Sentiment Rebounds with Trump's Recovery | FXTRADING.com - International

  • Sentiment was given a boost on news that President Trump was to leave hospital and continue his recovery back at the White House. The Nasdaq led the charge with a 2.3% gain on the session, with S&P500 and DJIA closing 1.8% and 1.7% respectively.
  • The US dollar index closed to a 2-week low in the risk-on environment.
  • Oil prices rallied from their cycle lows after six oil and gas fields in Norway were closed due to strikes over pay.

 

RBA Cash Rate Decision:
Markets were originally pricing in a rate cut for today’s meeting, although these expectations have now been pushed back to next month, given that the Government will also release their budget today. However, RBA may effectively confirm a rate cut at today’s meeting, which could be bullish for the S&P/ASX 200 (AUS200) and potentially bearish for AUD pairs. That said, the governments budget may provide the larger market reactions.

Australian Budget (19:30 Sydney):
The Morrison government will release a highly important budget, in which they are expected to unveil huge spending, tax cuts and blow the deficit out to historical levels. This could be bullish for the ASX 200 and AUD pairs if the markets view the budget as reflationary.

 

EUR/USD: Bullish Engulfing Candle Closes Above Resistance

  • Yesterday’s bullish engulfing candle closed above 1.1770 resistance and shows support has been confirmed at 1.1700.
  • Bulls can consider longs above yesterday’s higher or wait for a retracement towards the trendline.
  • The 1.18600 and 1.2000 highs are now in focus for bulls. A break beneath 1.1700 invalidates the bullish bias.

 

USD/JPY: Considering a Bullish Breakout

  • USD/JPY initially broke lower from the tight range highlighted on Friday, although the reversal by the close produced a bullish hammer to show demand around 105.
  • Yesterday’s bullish engulfing candle has us on high alert for a break above 105.58.
  • The bias remains bullish whilst prices remain above Monday’s low (105.25). A clear break above 105.80 brings the 107 high into focus for bulls.

 

Silver (XAG/USD): Probing Key Resistance

  • Prices spent the most part of Monday coiling within the 23.12 – 24.40 range, although bulls managed to push Silver higher and close just beneath 24.40 resistance.
  • A small flag is forming on the hourly chart, which would be confirmed with a break above yesterday’s high.
  • If successful, the flag projects a target around 25.16.

 

S&P 500 (US500): Trump’s Recovery to Pump Stocks?

  • As mentioned in yesterday’s report, we expect sentiment to be sensitive to President Trump’s perceived health. Given he has now been given the green light to leave hospital, this was bullish for stocks.
  • The S&P500 closed on trendline resistance, and a long-legged doji and bullish hammer show demand around 3300.
  • A clear break above yesterday’s high assumes bullish continuation.

 

Watchlist Update:

AUD/NZD: Bias remains bearish below the bearish trendline. A break beneath 107.69 assumes bearish continuation. However, prices are close to testing the upper trendline – and a risk-on environment could see it break higher.

Nasdaq 100 (USTEC): US indices are basically a proxy for Trump’s perceived health. A break beneath 11,183 brings the September low into focus for bears, a break above 11,600 assumes bullish continuation.

Hang Seng (HK50): A bearish candle has formed inside the Fibonacci resistance zone. A break beneath Monday’s low assumes bearish continuation.

S&P/ASX 200 (AUS200): A bullish hammer closed above 5,800 to suggest a swing low is in place. Bulls can target the 6,000 to 6,200 zone, although a retracement lower would help increase reward to risk potential.

WTI: Prices fell towards the initial target near September’s low, and have now rebounded higher. There’s potential for a bearish triangle to form so we will continue to monitor its bearish potential.

 

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