FUNDAMENTAL OUTLOOK

The outgoing president of the European Central Bank Mario Draghi warned on Thursday that trade uncertainties and geopolitical tensions such as trade wars, slowing growth and Brexit posed a risk to the Eurozone economy’s growth. Draghi spoke at a press conference after his final ECB policy meeting before leaving his post after eight years of service. Draghi said the Eurozone was facing a “protracted weakness” entering into next year.
The ECB meanwhile kept its negative territory interest rates on hold and vowed to keep the rates at historic lows until inflation picks up. The bank forecast GDP at 1.1% this year and 1.2% in 2020. Its headline inflation rate for this year was at 1.2% and at 1% for 2019 and 2020, respectively.
British prime minister Boris Johnson on Thursday gave up his efforts of getting his Brexit deal passed at the House of Commons and instead called for plans to bring on an early general election by December 12. Johnson’s proposal came after the Parliament rejected to allow his timetable for a fast-track legislation of Brexit laws as the European Union leaders discuss a three-month extension to Brexit.
Johnson needs a two-third majority in the Parliament for getting a general election but the main opposition Labour, which previously rejected PM’s elections calls, is yet to make its mind whether it is on board this time around.
The United States Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will speak to the Chinese Vice Premier Liu He by telephone on Friday. The two sides are attempting to calm down the nearly one a half year-long trade war after their agreement on the so-called Phase-1 deal. Citing diplomatic sources, Reuters reported that they will discuss China’s plans to buy more American agricultural products. In return, Beijing will request cancellation of some planned and in-place US tariffs on Chinese imports.
US Vice President Mike Pence warned China over what he says unfair trade practices. “So far it appears the Chinese Communist Party continues to resist a true opening or convergence with global norms. [It appears] that it’s the Chinese Communist Party that has been decoupling from the wider world for decades,” Pence said.

EURUSD

Disappointing data flow from Germany last week hit the common currency as the US dollar index strengthened. ECB’s decision to keep the rates on hold but step up stimulus through net purchases was another factor weakening the euro. On Monday all eyes will on the ECB, as the outgoing President Mario Draghi heads out to be replaced by Christine Lagarde. Her remarks will receive particular attention to figure out what kind of monetary policy she might draw. The pair price is rising on European open, targeting 1.1100. We will next follow 1.1120 above the ascending trendline. Further up, 1.1145 at the 50 pct Fibonacci retracement must be watched. In the event of a fall, 1.1070 and then 1.1050 should be designated for support.
Support: 1.1070-1.1050
Resistance: 1.1100-1.1120 -1.1145

GBPUSD

The UK pound is showing signs of recovery from last week’s losses as markets await the potential announcement by EU leaders on Monday of another extension to Brexit. However, the uncertainties surrounding PM Johnson’s early elections plans are weighing on the pair price. Despite the hesitant moves a continued rise upwards should target the levels at 1.2840 and then 1.2870. 1.2900 remains an important line of resistance. In the event of a fall, 1.2800 and then 1.2780, near last week’s low should be watched.
Support: 1.2800- 1.2780
Resistance: 1.2840-1.2870-1.2900

USDJPY

The Japanese yen is trading rather steadily entering the third week now above the 78.6 Fibonacci retracement and inside the ascending channel. The pressure in yen stemming from Sino-US trade war goes on as the dollar makes gains. A further rise in price should help the pair climb to 108.80 and then 109.00 that was last seen in early August. Some trust in the safe-haven currency should push the pair down to 108.50 and then 108.30 at the aforementioned Fibo line.
Support: 108.50-108.30–108.00
Resistance: 108.80- 109.00

GOLD

Precious metal prices saw a sharp fall on Friday after the US and Chinese officials described their phone call negotiations as close to being finalized. Gold came down to 1500 but did not dive below due to remaining market concerns. Other geopolitical issues, such as Brexit, continue to support the strong pricing. Having moved out of the closing triangle we had been following the price is aiming 1510. A further target is at 1516 and then 1520. In the event of a drop, we will watch 1500 and then 1494 support at the 50 percent Fibonacci retracement. 
Support: 1500 -1494
Resistance: 1510-1516 -1520

BRENT

Oil prices faced fresh pressure after a fall in Chinese industrial profits. Brent price is standing at a precarious 70.00 level near a four-week high. Russia’s energy ministry said on Friday close cooperation with OPEC and its de facto leader Saudi Arabia to enhance market stability and predictability continues. If the drop in price goes on, 69.70 at the 50 pct Fibonacci retracement should provide support. However if the price persists there, it might next fall to 69.40 and then 69.00. A reverse in the trend should help the price go back up to 70.30 and then 70.50.
Support: 69.70- 69.40- 69.00
Resistance: 70.30- 70.50

DAX

Pricing in the German index is deeply uncertain on Monday open, as investors try to grapple with the questions Brexit poses to the continent’s economy and commerce. As EU leaders are expected to announce another extension to the Kingdom’s divorce from the bloc, PM Johnson will try to convince the Parliament to back his proposal of early elections to break the deadlock. The index price is aiming for 12 950, and later 13 000, once the uncertainty is cleared off. Further positive signs from Sino-US trade talks might help it climb towards 13 050. In the case of a fall 12 900 and 12 850 will provide support.
Support: 12 900 -12 850
Resistance: 12 950- 13 000- 13 050

ECONOMIC CALENDAR

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