Market Update – 11-10-2016

Currencies

EUR/USD – moved down and has reached the support around the 1.1116 level again, a level we also reached last week but which was able to hold. We have some European data today as the calendar remains relatively quiet, but tomorrow we have the FOMC meeting minutes.

eur

USD/JPY – has moved up as the USD is strengthening and there is some more risk taking in the market, which weakens the JPY. This morning we are seeing an attempt to regain the 104 level again.

jpy

GBP/USD – moved further down and is now barely holding above the 1.23 level, meaning that we have dropped 100 pips since yesterday. The lower GBP should be good for exports, but the fast and sharp decline is no good and threatens the stability of the currency. We are now seeing some people that expect to see parity, although the same was expected for the EUR/USD which didn’t happen.

USD/CAD – with oil prices moving sharply up, the CAD strengthened also significantly, but USD strength contained the drop and we fell short of reaching the support around the 1.312 level.

Indices

DAX 30 – with improved sentiment, mainly due to a higher oil price, we could see the DAX move up to come close to the downwards trend line, which remains well in place, especially as we are expected to open lower this morning.

dax

S&P 500 – moved up as the energy sector moved sharply up with oil trading above the $51 a barrel again. We moved towards the resistance around the 2167 level, but fell short of actually reaching this level for now.

sp

Commodities

Gold – with the USD strengthening again, gold was unable to hold on to its recent gains. I mentioned yesterday already that the possibly upside for gold is limited at the moment, unless we see something fundamental change, or we get some bad US data which could put a rate hike in December in jeopardy.

Oil – moved sharply up after Saudi Arabia stated that we could see oil reach $60 a barrel by the end of the year, followed by comments from Russia’s Energy Minister as well as President Putin that Russia is willing to join OPEC in curbing production, although it prefers a freeze over a production cut. If an agreement will be reached, that would obviously be positive for oil if we look at sentiment, but we will also need to look further than that.

The countries exempted from freezing or cutting production according to the OPEC agreement are increasing their production, possibly offsetting any cut that the other OPEC countries will make, which was minimal to begin with. In addition it is a double edged sword as, if the small cut in production is able to drive prices higher, the likelihood that US shale will come back to the markets is only going to increase, something that we can see happening already with the increase in the amount of active rigs. In any case, the proposed cut by OPEC alone will not result in any significant change in the oversupply situation. Finally we will have to see that the agreement(s) will be actually implemented as well, as at the moment it is all talk, but no action, and with the higher oil price, the incentive to actually act is becoming less and less.

Technically we can see that we stopped right at the resistance around the 51.70 level which is also the highest level reached this year, reached back in June.

oil

Stocks

Apple (NASDAQ:AAPL) – has been moving up as Samsung (KS:005930) is under pressure with the problems surrounding its Galaxy Note 7, and as a result is halting sales of the device.

Twitter – has seen another large drop as it seems more and more likely that the major companies are not interested. This could mean that the price will go down and possibly at that stage it will be picked up by a major company, but that seems unlikely at this point.

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