca-Cola Is Still A Buy, Even Without The Recent Cannabis Buzz
Coca-Cola (NYSE:KO) has been on the hunt for the next big thing to create excitement—and of course drive additional growth—for investors. Two recent developments, one still only a rumor, could be just the fuel the company, and its rangebound stock, need.
Prior to jolting the highly speculative marijuana market, Coke created ripples in the fiercely competitive coffee market when it announced last month that it was acquiring UK-based global coffee chain Costa for $5.1 billion. This was Coke’s biggest acquisition in eight years.
Despite its current challenges, Atlanta-based Coke remains a solid dividend stock for long-term investors. The company has increased its dividend for 56 years in a row. That’s more than enough confirmation of the strength of the 21 brands it owns which generate $1 billion or more in annual sales.
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