Last Week’s Market Overview

US Stock Index

Last Monday, U.S. stocks closed at the highest levels since mid-September amid optimism that President Donald Trump would leave the hospital and Democrats were pushing a new economic relief bill. It continued to surge on Tuesday at the beginning, but slid more than 3% as Trump halted the stimulus talks. Between Wednesday and Friday, improving risk sentiment caused by Trump restarting talks with Democrats, the US stocks skyrocketed for three successive days, making a 2.5% to 4% on three major index last week.

NASDAQ
NASDAQ

AUD

The RBA kept the official cash rate unchanged (0.25%) last Tuesday, but at the same time emphasized that it would continue to consider additional monetary easing in order to relieve the high unemployment. Influenced by the signal of rate out in the near future, the bullish momentum of AUD dampened, leading to a 1.51% plummet on AUDUSD within a day. However, risk assets including AUD benefited from the potential agreement on further economic stimulus between Democratic lawmakers and the White House. AUDUSD as a result made a rebound from 0.7096 to 0.7241 after Tuesday.

AUDUSD
AUDUSD

Market Focus This Week

Brexit Talks

The coming Thursday, 15th October is supposed to be the deadline on Brexit free trade deal which is self-imposed by UK Prime Minister Boris Johnson. Boris called French President Emmanuel Macron on Saturday and met German Chancellor Angela Merkel on Sunday. According to the official statement from Johnson’s office, UK wants to make progress through intensive conversations in the coming days.
Significant gaps are remained between both sides over several issues, such as fishing and “level playing field”. If these main sticking points cannot be tackled, there may be a higher chance of “no-deal exit”.
We should pay attention to the meeting of EU leaders at the European Council on 15th October. The outcome of the meeting might give out a concrete signal on the direction of Brexit trade negotiations, which in turn affects the movements of both British pound and Euro.

Brexit
Brexit (Source: Institute for Government)

Technical Analysis

USDJPY (H4)

USDJPY
USDJPY

JPY experienced a slight drop last week, USDJPY once broke 106.00 resistance. As a safe haven, JPY might be benefited from the uncertainty of the Brexit negotiations this week and the disagreement on stimulus package between two parties in US. In addition, as indicated by a death cross (when MA 9 downward crosses the MA 21), a bearish trend might be likely.
For RSI indicator aspect, it currently drops to below 40, signalling a continue bearish momentum in the near future. Therefore, USDJPY is likely to extend its downtrend in the coming week.
Support: 105.47, 105.05
Resistance: 105.80, 106.10

GBPUSD (H4)

GBPUSD
GBPUSD

GBPUSD outperformed most of its counterparts last week and a breakout has occurred at 1.3000 mark. The golden cross between 9-day and 15-day moving averages shows a potential uptrend is forming. Meanwhile, RSI is within the neutral zone which indicates the remained bullish momentums. Despite the bullish signals given by these two indicators, the main driver of GBPUSD would be the news on Brexit talks. If some encouraging results can be reached, it is possible for GBP to test 1.3260.
Support: 1.3000, 1.2670
Resistance: 1.3260, 1.3480

NZDUSD (H4)

NZDUSD
NZDUSD

NZD also performed well last week, surging for 1.4% against USD. The price has just broken above the swing high of last two week. Both 2-line MA and RSI confirm the bullish momentums by fast MA crossing the slow MA and RSI remaining between 50 and 70 intervals.
As the price is still fluctuating near 0.6660 mark, it might safer for investors to wait for a while, and enter their long positions after ensuring the price is definitely settled above the support level.
Support: 0.6660, 0.6550, 0.6510
Resistance: 0.6800

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