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Daily Analysis: Dollar Crushed as Jobs Friday Disappoints

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Friday Market Recap

Asset Current Value Daily Change
S&P 500 2433 0.17%
DAX 12834 1.35%
WTI Crude Oil 47.17 -2.42%
GOLD 1278.00 0.85%
Bitcoin 2402 -0.63%
EUR/USD 1.1273 0.54%

Stock markets are mixed today so far following the crucial US Employment Report as European and Asian markets are up significantly while the main US indices are virtually unchanged. Non-farm payrolls came in at 138,000, well below the expected 181,000 while the last reading was also revised lower. The DAX touched its all-time high earlier today, outperforming its global peers, while the NIKKEI jumped to new highs above the 20,000 level before the Dollar slump. The negative employment report might push the Federal Reserve towards a more cautious rate-hike schedule, and sure enough, Treasuries are rallying strongly. This could have a profound effect on all asset classes if the US economy remains soft.

Gold is among the biggest beneficiaries of the today’s trends, as the Shiny Metal hit a 5-week high near the $1280 level. The Euro, the Yen, and the Swiss Franc are all up compared to the Dollar, while the Australian Dollar also recovered some of its recent losses, despite the sharp drop in the price of oil today. Industrial commodities are also lower together with oil, although the Chinese market has been relatively strong overnight.

Gold Futures, 4-hour Chart Analysis

Cryptocurrencies are broadly lower today, but the losses are limited with only Ripple losing more than 5% after yesterday’s surge. Ethereum continues to consolidate below its recent highs, while Bitcoin is trading near the $2400 level as it failed to move above the short-term resistance sustainably.   Litecoin is still stuck below $30, while Dash and Monero are a tad below their recent highs, still looking fairly bullish. Stratis and Bytecoin are the stars of the day, as Stratis almost hit 0.0035 compared to Bitcoin, rising by more than 40%, with Bytecoin also being up by almost 50%.

Ripple, 4-Hour Chart Analysis

Technical Picture

 

The DAX S&P is close to its all-time high after breaching it in the morning, although the US data pushed the German index lower as well. The continued strength of the Euro is weighing on the benchmark, but the recent consolidation cleared the overbought condition, so further upside is possible here. The 13,000 level could be in focus next week, while primary support is still found at 12,500.

DAX Futures, 4-Hour Chart Analysis

Key Economic Releases on Friday

Time, CET Country Release Actual Expected Previous
10:30 UK Construction PMI 56.0 52.7 53.1
14:30 CANADA Trade Balance -0.4 bill 0.0 bill -0.1 bill
14:30 US Non-Farm Payrolls 138,000 186,000 211,000
14:30 US Hourly Earnings 0.2% 0.2% 0.3%
14:30 US Unemployment Rate 4.3% 4.4% 4.4%
14:30 US Trade Balance -45.5 bill -45.5 bill -43.7 bill

 

Key Economic Releases on Monday

Time, CET Country Release Expected Previous
10:30 UK Services PMI 55.8
16:00 US ISM Non-Manufacturing PMI 57.5
16:00 US Factory Orders 0.2%

Featured image from Wikimedia Commons

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 380 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Analysis

Volatile and Flat US Session Ends a Hectic Week for Stocks

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The major US indices finished virtually unchanged today, despite the positive open, while short-dated Treasuries closed the week near their multi-year lows. The session had several ups and downs, but the uptick in yields and the weakness in Europe proved too much for a sustained move higher to develop, despite the string of better-than-expected quarterly earnings reports.

S&P 500 Index Futures, 4-Hour Chart Analysis

From a broader perspective we can say that another bounce faded in stocks, with small-caps underperforming yet again, so the risk-off trend got one more confirmation.

Russell 2000, 4-Hour Chart Analysis

We have been tracking the main US small-cap benchmark all week long, as it has been precisely leading the broader market in recent weeks, and today the index got very close hitting a new 6-month low. The next week will be crucial for global risk assets, as given the long-term breakdowns in the main European benchmarks, the new bear market lows in Chinese stocks, and the ugly market internals on Wall Street, this might be the last opportunity to avoid protracted bearish period, or even a global bear market.

While Italian assets are under severe pressure, with government bond yields charging higher, decoupling from the “core” of the Eurozone, credit markets in general are not showing signs of broad distress. With that in mind, we don’t expect 2008-like dislocations in financial markets, for now, but investors should watch high-yield corporate bonds, where large excesses built up in recent years.

Forex Markets Turn Choppy as Dollar Pulls Back Again

EUR/USD, 4-Hour Chart Analysis

The China-led rebound in equities, which faded in late trading, and the Dollar’s retreat were the two main drivers in forex markets today. The EUR/USD recovered above the key 1.15 level after reaching as low as 1.1430 in early trading, while the Dollar index also failed to rise above its recent swing high, so the reserve currency could continue to consolidate before re-testing the August lows.

The bounce in the Euro was helped by the rumors regarding a possible new budget proposal from Italy, and as Moody’s downgraded Italy after the US market close, we will likely see further choppy, hard-to-trade action in currencies, especially given the large moves in US Treasury yields.

Gold Futures, 4-Hour Chart Analysis

Commodities had a mostly bullish day thanks to the Dollar’s dip, with copper and crude oil both recovering after yesterday’s selloff. The WTI crude contract bounced back all the way to the $70 per barrel level, while copper avoided a key breakdown out of its lengthy consolidation pattern.

Gold is also consolidating, albeit in a much different technical position, as the precious metal is trying to form a swing low that would confirm a short-term uptrend after last week’s breakout. A move above short-term resistance would likely lead to a test of the $1245-$1250 zone, with a likely rally up to the next major resistance level near $1260.

