ActivTrades’ Market Analysts have prepared for LeapRate their daily commentary on traditional markets for October 21, 2019. See details below:
FOREX/BREXIT
Despite being slightly down on the day, the pound is holding on to most of the gains achieved last week, trading just above $1.29. Markets are waiting for today’s decisions in Parliament. A negotiated Brexit, according to the terms agreed last week between the EU and the UK, is now seen as the most favourable outcome. Certainty, or the lack of it, is the main factor weighing on investors’ mindset, as we reach the point of maximum Brexit fatigue. If Boris Johnson fails to pass his deal through parliament, Brexit will once again be postponed. In this scenario it is likely for the pound to lose support, potentially shaving off last week’s gains. A new delay means the possibility of a general election happening before any deal is rectified. This would multiply uncertainty, as the possibility of a no-deal exit would still be on the table and potentially in the hands of a Parliament more inclined to back such an outcome.
Ricardo Evangelista – Senior Analyst, ActivTrades
GOLD
Volatility seems to have disappeared on gold, with bullion in a lateral mode. The big rally seen in the first part of the year is now on hold, while stock markets are still in a risk-on environment. Investors, after switching to gold some of their portfolio in the last few months, are now waiting for new market movers, potentially from developments in the trade war and from the monetary policy that will be put in place by the Fed and the ECB. Brexit impact on bullion seems to be reduced. From a technical point of view, we will have a first positive signal with a new recovery to $1,500, while the first support is now placed at $1,477, which is the bottom reached last week, followed by $1,460.
Gold chart
Carlo Alberto De Casa – Chief analyst, ActivTrades
EUROPEAN SHARES
European shares edged higher today despite a mixed trading session in Asia due to unusually low volumes. Today’s “risk-on” trading stance takes place as investors digest the latest positive developments surrounding US–China trade talks. Sentiment is also being boosted by potential further stimulus from the ECB, with its decision on rates and monetary policy to be announced on Thursday.
Elsewhere in Europe, Brexit keeps on shaking investors’ minds after UK PM Boris Johnson was forced by law to ask the EU to postpone Brexit until January 2020 after he lost another Parliament vote on Saturday. However, Mr. Johnson renewed his vow to stick to the 31st of October date for the Brexit by asking the House of Common to back his deal in another “meaningful vote” today.
Reaching a deal before November would remove a lot of uncertainty surrounding stock markets in Europe and boost market sentiment ahead of the Christmas season. It is already quite noticeable traders have already priced a positive Brexit outcome as the pound manages to hold last week’s gains. Finally, investors will also pay attention to industry giants like Amazon, Microsoft, UBS and China Mobile with Q3 earnings published later on this week.
STOXX50 chart
Pierre Veyret– Technical analyst, ActivTrades