Doom and gloom spread but markets stable

Peter A Rosenstreich Swissquote Bank Ltd

Considering the developing risks, markets are handling the news flow relatively well. Asia equity markets were mixed and European stocks are higher. UK-EU negotiation has devolved into a deadlock (agreements seem unlikely by 31st Oct). Negative signals from Washington on US-China trade negotiations, which follows US escalation by suspecting China officials visa access. Expectations are low as US-China top trade negotiations are planning to meet today. There was a minor glimpse of hope as Chinese officials stated Beijing cold accept a limited trade deal as long as no additional further tariffs are imposed. Finally, news that Turkey launched an offensive in northern Syria, hitting the US back Syrian militia. We remain bearish on GBPJPY Brexit uncertainty is very unlikely to reduce near term. GBPUSD bearish trend needs to clear 1.2197 extend downtrend to back to the 1.1959 lows.

Stay on top of the markets with Swissquote’s News & Analysis

US treasury yields continue to gains as the demand for risk increased. The long end of the US curve hit an October high at 2.09%. Crude rose briefly after Turkish forces launched an offensive in Syria, however, prices fell as U.S. data indicated that crude stockpiles increased for the fourth straight week. Yesterday’s FOMC minutes indicated that most FOMC members are more concerned about the downside risk to growth than the upside risk of inflation. The minutes highlight clear diversion within the committee. The trade tensions and weaker global growth are the key fears. Interestingly, the members seem unconcerned over the effect that tariffs might have on inflation. Overall, further weakness in activity data will trigger two-25bp cut (Oct and Dec) this year. That is as long as inflation remains subdued. Today markets will be watching UK Industrial production and construction data and US CPI. EURUSD remains stuck in a sideways range, between 1.0940 support and resistance at 1.1000.

Author

Peter A Rosenstreich

Swissquote Bank Ltd

Peter Rosenstreich is Swissquote Bank’s Head of Market Strategy and manages the global strategy desk; he has held various positions in several banking institutions in the United States, Europe & Asia.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.