Investors buoyed by trade and jobs
There’ll be no Monday’s blues for European investors as they prepare for another positive start to the week following some decent data reports and trade news.
The US jobs report on Friday was the icing on the cake of a week that earlier delivered a third consecutive interest rate cut and encouraging statements on the phase one trade agreement between the world’s two largest economies. Of course, we’ve had plenty of warm words before that have delivered very little but things seem to finally be moving.
Earnings season is neither contributing to the growing optimism nor holding it back. There was an acceptance before the year even began that 2019 was going to be tough for CEO’s after they were handed a bye the year before thanks to Trump’s tax cuts. The earnings recession continues though and Q4 is not looking much better but companies are still beating Wall Street forecasts on both the top and bottom line, that’s nothing new really.
The UK is in full campaigning mode so while Brexit is going to be a hot topic, we’re not going to see any real movement on that front. The two main parties will be keen to make the election about more than just Brexit, particularly Labour who looked in a much stronger position before Johnson had his deal, while the two dark horses representing the Brexit extremes – no-deal and revoke – will be keen to talk about little else.
It’s easy to forget that we have a Bank of England rate decision this week, not that it matters too much. Perhaps the “Super Thursday” title should be shelved for now as it’s been a while since it’s even been anything more than noteworthy. In fact, the most interesting thing to come from Thursday’s press conference may well be whether Carney plans to extend his term briefly again given that it now expires on the new Brexit day.
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Gold stubbornly remains in consolidation
While stock markets hit record highs and the US dollar tests near-two month lows as risk-appetite improves, Gold is stubbornly refusing to budge. The yellow metal has been in consolidation mode for weeks and while a breakout doesn’t look far away, it’s certainly testing our patience.
Once again we find ourselves back at the top of this ever-tightening range, where the ground below us has been rising with each pull back. Also once again though, we appear to be seeing some profit-taking around $1,520. We’re yet to see much of a dip this time though but if we do, $1,480 will be key, although it’s certainly the upside that’s looking more vulnerable at the minute.
Oil buoyed by US jobs and trade headlines
Oil traders were a big fan of the jobs report on Friday and the trade headlines seem to be appearing at just the right time. As we enter a more joyful time of year, traders are finding more reason to be cheerful and the rise we’ve seen in oil prices in recent weeks clearly reflect this.
Brent rose to $62 on Friday and while we’re seeing a little profit taking on Monday, the rally we’ve seen recently looks well supported. It’s been a steady incline until this point, although $62 may take an extra push to break given that it’s previously been quite an important area of support and resistance. That will certainly put us into more promising territory though.
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Craig Erlam
His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.
Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
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