It hasn’t been a great start for global equities in this last week of September, with European indices dropping between 1.0 to 1.5 per cent during Monday’s morning session, mirroring a similar performance in Chinese and Japanese markets overnight.
The technical support platform in the $1305 per ounce area came to the rescue of gold once again last week, with five consecutive days of gains, taking the precious metal from the gapped up open of Monday at $1313 per ounce to end the week at $1341.70 on the December contract.
As summer transitions into Autumn, there seems to be little change in the sentiment for gold, which continues to remain rangebound on the daily chart, still transfixed within the Brexit candle of late June.
Following the recent improvement in UK data, the Bank of England was widely expected to sound a little more upbeat about the economic outlook with virtually no one forecasting any further easing of monetary policy.
The pound took a pounding in the lead up to and aftermath of the June 23 EU referendum. But in recent weeks, it has staged a remarkable recovery, even though the Bank of England has decided to cut interest rates to near zero and restarted QE.
The recent improvement in UK data has seen many investors and analysts, ourselves included, ask a rhetorical question with a hint of sarcasm “Brexit, what Brexit?” Traders have apparently reduced their net short positions from record high levels as they realised the fallout in the immediate aftermath of Brexit was not as bad as many had feared. Granted, not all the economic pointers have been great but on the whole
The GBPUSD ended higher last week on the back of surprisingly stronger-than-expected UK economic data and as the dollar eased along with expectations about an imminent rate hike in the US.
GBPUSD is pulling up from its recent slide and looks ready to test the nearby resistance levels. Applying the Fib tool on the latest swing high and low on the 1-hour chart shows that the 38.2% retracement level lines up with a broken support zone around the 1.3100 major psychological mark, which might now hold as resistance.
Cable continued to consolidate last week in the after shock of Brexit, with the pair trading in a narrow range on the daily chart, and this continued at the start of this week’s trading keeping to a 70 pip range, and closing 9 pips lower off the open.
As US equity markets continue to defy gravity and move inexorably higher, so the VIX slides ever lower as market complacency takes hold with risk on appetite continuing to remain firmly on the menu.
