Daily Market Roundup: US heading into a technical recession? Outlook on major Indices

Nick Batsford, CEO of Tip TV, was alongside 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 an array of major Indices, as well as GBP/USD, an outlook for central banks and the ZAR slump.

GBP/USD: bullish daily close ahead of BoE rate decision

Batsford highlighted FX Street, who noted that the USD was offered on Tuesday as financial market instability could delay lift-off, or reduce the degree of a Fed rate hike. When concerning the BoE, they commented that the UK central bank is expected to vote 8-1 to keep rates unchanged, with a hawkish surprise very unlikely due to low inflation and a worsening trade deficit. They concluded that a bullish close above 1.5159 will open doors for a rise to 1.5248 on the GBP/USD.

Indices Outlook

On the S&P 500, Batsford outlined that the index is consolidating in a bullish triangle across support from the 200-day exponential moving average. A break above 2100 is needed to resume the uptrend off the August low. In the meantime expect further volatility between 2050 and 2100. He added that momentum is already at a comfortable level, having unwound to neutral, prepping the char ahead of the next upside reassertion attempt. Hence, the present volatility should soon subside.

When concerning the FTSE 100, he expressed it broke medium-term support at 6250, with a breach of 6000 becoming more likely and would signal a primary down trend.

Watch the video for further technical analysis on Germany’s DAX, Shanghai Composite, Nikkei 225 and the VIX.

What next in the world of central banks?

Batsford moved onto Elliott, who noted that ahead of next week’s Fed meeting which is widely expected to produce the first rate rise in years, the Bank of South Korea kept its key rate at a record low 1.50% for a sixth consecutive month. At 08:30 GMT the SNB will announce whether it will keep its benchmark rate at a record minus 0.75% (many had feared it could go even deeper into the red depending on the ECB decision last week); a press conference follows. Finally at 12:00 the BoE is widely expected to keep the bank rate at the record low 0.50%, where it has been for the last seven years. Hubard contributed that he has been predicting an interest rate rise since June, and now we are likely to see one next Thursday. However, he also commented on the poor retail numbers expected tomorrow, which could be the start of the US heading into technical recession.

ZAR falls with Finance Minister’s sacking

Batsford finished with Elliott, who outlined that the ZAR slumped to its weakest ever level against the US dollar (15.3855 and down 23% this year) yesterday as President Zuma sacked his Finance Minister after 19 months of poor economic performance.