October 7 Market Overview: Top 3 Assets to watch this week
US non-farm payrolls were announced during the last trading day of the week. The announced rate was 136K was lower than the expected 140K. The data announced now brings the overall average rate below 153K. Despite the lower rates announced in non-farm payrolls, the unemployment rate announced was in 1969’s 3.5%. Hourly earnings were expected to show an increase by 0.2% but remain unchanged. Labor force participation rate was 63.2% in September in line with the expectations. Payrolls data for the previous 2 months were revised to show a growth by 45 thousand.
After these announcements, major institutions and market makers are expecting the Fed to decrease the interest rate by 25 basis points in October, mainly as hourly earnings were unchanged despite the growth that was expected. Fed Chairman Powell during his speech has stated that the US is facing some risks these days, but the US economy in general is in good shape. Moreover, Powell has stated that low inflation rates and low interest won’t cause a push for rate cuts.
Thus, the last trading day of the week closed positively for the SPX. SnP500 Index showed growth by 1.24% and is now testing the 2952 level — this year’s May 1st resistance level. Next week we have major events on Tuesday and Wednesday, as well as the Core CPI on Thursday. The SnP500 is expected to continue the bullish run and possibly reach 3000 this week.
This week, the European Union hasn’t showed any positive numbers. PMI rates were once again lower. The PMI data announcement triggered another round of sell-off of the Euro. The announced non-farm payrolls being at the 10-year low prompted the European currency to continue the dump to 1.07600 and lower.
The support level of 1.0850 rejected the Euro to continue its downtrend. Next week, German Factory Orders and German Industrial Production is expected to be announced, showing a potential positive climb of the pair towards 1.10700 and 1.11700.
In general, EURUSD is in a downtrend channel and long-term we expect the price to continue to fall towards December 2016’s minimum levels of 1.04700.
Today we have witnessed another attempt of the pair to cross 1.10000
Gold showed another big rally this week after the US has put higher tariffs on goods from the EU. 1459 is considered as the safest support level this month. In general, the price has completed Head and Shoulders pattern and it’s ZigZag correction.
On an hourly chart we can see that the price has tested the resistance level of 1503 as support, then tested previous support at 1496 and closed the week at 1504.7 level.
Gold remains as safe haven for investors these days. News on Brexit and the next round of US-China negotiations of ending the ‘Trade-war’ will define the next move of the precious metal. We do not expect that during these meetings the US and China will come to a solid decision and that the conflict between the two countries will be resolved easily, both will push their strict requirements and both will reject requests of the other party and postpone the truce, which in fact could bring the market in a higher risk and attract investors to purchase Gold, so the price might see 1550–1600 in mid and long-term.