US Market Wrap
Last week ended with investors still remaining relatively bullish despite the concerns around US-China relations.
The SPX closed the week in the green with a surge of late buying, while the Greenback has been on the slide.
US President Trump has declared that he will strip Hong Kong’s special status if China imposes new restrictions. There is also speculation that he could go as far as scrapping the phase one trade deal which could potentially send markets into a tailspin.
There’s also bee growing worries around riots in the US as tensions once again spark up. While China has posted some mixed PMI numbers over the weekend, but so far that hasn’t dented the risk-on trade just yet.
The Data Agenda
While the US-China situation boils away in the background, the real focus this week will be on the US jobs situation as the monthly non-farm payroll data is due for release on Friday.
The expectation is that we will see a staggering jump in the jobless rate to 19.7%. These are the types of numbers that we last saw during the Great Depression, so there are some very good reasons for concerns.
However, for the most part, markets have been pushing the bad data to one side. There are some key differences between the Great Depression-era and what we’re seeing at the moment.
The current fall is a manufactured situation to some degree and not demand-driven as we saw during the Depression. There is also a widespread belief that the situation is temporary.
At the same time, the approach Governments and central banks have taken is vastly different. In the Depression-era, Governments went into a period of saving money in a bid to balance their books. An approach that added to the fallout at the time.
These days we see more of a Keynesian Economics approach, which involves spending and stimulus and massive cuts to interest rates. All of which happened virtually immediately. That type of approach is likely one reason why markets are for the most part, not too concerned about a jobless rate that could top 20%.
Forex Signal Update
The FX Leaders Team hit 8 winners from 12 trades last week, as the guys put in a really solid performance.
Make sure you follow our live signals as this could be another busy week as some big data points hit.
EUR/GBP – Active Signal
The EUR/GBP has been bullish in recent weeks and we are long here. However, price is struggling to push through the 0.9000 level, but if it can expect a jump higher.
Oil – Pending Signal
WTI has posted its strongest month in history and there is every chance we could see more upside ahead. Price is now attempting to hold $35 and there is every chance we see $40 if that level holds. That said, the US riots appear to be weighing on sentiment.
BTC has had a bullish week or two, but still sits under the $10,000 level.
Underneath the real line in the sand is $8,500 and if that level drops we should expect a fall. So far $10,000 has attracted plenty of selling pressure in the past and that is the key thing we must watch in the next five trading days.