ActivTrades’ Market Analysts have prepared for LeapRate their daily commentary on traditional markets for October 16, 2019. See details below:
FOREX/BREXIT
Today the pound is receding against both the dollar and the euro, after climbing to a five-month high on Tuesday when it touched $1.28. Obviously Brexit and the ongoing negotiations between the UK and the EU are behind the pound’s recent gains, which surged as reports started to emerge of Boris Johnson being on the verge of reaching an exit deal with the EU, having reportedly made concessions on the issue of the Irish border. But any agreement reached with Brussels will have to be ratified by the British Parliament, and it is not yet clear if the Democratic Unionist Party, whose vote would be essential, is willing to support it. Perhaps this why the pound lost some steam after yesterday’s gains.
Even though a no-deal Brexit appears less likely, there is still a long way to go before the markets start to fully price in the ideal outcome for Sterling, which would be a negotiated Brexit.
Ricardo Evangelista – Senior Analyst, ActivTrades
GOLD
Gold is in a downward trend as the risk-on scenario, which has attracted investors to stock markets in the last few days, pulled down price. Bullion was unable to hold above the $1,500 mark but the next support level of $1,480 managed to curb its fall. From a technical point of view, we are in a sideways phase even though the short-term trend appears negative as the highs seen in the last two months are declining ($1,550 – $1,533 – $1,520). Meanwhile, buyers have managed so far to maintain the price above $1,470, holding off any sharp declines and demonstrating that there remains some appetite for the yellow metal.
Carlo Alberto De Casa – Chief analyst, ActivTrades
EUROPEAN SHARES
The Brexit saga continues to set the pace for share and currency markets in Europe on Wednesday. Stocks and sterling both opened slightly lower as these assets are retracing yesterday’s gains following the announcement of a draft Brexit deal nearing agreement between Brussels and London.
Today’s retracements are explained by both profit taking and a short-term shift in sentiment arising from the latest declaration of the Democratic Unionist Party in Northern Ireland which said “chances of a Brexit deal are low”. Technically speaking, this ongoing state of flux is displayed by high volatility levels in Europe, especially towards FX markets like EUR or GBP.
The impact of Brexit talks remains limited on stocks so far as the current rally of this asset class is still strongly linked to the recent trade war developments, the monetary policy of Central Banks as well as the important earning season where many big US banks already surpassed forecasts yesterday.
Pierre Veyret– Technical analyst, ActivTrades