• Alphachain Team

Financial Markets Rattled

Financial markets were rattled last week as market participants dealt with President Trump testing positive for Covid-19. The president, who has in recent weeks spent a lot of time engaging in campaigns for the upcoming elections is currently having to put plans on hold as he looks to recover from the virus. The news initially led to safe havens gaining as Trump and a number of his inner circle officials and aides tested positive for the illness.


Throughout the course of the week, the greenback took a back seat after its initial break through the 94.00 handle on the DXY. EURUSD pared losses as price retraced to hold beneath the 1.1750 level and the largely anticipated job numbers disappointed many after the nation reported a change of 600K, well below the expectations and previous figure. The unemployment rate ticked lower by 0.5% though with the current stimulus fading attention has turned to the new $2.2tln Democrat stimulus plan which passed the vote in the US House last Friday.

Sterling experienced a bout of volatility last week as Brexit discussions with the EU intensified and remaining areas of concern were addressed. GBPUSD traded erratically throughout the week though managed to close above the 1.2900 handle whilst EURGBP continued to trend lower within its daily bearish channel. Last week, sellers managed to withhold the opposition as price spiked up into 0.9150 on a number of occasions before trending lower and closing just above 0.9050. With the December 31st expiry fast approaching PM Johnson and EU official Von der Leyen both agreed to step up negotiations during a phone call over the weekend. When asked about the potential impacts of a no-deal situation in the midst of a pandemic Johnson outlined that though he wouldn’t want an Australian style agreement, the nation is more than capable to live with it. With roughly around $1.17tln in annual trade at stake, talks are set to continue this week before EU leaders gather later on in the month to discuss and evaluate the progress that has been made.


Turning to commodities

Turning to commodities; the sour tone towards the end of the week led to Brent completing its move to the downside and violating the previous swing low on the daily timeframe. This came after price attempted to make a recovery though failed to break above the 61.8% corrective retracement level (43.76) starting from the initial swing high at 46.50. The commodity currently stands over 6% down from the prior week with the next key level being 37.39 which doubles as support and a 127.2% extension level. Similarly, WTI Crude followed suit as woes continue to mount for the sector on increasing Covid-19 worries having an impact on global supply and demand. Price currently holds around the $37.00/bbl. handle after falling close to 8% last week. Going into the week ahead the OPEC World Oil Outlook is set to gather attention as medium-term forecasts may be projected. A softer greenback triggered a resurgence for bullion as the asset looked to break back above the $1,900 handle. The commodity found support around $1,860 before buyers continued to drive its move higher. Price currently sits around the psychological round number with the 50 and 21EMA acting as dynamic resistance.


Within the cryptocurrency space

Within the cryptocurrency space, BTCUSD ended the week indecisively as price failed to break above the $11,000 handle. Bulls and bears continue to tussle for near term control as price remains subdued beneath both its 50 and 21 EMA. Currently on the daily Timeframe, a converging pattern is forming with nearby resistance being $11,000 followed by $11,100.

Here is a breakdown of the high impact data releases this week.

Monday

15:00 ISM Non-Manufacturing PMI. Markets to watch: USD Crosses

Tuesday

04:30 Cash Rate & RBA Rate Statement. Markets to watch: AUD Crosses

Tentative Annual Budget Release. Markets to watch: AUD Crosses

09:35/14:00 ECB President Lagarde Speaks. Markets to watch: EUR Crosses

15:40 FED Chair Powell Speaks. Markets to watch: USD Crosses

Wednesday

13:10 ECB President Lagarde Speaks. Markets to watch: EUR Crosses

19:00 FOMC Meeting Minutes. Markets to watch: USD Crosses

Thursday

08:25 BOE Gov Bailey Speaks. Markets to watch: GBP Crosses

13:30 BOC Gov Macklem Speaks. Markets to watch: CAD Crosses

Friday

13:30 Employment Change & Unemployment Rate. Markets to watch: CAD Crosses

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