It was a big week for the global financial markets. The FED delivered for Trump, with Trump delivering a phase 1 deal and Johnson crushing the opposition.
The S&P 500 and the Nasdaq Composite finished the week at records Friday but enthusiasm over an announced China-U.S. partial trade deal, which had sparked buying Thursday, faded as investors weighed aspects of the so-called phase-one pact. The Dow Jones Industrial Average closed up about 0.01% at 28,135, missing a record close at 28,164, while the S&P 500 index advanced less than 0.01% to 3,169, enough for a fresh all time high. The Nasdaq Composite Index closed up 0.2% to end at 8,735, marking its second straight all-time closing peak. For the week, the Dow gained 0.4%, the S&P 500 returned 0.7%, while the technology-laden Nasdaq gained 0.9% for the five-day period. Underpinning the week's advance was the easing of fears --at least temporarily--surrounding two of the biggest points of friction for stock-market investors: U.K. elections and trade tensions. The U.S. and China announced a limited agreement Friday to halt the trade war, eliminating tariffs that were set to go into effect Sunday; but some critics worry that the phase-one deal may not accomplish as much to alleviate future trade tensions as had been expected--a point that some say doesn't entirely help business leaders make strategic plans. Meanwhile, a resounding election victory for Prime Minister Boris Johnson's Conservative Party raised hopes for a quick divorce from the European Union. In corporate news, shares of Live Nation Entertainment Inc tumbled after the Wall Street Journal reported that the Justice Department was preparing to take legal action against the company, alleging that it sought to strong-arm concert venues into using its dominant Ticketmaster subsidiary.
The market has been forming a rectangular chart pattern with a slight upside bias since bottoming at $1453.10 on November 12. The two higher bottoms at $1456.60 and $1463.00 and the two higher tops at $1489.90 and $1491.60 could be a sign of accumulation.
After peaking in September, gold entered a prolonged corrective phase. The back and forth trade negotiations kept prices in limbo and delayed the final breakdown. With a phase I deal intact, gold could reach $1420 and a sustainable bottom by Christmas.
The gold markets rallied a bit during the trading week, slamming into the top of the down trending channel. However, we have given back the gains from that area, so it makes quite a bit of sense that the market stays within this range.
Gold markets rallied a bit during the trading session on Friday, reaching towards the 50 day EMA as the Americans and the Chinese have come to terms on an agreement it appears. This is a bit interesting, because it should be negative for gold.
The USD/JPY pair rallied a bit during the week, as we continue to grind back and forth between the ¥108 level on the bottom and the ¥110 level on the top. All things being equal, the market looks likely to continue grinding forward until we can get some type of certainty globally.
The British pound spiked early on Friday after the election results confirmed a Tory victory in parliament. That being said though, the 1.35 level has been like a brick wall for this pair.
The British pound spike higher against most currencies around the world after the election of a Tory Parliament. By doing so, the markets have broken some resistance, and found more above.
The Euro rallied significantly during the week, slamming into major resistance at the 1.12 handle, and the 50 week EMA. Beyond that, there is also a lot of resistance in the form of a downtrend line.
The Australian dollar rally during the week but continues to find a lot of resistance at the 50 week EMA. Ultimately, we gave back quite a bit of the gains on Friday as confusion still reigns when it comes to the US/China trade war
The US dollar climbed during the trading session on Friday as it was announced that there was “an agreement in principle.” Between the United States and China.
The British pound rallied rather significantly during the trading session on Friday as election results came out in favor of a conservative Parliament. That being said, the market has seen a bit of a pullback from the highs.
The British pound has gapped higher against the Japanese yen after the election results showed the conservatives taking over Parliament with a huge majority. At this point, it looks like Brexit will happen.
The Euro continues to find plenty of resistance near the 61.8% Fibonacci retracement level from the bigger move, and of course the downtrend line that I have marked on the chart. The 1.12 level is psychologically important as well, and we have seen a bit of a push back from there.
The Australian dollar initially tried to break out during the trading session on Friday but as you can see the 200 day EMA has offered significant amount of resistance.
It can be certainly said that AUD/USD has surprised on the upside recently. Having reached several important resistances, and attempting breakout above them, what else can be said about the pair’s current and upcoming performance?
The Canadian dollar edged lower against its U.S. counterpart on Friday but held near an earlier five-week high as the reduction of some global investment risks weighed on the greenback. "I think CAD was caught in this broader U.S. dollar move," said Simon Côté, managing director, risk management solutions at National Bank Financial. Historically cheap rates for the market's pricing of expected volatility showed that investors were not prepared for a major move in the U.S. dollar, even though it was testing key support levels against a number of major currencies, including euro , sterling and the Mexican peso , Côté said.
Investing.com – Gold bulls seem determined to show their disbelief that the China deal touted by President Donald Trump will do magic. They sent prices higher Friday, as the yellow metal remained a hedge to the 17-month trade war.
Based on the early price action and the current price at 1.1171, the direction of the EUR/USD the rest of the session on Friday is likely to be determined by trader reaction to the Fibonacci level at 1.1185 and the steep uptrending Gann angle at 1.1181.
In a tweet following Johnson’s win, Trump said: “Congratulations to Boris Johnson on his great WIN! Britain and the United States will now be free to strike a massive new Trade Deal after BREXIT.”