Daily Analysis – Oct, 26th 2016

Daily Analysis – Oct, 26th 2016

For today we recommend you to sell the highs of global stock market (DAX, S&P500, USTECHN100 and EUROSTOXX). The big news coming from apple share price and the wprry news that the biggest company in the world posted the first annual sales decline in 15 years one extra worry signs is that revenues in China dropped by 30% while the company sold globally 5% less iPhones from the previous year.

We can find only one reason that stock market can move higher today and this has to do with Feds desire to keep stock market at high levels particularly before US elections.

Today also we should keep an eye in Italy as Italian Prime Minister Renzi supported that will veto European budget plan if Europe does not support Italy about immigration issues. Also Italy will remain in focus as the troubled banking system and upcoming referendum can give us some key breaking news at any time The plunge of 2 years US Treasury notes and the continue appreciation of USD show us that market largely expects a hike this December.

Yesterday the gold appreciation caused some minor losses for USD which can continue today.

Technically gold seems very bearish however fundamentally remains bullish. We see high probabilities for gold to move moderately higher particularly now where there are some signs that global inflation is accelerating while still growth is weak and there is still a lot of geopolitical uncertainty. Oil continue to move lower as probabilities increase that some countries will decline to participate to oil freezing production.

Key points:

  • Best trade of the year: GBP the weakest; Silver the strongest
  • The BoE last cut interest rates on August 4, from 0.5% to 0.25%. The next meeting is on the 3rd of November and some predict a cut to 0%
  • GBP /USD Tuesday closed in the lowest level in 30 years
  • Fed’s Williams supported that December FOMC may be the ideal time for Fed to hike
  • Currency volatility falls to the lowest level this year
  • Hollande popularity / approval rating at 4%
  • Nonfarm payrolls tracking, estimate 182k – Nomura
  • Canadian dollar weakens, approaches 7-month lows
  • Probability of RBA Nov rate cut falls to 6% vs.15% prev after CPI
  • Coca-Cola is set to report Q3 earnings before the market opens Wednesday

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