The Previous week:
The Federal Open Market Committee (FOMC) minutes highlighted the importance of US fiscal stimulus for supporting the US recovery. The Federal Reserve (FED) announced it will maintain its accommodative monetary policy and that it’s satisfied with the average inflation targeting.
US President Donald Trump said he wants a bigger economic stimulus package. The US government expects another $1.8 trillion stimulus package in the coming days. This could push US stock market indices to new highs.
The FTSE and Gold hit their targets that we expected in last week’s newsletter.
The Week Ahead:
The stimulus package that’s just been added to the US economy could weaken the US dollar and there’s potential for shorting opportunities.
On Tuesday, the consumer price index data will be released.
Following Trump’s initial disagreement on Tuesday about a stimulus package, indices dropped. However, optimism returned when he approved the new $1.8 trillion stimulus package, a few days later.
US indices shot up over the last couple of trading days, following the stimulus decision. Based on market behavior we can see that indices are gaining value in reaction to the additional injection of money to the economy, which supports and bails out corporation, helping their stock price move up. This is more of a vicious cycle than real economical growth. As the saying goes “The market is not a reflection of the true economy, it’s sentiment that drives the market”.
UK Prime Minister Boris Johnson has set a deadline for the Brexit agreement on a deal with the EU on October 15. However, the EU is seeking a few more concessions before entering the final phase of negotiations. At present, the GBP is rising against the USD potentially creating volatility over the next couple of days.
GOLD & Silver
The weakening US dollar could push Gold and Silver upwards.
Setups for this Week:
- Resistances are seen near 1950 and then 1970.
- Support is seen near 1912.
- The current price seems to be a good entry point for potential buyers.
- A pullback entry is also possible with a stoploss below 1910.
- The target could be 1950.
- If the price falls below 1910, we may see further movement to the downside.
- Resistance is seen near 1.31250.
- Immediate support is seen near 1.30000.
- Entry at current price or on pullback seems good for potential buyers.
- Stoploss has to below 1.30000.
- The target could be 1.31250.
- If the price moves below 1.30000, we may see further movement to the downside.
- Immediate resistance is seen near 29160.
- Immediate support is seen near 28300.
- The entry at current price or on pullback seems good for potential buyers.
- Stoploss has to below 28300.
- The target is near 29150.
- If the price falls below 28300, we may see further movement to the downside.