FTSE 100 & DAX Fundamental Forecast: Trump Impeachment Odds Rise
- Equity Markets Drop as Risk Appetite Folds
- Trump Impeachment Odds Rise
Equity Markets Drop as Risk Appetite Folds
President Trump impeachment odds rose 20ppts to 57% in yesterday’s session after House Speaker Pelosi announced that the House will launch a formal impeachment inquiry into US President Trump. The impeachment proceedings are due to allegations that President Trump had pressured the Ukrainian President to investigate a political rival, Joe Biden, who is currently running in the 2020 Presidential Election campaign. That said, so far this may simply be political noise, given that while the House of Representatives (Democrat Majority) will likely vote and carry the inquiry, the proceedings would likely come to a halt in the Senate as the Republican party holds a majority. Therefore, the Republican party can prevent the President from being removed from office by a two-third majority. However, equity markets are nonetheless on the backfoot with European equity markets trading firmly in the red.
US-China trade deal optimism had been given somewhat of a reality check following the less than conciliatory tone from President Trump at the UN. Subsequently, this highlights that while both sides have made goodwill gestures with China stating that they will purchase more US agricultural products, roadblocks to a significant trade deal remains.
DAX Price Chart: Daily Time Frame (Apr 19 – Sep 19)
The DAX is currently testing the support from 12140-50 and thus capping further downside for now. However, a break below raises the risk of a test of 12120, which coincides with the 100DMA. Amid the current backdrop, any bounces could stall on a test of resistance at the 61.8% Fibonacci retracement (12300).
FTSE 100 Price Chart: Daily Time Frame (May 19 – Oct 19)
Following yet another failure to make a topside breach above 7400, the FTSE 100 continues to head lower. Currently, the index is holding key support area of 7200-20, however, losses may indeed extend further on a closing break below 7200, which in turn increases scope for a test of 7100. Ongoing uncertainty pertaining to the current political chaos keeps demand for UK equities on the weak side.
--- Written by Justin McQueen, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.