Nick Batsford. CEO of Tip TV, was joined by Zak Mir, technical analyst for Zak’s Traders Café, and Bill Hubard, Chief Economist for Bullion Capital, when he opened the Tip TV Finance Show to discuss the outlook for the USD Index, the likely measures involved in the ECB stimulus package, as well as an outlook for stocks and key indices.
USD Index could correct after Fed tightening begins
Batsford highlighted FX Street, who noted that 1994-1995 saw a 10% drop in the USD Index after the first rate hike, but then experienced gains in 1999-2000 as the Dot com bubble was in the making. The USD Index extended downwards between 2004 and 2006, and now they believe that 2015-2016 could see the USD Index correct, but losses may be restricted by potential instability in the emerging markets. Conversely, Hubard commented that the USD Index is a major talking point, and is poised to continue higher.
ECB action next week
Batsford outlined that the ECB think tank report suggests they will launch a stimulus package of measures next week which are likely to include: a deposit rate cut at least 10bps, the extension of QE by 6 to 12 months, the pool of securities to be expanded and the possibility of more radical options to be considered.
Index and Stock Outlook
Batsford expressed that the S&P 500 hesitated at 2100, with short candle ranges indicating a lack of interest ahead of the Thanksgiving holiday. Reversal below 2000 is unlikely, he noted.
In terms of Lloyds, Mir commented that the 72p support level was broken earlier this week, and whilst it is back above that level now, he expected a bear trap ahead for the stock.
Batsford continued to Germany’s DAX, which broke resistance at 11000, signalling another test of 12400. He added that reversal below medium term support at 10600 is unlikely, but would warn of a decline to primary support at around 9500. Mir highlighted that the 10600 level is very significant, but the Index is likely to rise.
When concerning Tesco, Mir concluded that anything around 160 is an opportunity, and he urged to buy the lows on the stock.
Watch the video to see further analysis on the Shanghai Composite, the FTSE 100, the Nikkei 225, the VIX, as well as SAGA, IMT, CNA, CCL, WRES, SML and LGO.
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