Weekly Trading Forecast: Risk Appetite Overcomes Growth Concerns
Speculative appetite – also called ‘animal spirits’ – is holding effective control over the capital markets. Despite regular warnings over the health of the global economy and infighting that suggests there is little capacity or will to fight future fires, the markets continue their advance in pursuit of capital gains. Is this a sustainable course?
The Australian Dollar still completely lacks domestic monetary policy support, and that will weigh on it more heavily in time. However, for now trade is running the table.
Crude oil prices may trade higher over the coming days as the Relative Strength Index (RSI) sits in overbought territory for the first time in 2019.
A softer Brexit outcome is beginning to look more likely after the UK Parliament took a no deal Brexit off the table, while the potential for a year long Article 50. delay may usher in a second referendum.
The US Dollar will deal with several important data releases over the coming week, including UK GDP, the ECB meeting, US inflation data, and the Fed meeting minutes.
Gold prices may fall if downbeat comments from the ECB and the Fed spur haven demand for US Dollar. Lower bond yields may help cap the downside.
The start of earnings season in the United States will play a key fundamental role for both the S&P 500 and Dow Jones. Elsewhere, Brexit and trade wars remain key themes.
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