Markets continue to suffer jitters following the continued US government shutdown and a failure by both parties to agree the latest budget. Although past precedent indicates that a deal will be reached before the deadline, expect this to be taken to the wire, making for unsettled markets in the meantime.
Against this trouble backdrop it is perhaps not surprising that the relative safe havens of the Yen and Swiss Franc have seen gains, something I wrote about previously. So too has gold, with the commodity metal holding and building on gains above $1300. Given the current market fundamentals this trend is likely to continue over the coming week.
Elsewhere British Pounds rate decision from the Bank of England could help to fuel recent gains in Sterling. The currency has seem strong gains on the back of current monetary policy and despite a pullback at the start of the week, the rate decision could provide the impetus for further gains.
Canadian employment change figures end up the week. Figures are expected to show an increase which should prove to be broadly supportive for the Canadian dollar.
Key News This Week
EUR/USD – The pair pulled back as far as 1.3538 before continue to move higher. With price above the 5, 10 and 20 day SMA bias remains higher. Look for a test of 1.3640 over the coming sessions. This is the current high reached this year.
USD/JPY – Price is moving lower in a current downtrend channel. Looking lower expect a test of 96.70 over the coming session with a break sending the pair on towards 95.00 from where a bounce should occur.
USD/CHF – Breaking below 0.9000 the pair hit its lowest level in over a year at 0.89653. From this level the pair bounced in an anticipated reversal. Could this be an important low? USDCHF has disappointed so many times before we suggest standing aside for now.
GBP/USD – Since hitting a high of 1.6259 the pair has reversed strongly. While technically much of the pullback has been to profit taking, 1.6000 is likely to be tested but should provide good support before we see another move higher.
DOW – Moving lower, the Dow held above support at 15,000 but only just. Given current fundamentals for the US economy there is scope to move lower from here. While bias remains higher, look to support at 14750.
NASDAQ – As predicted the Index posted gains for the week, finishing at highs back above 3800. This provides a fairly bullish signal given the backdrop of market fundamentals. Look higher with 3700 as support if needed.
FTSE – The FTSE moved lower through support at 6500,eventually finding support at 6400. This level is expected to provide support to the market this week. 6400 (lower) and 6700 (higher) mark either side of the current range.
Oil – Support kicked in at $101 with the Crude price finishing positive, despite move lower over the week. Given the positive end to the week we continue to look higher on the this market for a an eventual test of recent highs.
Gold – Despite pulling back of over the course of the week, the price of Gold held firm above the $1300 level. Flows into the metal no doubt increased as a result of fears surrounding the US budget and dollar easing. Continue to look higher.
Key results due for release this week include Q3 results from Wells Fargo and also banking giant JP Morgan.
Given the recent $11 billion dollar fine, we would expect results to be down at the US bank and would expect the stock price to end lower over the course of Fridays session.