Weekly Fundamental Forecast: As Political and Rate Decision Risks Ebb, Will Sentiment and Trade Wars Take Over?
The US mid-term elections and FOMC rate decision from this past week were noteworthy distractions for the markets, but they were not ultimately true course settings for the markets. The docket thins out next week, but open-ended themes from trade wars to Brexit to Italy’s budget can wrest back focus.
The Australian Dollar has finally managed to rise from the canvas despite the persistent weakness of domestic inflation and a lack of clear interest rate support.
The current environment is likely to keep crude prices under pressure as OPEC changes gears, while the RSI pushes into oversold territory for the first time since 2017.
Brexit breakthrough needed to awaken GBP bulls. Lack of concrete progress to keep Pound on backfoot, while plethora of UK data will likely take a back seat.
The second Q3’18 Eurozone GDP release plus the final October Eurozone CPI release will draw attention on the calendar, while the Italian budget saga continues to drag on.
The US Dollar may continue to push higher after last week’s rebound as CPI data boosts Fed rate hike bets while shaky European politics drive haven demand.
Trade wars and Brexit look to dominate equity headlines in the week ahead while German GDP and Italian budget negotiations will remain factors for the DAX.
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