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Before The Bell 13/10/19

By: Sean Cartwright

Looking ahead this week, equity markets will start the week on an interesting note after Trump’s “partial” trade deal with China. Last Friday, the US markets were well upon this news, but were heavily sold off into close the same afternoon. US equity markets continue to be very choppy and even though the Aussie markets are acting with a bit more strength, we are still seeing a lot of volatility and uncertainty. Personally, I have very little risk and exposure in the markets as I’m still not convinced this is the action I want to see.

Looking at commodities, Copper got a bit of a boost on Thursday and Friday on trade war news and may continue its strength into this week. As well as this, other base metals such as Nickel have recently become the must-have metal for commodity traders. Gold and Silver continue to move sideways but we may see some interest this week after the US-China news.

On Tuesday, we’ll get the release of the Reserve Bank of Australia’s meeting minutes from their last meeting where they decided to cut interest rates by a further 25 basis points. This will give us more insight into whether they are planning to cut rates yet again by the year-end. While a couple of indicators are pointing towards a housing market bounce, I feel like this is a snap back reaction to three rate cuts in a very short period and the overall trend of the housing market is still well and truly down. My thoughts are that we will indeed see another cut by the end of December (taking the interest rate to 0.5%). On Friday, we will get the latest unemployment figures, and these are expected to stay constant at 5.3%.

CPI figures released this week are China and New Zealand on Tuesday, and Great Britain and Canada on Wednesday. China’s GDP figures are also due for release on Friday. These key events will lead to high volatility in their corresponding FX markets.

Trade well all and have a great week.

Sources: FXStreet

Disclaimer: The views expressed in this article are the author’s, and do not necessarily reflect the position of UNIT nor the University of Melbourne. Transacting off this information is done so at one’s own risk, and individuals are encouraged to consult a finance professional before making investment decisions based off of this article.

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