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 380 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Altcoins

Zcash Price Analysis: What is Behind the Recent Surge in Price?

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  • Zcash had jumped over 17% over the period of 12-18th October, before running into sellers.
  • The foundation set to launch the Sapling protocol upgrade. To improve efficiency for shielded transactions.

Zcash over a 6-day period from 12-18th October gained a whopping 17%. Moving quickly from as low as $108, to then be above $126. Since, the price has run into some sellers and touted profit-takinggiven the large run in such as short time frame.

What Is This ‘Zcash’ (ZEC)?

Zcash was a hard fork of Bitcoin in 2016. Unlike the number one ranked crypto by market cap, privacy is ensured via Zcash. Personal and transaction data are kept confidential. This being facilitated through zero-knowledge proofs, allowing conducted transactions to go through verification without any required details about the sender, receiver as well as the transacted amount.

Zcash Set to Launch Sapling Protocol Upgrade

The Zcash foundation recently updated via their blog ‘Sapling Transaction Anatomy’. Full breakdown details can be read there as they are set to launch the Sapling protocol upgrade.

Sapling, this will be a network upgrade that aims to substantially improve efficiency for shielded transactions – paving the way for broad mobile, exchange as well as vendor adoption of Zcash shielded addresses. Their motivations for the Sapling upgrade are to increase speed on these shielded transactions.

Coinbase Speculation Continues to Do Rounds

The community around Zcash continues to speculate on whether the privacy-focused crypto will be added to Coinbase. Earlier in the year, Coinbase said they were exploring the possibility of listing Zcash and others, such as Cardano, Basic Attention Token, Stellar Lumens and 0x on its platforms. This covered back in July and does not guarantee it will be added, but the hope still appears to be flowing through the community.

Zcash Jumps to 20th Largest by Market Cap

Earlier this week, Zcash managed to break into the top 20 cryptocurrencies by market cap. It overtook Dogecoin. The current market cap at time of writing seen at $588,429,693, ahead of DOGE at $513,884,230.

Technical Review – Daily Chart

ZEC/USD daily chart

ZEC/USD has been cooling over the past two sessions, after its recent 17% price run. It isn’t too much of a surprise to see the current easing, given the fast surge higher. Near-term support can be found around $115 area, then further south within a demand zone tracking from $110-105. Looking to the upside, sellers are camped heading into the $130 territory. A higher near-term target would be eyed at $145, price last traded here on 28th September.

This year Zcash is still down some 80% from the highs in January, up over the $800 price level. It has failed to sustain any upside momentum, rallies continue to be sold by the bears. This is something that has been seen across the other cryptocurrecies, not just Zcash. The market continues to search for a bottom.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 33 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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Analysis

Pre-Market Analysis And Chartbook: Risk Assets Higher Thanks to Chinese Bounce

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Friday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,797 0.81
DAX 30 11,568 -0.18%
WTI Crude Oil 69.61 1.35%
GOLD 1,230 0.16%
Bitcoin 6,379 -0.24%
EUR/USD 1.1480 0.24%

Risk assets are having an active and already very busy day after yesterday’s tumultuous session, as volatility continues to be high, especially in equities. All eyes were on Chinese stocks and the Yuan today in early trading, as several key economic numbers were published in the country. Chinese officials lived up to the occasion, doing everything in their power to prop up the market verbally and most likely more directly too.

USD/CNH, 4-Hour Chart Analysis

Chinese stocks started the day lower due to yesterday’s broad global selloff, and although they surged higher towards the end of the session, erasing their early losses, the main benchmarks remain in steep downtrends on all time-frames, and the Yuan is also very close to its cycle lows.

Shanghai Composite Index CFD, 4-Hour Chart Analysis

The quarterly GDP and industrial production came in slightly below expected, continuing the deterioration of the recent quarters, while retail sales beat the consensus estimate, as the consumer segment is still outperforming.

 While the official numbers are far from disastrous, it’s hard to trust the government statistics, given the history of “controlled” releases, and looking at the unofficial indicators, the country’s economy and financial system are under larger stress than reported.

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Global stock futures celebrated the Chinese rally for a few hours, but a large chunk of the gains is already gone near the end of the European session, and the focus is back on the Italian budget crisis and the looming Brexit deadline.

The Italian banking sector is under heavy pressure on rumors suggesting increased capital flight from the country and although the Euro is stable, the risk-off trade is well and alive on the Old Continent.

The EuroStoxx 50, which has been performing relatively well form a long-term standpoint failed to leave the vicinity of the spring lows, and the mega-cap index is now threatening to join the long-term breakdown of the DAX after the decline of the past couple of sessions.

US Stocks Rebound as Dollar Rally Pauses

Dow 30 Futures, 4-Hour Chart Analysis

The major US indices opened modestly above yesterday’s closing levels, as Treasury yields settled down following the volatile post-Fed-minutes period. The Dow, the S&P 500, and Nasdaq are all stuck in declining short-term trends, and despite the recent strong bounce, last week’s panic lows are still close.

The Volatility Index (VIX) fell back below 20 today, small caps are performing in line with the broader market, so while we remain bearish form a broader perspective, the immediate outlook for equities is mixed, with no strong divergences before the last session of the week.

Today’s bounce is helped by the better-than-expected earnings report of Procter & Gamble (PG), which opened 6% higher, and the slight pullback Dollar, which got close to its 2-month highs today in European trading. Forex markets, in general, are showing a risk-on bias today, with the Australian Dollar and the Kiwi being helped by the Chinese bounce, and with Pound being stable after yesterday’s selloff.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Nasdaq 100 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Gold Futures, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 380 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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