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Key news affecting the market:
- Fed Rate – Market have priced in a 93% probability of a 0.25% rate cut in the next FOMC meeting (announcement on 30th Oct)
- Brexit by 31st Oct – This is now expected to be delayed until Jan 2020
- Trade war – Phase 1 deal expected to be signed in Nov 2020
- Expected Fed Rate cut would have a direct impact on the following:
- With Fed expected to further cut rates, we would expect Gold to continue with the upward trend
- Basis technical chart, we are seeing a bullish confirmation on the immediate team as seen in the below chart
- Key support have been formed on 1,480~1,485 range
- With Fed rate cut, we would expect USD to normalize in the immediate term
- Basis technical charts, we can see the strength of USD Index (DXY) weakening where the resistance line is around the range of 98.2.
- Should the back-testing fail to rally above the resistance line, DXY would be expected to drop below 96 support level.
- 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
- 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)
- 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):
- 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.
- This would indirectly mean that the resolution to Trade war is near and could be genuine this time round.
- We remained bullish on China in the long run (Value Investing – Just buy the Index and sleep)
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