Currencies

Trendline breakout

S&P Global Ratings revised its risk trend on New Zealand to positive from stable after housingrelated imbalances in the economy moderated. GDP growth remained strong and the labour market continued to perform well. These factors, a steady interest rate environment and strong net migration signaled that the economy was in a relatively strong position.

New Zealand's economy grew at its fastest in two years last quarter of 2.8 percent. Q2 GDP reinforces that the momentum in the economy was relatively robust over the first half of the year despite some of the negative headlines and weak business confidence. Meanwhile, US President Donald Trump is having his own war with Federal Reserve and this might put a brake on the surging US Dollar. This could turn out to be good for NZD/USD in the medium term.

Lira positive on possible oil waiver

Merkel is increasingly being seen as a lame duc” on the world stage after she announced her decision to stand down as CDU leader and this could not be good for the Euro that is already plagued by Italian budget woes. For years, Merkel has shaped EU policy whether it is the Banking crisis, financial crisis or refugee crisis. With lack of leadership, European union can suffer in the short term. Meanwhle, Turkish lira rose on expectations that Turkey will receive a waiver on buying Iranian oil after the United States reimposes sanctions on Tehran from this week. Turkey depends heavily on imports to meet its energy needs and neighboring Iran has been one of its main sources of oil because of its proximity, the quality of its crude and favorable price differentials. Also some easing of trade tensions is supportive for Lira. News reports suggest that U.S. President Donald Trump wants to reach an agreement with Chinese President Xi Jinping at the Group of 20 nations summit in Argentina later this month. Keeping these in mind, Euro will be a sell against Turkish Lira.

Hopes for Brexit deal

With the Brexit deal expected to get finalized and done till 21 Novemeber2018, it is bullish news for the GBP/USD pair. The downfall had accelerated further after the UK Chancellor of the Exchequer Philip Hammond said that a no-deal Brexit would be a shock to the economy and would require fiscal stimulus, but deciding on the date to finalize the deal shows they have agreed on terms in which both parties are content and is positive news for the pair.

Equities

Abatement of trade war concerns

Third-quarter earnings for companies in the S&P 500 are on track to rise 22.5%. Even though 77% of S&P 500 companies have beaten analysts' earnings expectations for Q3, indices have fallen sharply. A combination of factors like Chinese growth which became a concern due to tariffs & Fed tightening have exacerbated the selling. However, Trump administration’s tariffs on goods imported from China will total about $60 billion by January, equal to 0.3% of U.S. GDP or only 0.49% of Chinese GDP. Meanwhile, the U.S. economy is growing fast, with no hard evidence of imminent reversal or inflation. Recent inflation data has softened and this could force the Fed to slow down the pace of rate hikes. S&P 500 index is trading at attractive valuation of 16.55 times next year earnings. Benchmark US index, SPX 500 is at trend line support in weekly chart and there is a good probability of equities bouncing back from current level.

200 Week Moving Average Support

Australia's export boom has hit a new high. The trade surplus jumped to $3 billion in September, thanks to a large leg-up from the alreadyhealthy August surplus being revised up from $1.6 billion to $2.3 billion. It is the third-largest surplus since the Australian Bureau of Statistics started compiling the data in 1971.Exports rose by 1 per cent to a record $37.5 billion, while imports fell 1 per cent to $34.5 billion. The weaker exchange rate will start to boost net trade next year. No other rich country has ever managed to grow so steadily for so long. By that measure, at least, Australia boasts the world’s most successful economy. Australia 200 at 16 times earnings and with a 4.73 percent yield is a good buy at current levels.

Metals

Festival Season to boost demand

Technical chart based selling seems to be main driver of downward move in Gold price over the past couple of days. In international market, Gold has encountered the 200 week moving average around $1240 on the chart and from there it has pulled back by almost 2 percent. From a fundamental perspective, the safe haven demand fell after a sharp pull back in equity markets. Nevertheless, the yellow metal is expected to bounce back ahead of the Indian festival of Diwali as consumer demand is expected to rise. Meanwhile, US President Donald Trump is having his own war with Federal Reserve and this might put a brake on the surging US Dollar. This could turn out to be good for Gold prices as it has an inverse correlation with US Dollar

Energies

US to place sanctions on Iran

US sanctions on Iran will take effect from 4th November, 2018. Oil market fundamentals are on a strong footing as expectations are that oil supply will be dropping by at least 1 million barrels per day. The situation could turn far worse if Trump shows zero tolerance for the countries that still import from Iran and decides to take punitive actions against them. Even though Saudi Arabia has promised to make up for any shortfall, it is doubtful on whether it would be able to handle any unexpected disruption from Nigeria, Venezuela or Libya. Meanwhile, International benchmark Brent crude has fell by more than 11 percent from its recent highs.

 

Source: Matrix PR