ActivTrades’ Market Analysts have prepared for LeapRate their daily commentary on traditional markets for October 18, 2019. See details below:
FOREX/BREXIT
The pound is slightly down on the day, as the markets digest the developments of the last 24 hours. Boris Johnson and the EU leaders reached an unlikely agreement for an orderly Brexit, which the DUP subsequently refused to support, making the approval of such a deal by the British Parliament uncertain. It is still not clear what the final outcome for the Brexit process will be.
Nevertheless, judging by the pound’s price action, the markets are now pricing in reduced chances of no deal, despite doubts over what Parliament will do on Saturday. Sterling is 5.5% up against the dollar compared to where it was just over a week ago, when there was no agreement in sight between the two sides.
Ricardo Evangelista – Senior Analyst, ActivTrades
GOLD AND NICKEL
Gold is continuing to show little volatility with the price waiting for new market drivers. Bullion is languishing just below $1,490 and was unable to recover further, despite the weakening of the greenback. As said in previous comments, we are seeing a real challenge between the short-term scenario, marked by the relative strength of bears, and the medium-long term bullish trend, which has driven gold up by 15% YTD.
On base metals, there is a lot of attention on nickel, which is up more than 50% from the beginning of the year but collapsed by $825 in just a few minutes a couple of days ago, before continuing that bearish trend yesterday with a 5% loss. These are clear signals that some big investors are taking profits after the long rally. From a technical point of view, the price is now testing the first key support at $16,000-$16,250, while the next level to monitor will be $15,400-$15,500. On the flipside, a recovery to $17,000 would represent a first positive signal after the weakness seen in the last few days.
Carlo Alberto De Casa – Chief analyst, ActivTrades
EUROPEAN SHARES
European stocks opened lower for the last trading session of the week after mixed data from China overnight put pressure on market sentiment. As a trade deal between Washington and Beijing now has a good chance of being signed next month, investors have switched their focus back to data. Even though both industrial output and retail sales have increased in China, investors were very disappointed by GDP at 6.0% (prev. 6.2%), its slowest pace since the early 1990’s. Having said that, investors are probably choosing to take some profits today, after a week of gains, and limit their exposure to EU stocks ahead of a busy weekend with a potential Brexit deal to be approved by the UK Parliament this Saturday.
The FTSE-100 Index is in a very short-term bearish channel and found strong support from bulls above the 7,155pts zone. A breakout below this level could potentially lead prices towards 7,125pts and 7,090pts by extension even if it is not a likely scenario ahead of tomorrow’s vote.
FTSE-100 Index chart
Pierre Veyret– Technical analyst, ActivTrades