- Oil spikes up 7.00% after Iran fires 200 missiles at Israel and Tel Aviv.
- US Stocks decline as JOLTs Job Openings increase back above 8 million and the ISM Manufacturing Index falls below expectations.
- Stocks continue to trade lower after the latest US economic data and new geopolitical escalations.
- The US Dollar attempts to rise to a 3-week high as the market continues to price a cautious approach by the Fed.
NASDAQ – The NASDAQ Falls To Its Previous Support Level!
The NASDAQ fell to its lowest price since the 19th of September after declining 1.37%. The downward price movement was largely related to the economic data. The Jobs JOLTS Opening rose above expectations indicating a resilient employment sector. Simultaneously, the ISM Manufacturing PMI fell below expectations. As a result, the market continues to price a weaker than expected interest rate cut. Markets now predict a 0.25% cut for November.
At the same time, investors remain cautious about the global economy due to weak data in the EU and UK as well as global geopolitical tensions. Economists advise this can continue to lower the risk appetite for the market which could fall further. In regards to this, investors will continue to monitor the escalations in the Middle East including Israel’s response to the latest attack on its soil by Iran. Further escalations can potentially cause the NASDAQ to decline and trigger higher oil prices. Higher oil prices can have a domino effect on inflation which will again pressure the Federal Reserve and consumer demand.
According to the Federal Reserve, if the US economy aligns with forecasts, interest rates will be lowered two more times. In total markets expect a reduction of 50 basis points. The Chicago exchange also continues to advise a similar scenario. The question is whether based on a 25-basis point cut the price of the NASDAQ will continue to decline or find support at this level?
The price is now trading below the trend-line and below the Moving Averages for the first time since September 11th. This would normally indicate that the price is potentially going to decline further. However, the bearish price movement has lost momentum and is trading at the previous support level. Therefore, if the downward price movement is to continue, the price will need to break through this level. If the price trades below $19,685.05, the breakout would signal that the price may decline further rather than find support.
EURUSD – Investors Short The Euro On Poor Economic Data!
One of the weakest performing currencies of the week has been the Euro which has been giving up some of its previous gains. Simultaneously, the best performing currency of the week has been the US Dollar. Over the past week the Euro Index has fallen more than 0.60% due to weak economic data, low inflation and expectations of further interest rate adjustments.
Currently the price of the exchange rate is trading slightly higher than the previous low. In addition to this, the quick attempt to break lower was quickly rejected. However, that candlestick can be used as a breakout level for a further attempt. Therefore, if the price breaks below the 1.10534 level, traders may consider this as a bearish signal.
However, it is important to highlight that for investors to anticipate a continued decline in the EURUSD, the US Dollar Index must stay strong, and today’s employment data should at least meet, if not exceed, expectations.
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Michalis Efthymiou
Market Analyst
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