CHF and JPY Outperform on Safe Haven Flow, BRL Cheers Election - US Market Open
MARKET DEVELOPMENT – SAFE HAVEN GAINS, GBP SOFT ON BREXIT CONCERNS
JPY & CHF: Safe haven currencies are outperforming this morning as concerns continue to mount in the EU over Italy’s budget. Consequently, this sparked a wave of fresh selling in European assets in which the FTSE MIB is now trading below the psychological 20k level and also a fraction away from reaching a technical bear market. Elsewhere, Chinese markets returned from its golden week holiday, however, despite a RRR cut by the PBoC the Shanghai Composite saw declines as much as 4% overnight.
GBP: Again, headline risk remains elevated ahead of next week’s crucial EU summit. Although the Pound has already gotten off to a bad start amid reports that UK Brexit Minister Raab has not been confirmed to visit Brussels this week, while PM May’s spokesman noted that differences persist. As such, this negative sentiment has pushed GBP back below 1.31 to trade around 1.3050. Support is situated at 1.30.
BRL: The Brazilian Real is cheering the outcome from the election results on the weekend in which the far-right Bolsonaro won the 1st round of elections with 46% of the votes, however, failed to win an outright majority of 50%. The 2nd round of elections will take place on October 28th. USDBRL trading with losses of over 2% following election outcome.
DailyFX Economic Calendar: Monday, October 8, 2018 – North American Releases
DailyFX Webinar Calendar:Monday, October 8, 2018
EURUSD: Data shows 56.8% of traders are net-long with the ratio of traders long to short at 1.31 to 1. The number of traders net-long is 4.3% lower than yesterday and 31.0% higher from last week, while the number of traders net-short is 9.9% lower than yesterday and 9.8% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EURUSD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EURUSD-bearish contrarian trading bias.
Five Things Traders are Reading
- “US Dollar, Yen Gain as Euro Risk Aversion Remains” byJames Stanley, Currency Strategist
- “UK Week Ahead: Brexit Talk Remains Key | Webinar”by Nick Cawley, Market Analyst
- “Weekly CoT Update for the Euro, Japanese Yen, Gold & Other Major Contracts”by Paul Robinson, Market Analyst
- “Crude Oil Price Analysis: Risk Premiums Unwind as US Mulls Waivers” by Justin McQueen, Market Analyst
- “Ripple (XRP) Price Stuck in a Short-Term Downtrend” by Nick Cawley, Market Analyst
--- Written by Justin McQueen, Market Analyst