9 Oct: Stocks remain firm on hopes of a US coronavirus stimulus package. FX sideways. Australian FSR ahead.

9 Oct: Stocks remain firm on hopes of a US coronavirus stimulus package. FX sideways. Australian FSR ahead.

It has been an indecisive day on Thursday although stocks retain their positive bias, with the US indices set to finish around 0.4%/0.7% higher following on from a positive risk session through Asia and Europe. The gains could have been more significant but were capped after US House Speaker Nancy Pelosi said she would not back any airline relief without a broader coronavirus aid package, cooling investor hopes for further stimulus. On the other hand, she also said that she has confidence in Treasury Secretary Mnuchin and believes they can reach an appropriate deal.

The FX markets were pretty much at a standstill, with the DXY putting on just 0.2%, trading within a fairly tight and mixed range against all the other majors.

The one point of interest in the commodities market has been the recent rally in oil, with WTI gaining another 3% on Thursday due to hopes that US politicians will agree some kind of targeted, slimmed-down stimulus plan and continues to underpin demand. Production worries are also in focus, with signs that the Norwegian oil strike seems likely to cause greater disruption to production, while at the same time Hurricane Delta is forcing an extensive reduction in production in the Gulf of Mexico. All of these factors are adding to provide a floor under the price, with WTI looking to now test the strong resistance in the 42.00/43.50 area.

In terms of data, the US initial jobless claims dropped -9k to 840k in the week ending October 3, above expectation of 820k, while the continuing claims dropped -1003k to 10976k in the week ending September 26.

The ECB minutes suggested that a further appreciation of Euro would constitute a risk to both growth and inflation in the EU, and shows that the ECB are increasingly concerned at the exchange rate, so worth keeping an eye on as traders will be wary of getting caught long near the top of the range.

It will be another empty calendar for the end of the week and most likely another choppy, sideways session although there culd be some position squarin gahead of the US Columbus Day holiday on Monday.. The Australian Home Loans data will provide limited interest as will the Australian Financial Stability Report  which will be studied for any possible hint of a November rate cut, along with the Caixin China Service PMI (exp 50.7). The UK Manufacturing/Industrial Production will be the European focus,, while the US will look to the August Wholesale Inventories (exp +0.5%mm) for inspiration. Otherwise it will be all about the US election and the headlines surrounding that that provides any direction in the next couple of weeks.

Economic data highlights will include:

Fri: Australian Financial Stability Report, Home Loans, Investment Lending for Homes, Caixin China Services PMI, UK Manufacturing/Industrial Production, Trade Balance, Goods Trade Balance, GDP (August), US Wholesale Inventories

Market moves, in brief:

FX: DXY 93.62 (+0.02%)

Bonds: US10Y; 0.765% (-3.76%), German 10Y; -0.522% (-5.82%), UK 10Y; 0.287% (-5.35%), Australian 10Y; 0.826% (+3.26%), NZ 10Y; 0.559% (+5.08 %),

Stock Indices: DJI; +0.40%, S+P; +0.74%, NASDAQ; +0.44%, EUStoxx50; +0.69%, FTSE100; 0.53%, ASX200SPI: +0.85%

Metals: Gold $1892 oz (+0.29%), Silver $23.85 oz (+0.17%), Copper $3.0395 lb (+0.21%), Iron Ore $122.67 per tonne (NYMEX) (+0.45%),

Oil: WTI $122.67 pb (+0.45%)


Trend Table: October 9, 2020                                                         

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No trade ideas today. More sideways choppy, sideways trade is expected in most FX pairs. Some pre-weekend profit taking in stocks would not surprise although the charts are not really suggesting such a move at this stage.

1 HourTurning NeutralTurning NeutralTurning NeutralTurning NeutralTurning NeutralTurning Neutral
4 HourTurning NeutralNeutral – Turning Higher?Turning NeutralTurning NeutralNeutralNeutral
1 DayTurning NeutralNeutral – Turning Higher?Turning NeutralTurning NeutralTurning NeutralNeutral
1 WeekPossible Topping FormationTurning NeutralNeutral – Turning Lower?Possible Basing FormationPossible Topping FormationPossible Topping Formation
1 HourTurning NeutralPossible Topping FormationNeutral – Turning Lower?NeutralNeutralUp
4 HourTurning NeutralUpUp – OverboughtTurning NeutralNeutralTurning Higher
1 DayTurning NeutralNeutral – Turning Higher?Turning NeutralTurning NeutralTurning NeutralNeutral
1 WeekPossible Basing FormationOverbought – Turning Lower?Turning NeutralTurning LowerTurning LowerNeutral
1 HourTurning NeutralNeutral – Turning Higher?Turning NeutralTurning NeutralPossible Basing FormationPossible Topping Formation
4 HourTurning NeutralTurning NeutralNeutralNeutral – Turning Higher?Neutral – Turning Lower?Up
1 DayTurning Higher?Turning NeutralTurning NeutralTurning NeutralTurning NeutralNeutral – Turning Higher?
1 WeekTurning Lower?Turning NeutralTurning NeutralPossible Topping FormationTurning NeutralNeutral – Turning Lower?

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