WEEK 44 28TH OCT 2019: FED RATE CUT, BOND YIELD, GOLD, USD Index, GBP/USD, China A50

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Key news affecting the market:

  1. Fed Rate – Market have priced in a 93% probability of a 0.25% rate cut in the next FOMC meeting (announcement on 30th Oct)
  2. Brexit by 31st Oct – This is now expected to be delayed until Jan 2020
  3. Trade war – Phase 1 deal expected to be signed in Nov 2020

 

  1. Expected Fed Rate cut would have a direct impact on the following:

Gold

  1. With Fed expected to further cut rates, we would expect Gold to continue with the upward trend
  2. Basis technical chart, we are seeing a bullish confirmation on the immediate team as seen in the below chart
  3. Key support have been formed on 1,480~1,485 range

 

 

USD Index

  1. With Fed rate cut, we would expect USD to normalize in the immediate term
  2. Basis technical charts, we can see the strength of USD Index (DXY) weakening where the resistance line is around the range of 98.2.
  3. Should the back-testing fail to rally above the resistance line, DXY would be expected to drop below 96 support level.

 

 

 

Bond Yield

  1. While Bond Yield have trended upward for the past few days, they are still on a downward trend where we would expect it to resume the downward trend should Fed cut rates post the meeting.

 

 

 

 

 

 

2. Brexit: GBP/USD

  1. With the uncertainty of Brexit going down, we can see that GBP/USD has came out of its downward Trend (bottom of 1.20 range)
  2. It is currently performing a back test where any strong support at 1.265 range would serve as a bullish confirmation

 

 

 

 

 

3. Trade War – China A50 (2823:HK):

  1. With the uncertainties around, we can see that China A50 shares (2823:HK) has recently broke out of the trend and would be likely to head up to test the resistance line of 15.75.
  2. This would indirectly mean that the resolution to Trade war is near and could be genuine this time round.
  3. We remained bullish on China in the long run (Value Investing – Just buy the Index and sleep)

 

 

 

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