The Australian Gross Domestic Product (GDP) growth was relatively flat throughout the 2nd quarter of 2015 as global commodity prices remained severely depressed. The GDP result was well below expectations, indicating growth of 0.2% quarter- on-quarter in the wider economy. This represents the weakest period of growth since early 2013, and data from the third quarter is likely to follow the same path, when released in December.
The Federal Reserve (Fed) decision to hold off on raising rates last month and a disappointing September payrolls report appear to have given traders confidence that US policy makers won’t rush a rate hike. Minutes of their last meeting showed officials put off an increase because of growing risks, mainly from China, to their outlook for economic growth and inflation.
The AUDUSD rose 4.4% since the start of the month and plunged 9.5% year to date, plus is in well-established recovery phase. The currency rose last week with a wide range after a clear break of a four-week consolidation and closed in the green near the high of the week. The Stochastic is showing a bullish momentum although it is still below the 50 mid line.
Expecting an upward move to a weekly resistance at 0.7533 on a break above previous week high at 0.7344 (scenario 1) or wait for a retracement and bounce off a key level at 0.7234 (scenario 2).
Last week, the minutes pointed to an extremely cautious Federal Reserve (Fed) even before later economic data showed a sharp slowdown in hiring by US companies. Most investors however, thought the Fed’s first-rate hike in a decade should still come this year.
Overall, the Federal Open Market Committee (FOMC) still see risks to the downside for US real Gross Domestic Product (GDP) and inflation forecasts, with recent global growth and financial market developments worsening these downside risks.
The commodity since the beginning of the year fell more than 2.5% and is in a recovery since the beginning of October, trading above the 10 and 50-week moving averages. Last week gold rose with a narrow range and closed in the green near the high of the week. Stochastic is showing a strong bullish momentum and crossed above the 50 mid line.
Expecting an upward move to a key level at 1,227.12 on a break above a weekly resistance at 1,177.76 (scenario 1) or a bounce from a weekly resistance at 1,177.76 could push downward gold to a weekly resistance at 1,131.65 (scenario 2).
Nearly all the indicators that Chair (Janet) Yellen and other FOMC participants have recently cited as important in assessing labor market conditions showed some degree of deterioration. Markets are now likely to downgrade any likelihood of a policy move in 2015.
The Federal Reserve (Fed) minutes may shed further light onto the most recent rate decision, which was interpreted as dovish by the market, however the fact that Fed’s Yellen held a press conference immediately after the decision limits the amount of new information that the minutes may provide.
The UsaTec rallied more than 2.5% since the start of the month and rose 1.1% year to date; the Index is in a bearish phase since the end of September after the death cross. Last week the Index initially fell but found enough buying pressure to turn around and closed at the high of the week on above average volume. The stochastic is showing bearish momentum and is below the 50 mid line.
Expecting an upward move to a weekly resistance at 4,347.50 on a break above previous week high at 4,261.25 (scenario 1) or a break below a weekly resistance at 4,247.50 may push the Index back down to a weekly support at 4,118.25 (scenario 2).
UsaTec is a CFD written over Nasdaq 100 futures.
The main drag on the British economic recovery is the weakness in UK manufacturing managers index (PMI) as the latest figures sunken last week, showing a drop to 51.5 in September, down from 51.6 in August. While remaining above the 50 threshold indicating growth, September’s PMI was only just above a two-year low hit in June.
At the end of last week the USD initially sank after an unexpectedly poor US jobs report suggested the Federal Reserve (Fed) may wait to raise interest rates until next year, but scraped back some of its losses.
Since the start of the year the currency fell more than 0.5% and is in a bearish phase since late of September. Last week the GBPUSD went back and forward without any clear direction with a narrow range but closed in the red near the open of the week. The currency is testing the lower channel line and the stochastic is showing a slight bearish momentum.
Expecting an upward move to a weekly resistance at 1.5483 on a break above previous week high at 1.5241 (scenario 1) or a break below previous week low at 1.51065 could push the currency down to year low at 1.4566 (scenario 2).
The Chinese demand for raw materials may not necessarily rebound as quickly as overall economic activity, which could be a problem for Australia. The recent devaluation of the Yuan has reduced the purchasing power of Chinese businesses and investors which may lead to further weakening of demand for Australian natural resources.
While the Federal Reserve maintained current interest rate levels, it is widely believed that it is a matter of time before the central bank begins to raise rates. The Reserve Bank of Australia, on the other hand, is forecast to lower the cash rate to 1.5% next year. The unemployment rate is expected to creep up to 6.5% by November, which could further pressure the Australian Dollar.
The AUDUSD fell 1.3% since the start of the month and plunged 13.1% year to date, plus is in well-established bearish phase. The currency fell last week with a wide range after a clear rejection of the 10-day moving average and closed in the red near the low of the week. The Stochastic is showing a bullish momentum and crossing above the 20 line indicating a buy signal although it is below the 50 mid line.
Expecting a downward move to a Fibonacci extension at 0.6190 on a break below a weekly support at 0.6896 (scenario 1) and a break above previous week high at 0.7197 may throw the pair to a weekly resistance at 0.7533 (scenario 2).
Gold rose to a two-week high last week as the Federal Reserve’s (Fed) decision to leave US interest rates unchanged weighed on the US dollar and added to uncertainty over the timing of the first-rate hike since 2008.
The Fed statement had a clear dovish tone hurting the US dollar and boosting precious metals attractiveness against securities that provide a yield.
Concerns over slowing economic growth in China, mixed economic data and volatility in financial markets have increased doubts about the timing of any US rate increase, putting gold into the spot lite.
Looking ahead, the price support for gold is seen as being short-lived. While the Fed didn’t raise rates this time round, the central bank said a hike will likely come this year. Although the dovish tone of the Fed statement is throwing this into doubt.
The commodity since the beginning of the year fell more than 4.0% and changed from a bearish to a recovery phase last week, trading above the 10 and 50-week moving averages. Last week gold rallied and closed in the green near the high of the week on a wide range week. Stochastic is showing a slight bullish momentum although is still below the 50 mid line.
Expecting an upward move to a key level at 1238.14 on a break above a weekly resistance at 1,177.76 (scenario 1) or a break below last swing low at 1,098.62 could push downward gold to a Year lows at 1,070.83 (scenario 2).
The US Labour Department showed last the producer price index (PPI), which measures price changes before they reach the consumer, the final demand index moved down 0.8% for the 12 months ended in August, displaying the seventh straight 12-month decline.
The inflation picture is generally still very subdued with oil and gasoline prices falling and most other costs little changed, American consumers are enjoying mild inflation. The dollar has risen about 15% in value in the past year, which makes imports cheaper.
The Federal Reserve (Fed) has got a bit of a tough dilemma. The labour market is getting close to full employment and growth is quite solid but inflation is clearly below the Fed’s target, it will be a close call on whether the central bank will raise rates this week.
The Index rose 0.5% since the start of the month and fell 3.0% year to date, plus is in a well-defined bearish phase since late August. Russell 2000 rose with a narrow range last week and closed in the green near the high of the week, made a straight 2nd narrow week. The stochastic is showing bullish momentum although is below the 50 mid line.
Expecting an upward move to weekly resistance at 1,212 on a break above previous week high at 1,171.5 (scenario 1) or a break below previous week low at 1,131.4 could push the Index down to a weekly support at 1,078.7 (scenario 2).
UsaRus is a CFD written over Russell 2000 futures.