UD Fails to Break Crucial Trendline, Eyes on Fed Risk
By Justin McQueen
Heightened US-China trade tensions keep the Australian Dollar on the backfoot, with the currency shedding 0.7% over the past two sessions. In turn, AUDUSD failed to make a break above the key 2018 high trendline, which has remained firm thus far, consequently, keeping the Australian Dollar stuck in its bearish trend. However, a move back towards the 2018 lows may be out of the question for now, as large net Aussie short positioning ($4.9bln), alongside a bid in copper and oil prices may limit downside.
Today will see the latest Fed monetary policy meeting, in which the central bank is expected to raise rates by 25bps. Given that this is 100% priced in by the market, focus will be on the monetary policy statement as well as the Fed dot plot projections.
Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger AUDUSD-bearish contrarian trading bias.
Are $80 Brent And $3 NatGas Heralding The New Age Of Energy Prices?
Brent crude’s spike above $80 a barrel and natural gas’s rally beyond the key $3 level are prompting Wall Street bankers and traders to ask whether the new age of high energy prices could be arriving faster than expected.
Now, however, crude looks poised to rewrite any highs seen in 2018 as the clock ticks toward Donald Trump’s November 3 vow to turn Iranian crude exports into zero through sanctions. Simultaneously, worries about unusually low gas stockpiles ahead of the winter heating season are making nervous traders seek premiums for the fuel that are far from their usual levels of this time of year.
J.P. Morgan, which has forecast Brent to average $85 over the next six months, says “a spike to $90 per barrel is likely” in the coming months due to US sanctions on Iranian oil exports, which could wipe out as much as 1.5 million barrels from the 2.6 million bpd shipped by the Islamic state daily.
As for natural gas, late warmth in September and a near decade low in pre-winter heating stocks were helping keep the market above the $3 per million British thermal units (mmBtu) targeted by bulls.
While almost no one is betting that gas prices will recapture the summer highs of 2008, when it got to beyond $13 per mmBtu, few can say with certainty how long the current rally will last.
USD/JPY: Bears continue to guard 113 barrier, Fed in focus
By Dhwani Mehta
The USD/JPY pair is seen consolidating the upside within a familiar range in the European session, having failed another attempt to take out the 113 handle.
The spot remains supported by broad Yen weakness after the Bank of Japan (BoJ) minutes released yesterday. The minutes revealed that a few officials are concerned about the dangers of the ongoing ultra-easy policies. Meanwhile, the latest remarks from the BoJ Chief Kuroda also weighed negatively on the Yen.
But, the downside in the Yen appears capped amid looming US-China trade concerns, which tends to boost the safe-haven demand for the Yen. Meanwhile, the US dollar remains on the back foot across its main peers ahead of today’s FOMC decision, further restricting the upside attempts in USD/JPY.
Amazon’s Stock Faces More Declines Short Term
By Michael J. Kramer
The stock has dropped by about 6% since reaching an all-time intraday high of 2,050, on September 4. Technical analysis suggests the shares may fall an extra 4%, pushing the stock into a correction, with shares down by 10% from their peak.
Any pullback in the stock is likely only to be short term. That is because analysts expect the company to deliver strong earnings and revenue growth for years to come.
Amazon’s stock has been rising since April in a technical pattern known as a rising wedge. It is a bearish technical pattern, suggesting the stock will fall. The shares may fall to a price of around $1,840, which is the next level of technical support.
Additionally, bullish momentum has been leaving the stock. It too suggests the stock price will fall. The relative strength index (RSI) has been trending lower since peaking in late January at a level of near 90. But the stock has continued to rise, while the RSI has been trending lower, a bearish divergence.
Analysts are still very bullish on the stock long term.
Still, analysts see the shares powering higher, by an average of 13% to a price target of $2,164.
Lira Gains on Hopes U.S. Pastor Held in Turkey Will Be Released
By Constantine Courcoulas
Turkey’s lira gained the most among emerging markets amid speculation a detained American pastor could be released next month, ending a dispute between the NATO allies that has wreaked havoc on the currency.
There are “somewhat promising signs from both U.S. and Turkish officials of late” and the Oct. 12 trial is now “much more of a 50/50 probability event than has been the case ahead of previous hearings,” said Henrik Gullberg, a strategist at Nomura International Plc in London, who suggested that investors take a long position in the Turkish currency.
The Curious Case of Citigroup’s Highly Recommended Lagging Stock
By Jennifer Surane
Investors haven’t exactly embraced Citigroup Inc. in 2018, leaving its stock behind competitors. But analysts have been falling in love.
Shares of the New York bank — known for its vast overseas operations — have stagnated this year on concerns it could get burned by a rout in emerging markets and a looming trade war. Yet a growing number of analysts are suggesting it’s primed for brighter days after building cash-management relationships with global companies and shaking up senior management.
Citigroup’s stock is now both a laggard among large U.S. commercial banks and one of the most-recommended, with pickers making the case it’s undervalued.
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