Pre-Market Analysis And Chartbook: Dollar Dips on Dovish Powell as Brexit Deal Still in Question
Friday Market Snapshot
|Asset||Current Value||Daily Change|
|WTI Crude Oil||57.59||1.80%|
Today is shaping up to be another wild ride in financial markets after the recent volatile sessions, with currencies, bonds, and equities all experiencing heavy trading. The Brexit process, the confusion regarding the US trade tariffs, and the broad bearish technical shift in risk assets are all contributing to the wild moves, and Fed Chair Jerome Powell also increased uncertainty yesterday.
The central banker hinted on possible pause in the Fed’s tightening cycle next year, citing increased economic headwinds following the open attacks form President Trump regarding the “tight” policies of the bank.
As Mario Draghi confirmed the ECB’s quantitative tightening plans as well, the Greenback lost ground compared to most of its peers, even as the main European currencies continue to be under pressure due to the Brexit chaos.
EUR/GBP, 4-Hour Chart Analysis
The Euro and the Pound, which are trading near their yearly lows compared to the Dollar, are stuck in a very volatile broad trading range against each other. The EUR/GBP pair topped out just above 0.90 this year, and although since the August high it drifted back to 0.86, the Pound remains weak from a long-term perspective.
A no-deal Brexit could hurt the British currency more and even a push above the decade-long high near 0.93 could be ahead. Short-term, we expect volatility to remain high in the pair, and in forex markets in general, and a move out of the range could happen soon.
USD/JPY, 4-Hour Chart Analysis
Another possibly important move started in the USD/JPY pair and in gold in recent days, as the broad risk-off shift helped the Yen, with safe-haven flows favoring the currency and the precious metal again.
Following Powell’s dovish words, the pair could be ready to test the 112 level again, especially should the major stock indices continue lower in the coming week. Below 112, the 111.40 and the 110.70 levels provide support, while strong resistance is ahead near 113.70 and 114.50.
Another Selloff in Stocks as Bearish Pressures Mount
Global stock markets are lower today, despite yesterday’s reversal and late-day rally on Wall Street, which was sparked by renewed trade optimism, following rumors on a possible halt of the US tariffs on Chinese goods.
The rumors were quickly denied, but there is more and more evidence that the Trump administration might be changing its aggressive strategy, while China also seems more flexible in light of the economic slowdown and the turmoil in Chinese assets.
FTSE 100 Index CFD, 4-Hour Chart Analysis
The Brexit chaos is also weighing on equities in Europe and across the globe, with British assets clearly being under pressure, despite the rally attempts on the positive headlines regarding the draft withdrawal plan.
For now, the fate of the plans is still highly uncertain, despite the progress made by Theresa May. The hawkish words of Draghi also added to the bearish pressures today, as the Eurozone CPI was in line with expectations.
Nasdaq 100 Futures, 4-Hour Chart Analysis
The major US indices all opened lower today, despite the continued decline in Treasury yields, with clear weakness in the tech sector and small-caps. Industrial Production missed the consensus estimate in October, with a monthly growth of only 0.1%, and the previous reading was also revised lower.
The key benchmarks are not far above the October lows, the recent rally attempts all failed, so given the bearish global technical picture, conditions in equity markets remain hostile for bulls.
Major Stock Indices
S&P 500 Futures, 4-Hour Chart Analysis
Dow 30 Futures, 4-Hour Chart Analysis
VIX (US Volatility Index), 4-Hour Chart Analysis
DAX 30 Index CFD, 4-Hour Chart Analysis
EuroStoxx50 Index CFD, 4-Hour Chart Analysis
Nikkei 225 Futures, 4-Hour Chart Analysis
Shanghai Composite Index CFD, 4-Hour Chart Analysis
EEM (Emerging Markets ETF), 4-Hour Chart Analysis
EUR/USD, 4-Hour Chart Analysis
GBP/USD, 4-Hour Chart Analysis
AUD/USD, 4-Hour Chart Analysis
WTI Crude Oil, 4-Hour Chart Analysis
Gold Futures, 4-Hour Chart Analysis
Copper Futures, 4-Hour Chart Analysis
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