Welcome to the new week, I hope everyone had a great weekend. All focus will be on the 2-day Federal Reserve meeting which concludes on Wednesday, the ensuing interest rate decision and some future guidance from Chairman Powell.

Alongside that, US earnings reports continue, including Apple who reports after the bell on Wednesday. And of course, we have the continuing Brexit saga as well a potential general election in the UK. So plenty to focus on for the new week.

BTC/USD Analysis

As is often the case when we have major events later in proceedings, the start to the week can be a little quiet. And that would be the case for Monday. EURUSD and GBP would rally 20 points from their Friday’s closes to sit at 1.1100 and 1.2845, respectively.

Otherwise, FX is happy to wait. Equities, on the other hand, were keen to start the week in the green with the DAX approaching the 13,000 level and US equity futures pointing to solid gains at the open.

One big mover since Friday has been crypto. Following positive comments from Chinese President Xi, BTC rallied from around $7,500 to a high of $10,580 before settling at $9,400 at the beginning of the new week.

Crypto desperately needs signs of large-scale adoption and positive comments from a country such as China comes at a time when crypto prices have been under a lot of downside pressure.

It remains to be seen whether the rally is sustainable. Back to equities and US stocks open higher with the DJ +145 and the S&P making a new all-time high at 3038, +16 points on the day.

XAU suffers amidst the euphoria dropping from $1,505 down to $1,493. As the day progresses stocks start to give back some gains which then sees JPY crosses edge marginally lower.

But that move lower is short-lived as stocks bounce back and JPY crosses move to their highs with USDJPY breaching 109.00 and EURUSD flirting with 1.1100.

In Brexit news, the EU agreed to an extension to Jan 31st, 2020, and Johnson lost a vote to hold a general election on December 12th. Neither affected GBP, which spent much of the US afternoon around 1.2865.

As we head to the close US equities off their highs, but the S&P still registers an all-time high close. The DJ ends +132 points. A good start to the week, but much more to come.

Despite the impressive performance by equities, it was a relatively calm start to the week for FX.

The day was probably best represented by EURJPY, a pair I highlighted last week.

As you can see from the hourly chart we have some solid support now 120.35-40 and while that holds would look to challenge last weeks highs above 121.00.

It’s also showing a good example of how the break of a steep trendline does not necessarily mean the end of a trend.

Very rarely do we go up or down in a straight line for extended periods of time, so it is important to recognise the fresh levels of support and resistance.

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David Hannigan
Author

A graduate of the Cass Business School, Dave's career began with Credit Suisse as an Equity Options Trader on the London Stock Exchange, before moving into the world of FX with Chemical Bank and Citibank. 1994 saw him join National Australia Bank, first as a Senior Dealer, then Senior Vice President and Chief Dealer.

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