15th November 2018 - Powell sees The equities volatility is just one factor of many

Walid Salah Eldin

Active member
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The continued US equities indexes slide could weigh down in the sentiment in the Asian session, After the Fed spurred further selling by showing continued unfazing of the market volatility.
While the oil prices massive selling is still weighing down on the energy sectors shares across the globe on output glut and increasing worries about the global recovery amid the trade tensions and the current Fed's monetary tightening pace which is looking to continue ahead eroding the demand for energy and boosting the greenback.

As The Fed's chairman Jerome Powel who has not made a press conference following last week FOMC meeting as scheduled came out finally yesterday to figure out that "equity volatility is only one of many factors that the Fed takes into account".
Powell who repeated this sentence several times during his speech assured on the importance of tightening the Fed's balance sheet which started nearly a year earlier to weigh down on UST prices.

Powell comments came to be in line with San Francisco Fed President Mary Daly who indicated Monday that she isn’t worried about recent declines in stocks.
She figured out also that Equities valuations became higher than what could be supported and the correction is something she sees positive.

The Fed has not praised or welcomed the Equities volatility, but its stance still showing that it knows that this volatility is worrying but it can be important for equities the investors who need to be selective relying on the shares fundamentals, when they are to take their decisions next specially after the Fed ended its accommodative stance getting into neutral stance.

Powell's could not add strength to USD or send UST yield up, as the risk aversion sentiment could contain the market weighing down on the borrowing cost in the secondary money market.
The gold could be an attractive option to the safe haven seekers and it is trading again close to $1210 per ounce, after diving below $1200 psychological level last Tuesday.

While GBP and EUR could regain support versus the greenback, after the markets have support from U.K. Prime Minister Theresa May's conservative cabinet and also from EU to the deal draft which could avoid dividing Ireland and putting materialized boarder between its 2 divisions.
However it is still widely expected to see this draft ending to house of common disapproval can lead to another early parliament elections or even another Brexit referendum, After more than 2 years of negotiations between the European Commission and May’s Conservative party.
Yes, she could secure backing from her Cabinet which was about to face wave of resignations following of Minister for Transport Joseph Edmund Johnson.
But she could not gather her party on this reached draft which is looking to some from her party a half unacceptable deal or no deal, while the labor party can get use of this current mixed stance to gain more ground.

After volatile day, GBPUSD returned to be trading just above 1.30 level and EURUSD rose to be trading near 1.1330 after slippage below 1.13 in the beginning of the week raised its downside momentum and triggered further selling of this pair to reach 1.1215 which has not been seen since Jun. 27, 2017.

After forming a higher low at 1.2829, GBPUSD became trading now in its fourth consecutive day of being below its daily Parabolic SAR (step 0.02, maximum 0.2) which is reading today 1.3153.
GBPUSD tried this morning to keep its creeping up to meet currently its daily SMA50 just below its daily SMA100, while the pair is still undermined over longer range by continued existence below its daily SMA200.
GBPUSD daily RSI-14 is now referring to continued existence inside the neutral area reading 51.758.
GBPUSD daily Stochastic Oscillator (5, 3, 3) which is more sensitive to the volatility is having now its main line inside the neutral area at 53.457 leading to the upside its signal line which is lower reading 34.287 in the neutral region.
After positive crossover just inside of it on forming a higher low at 1.2826 above its formed second bottom on last Oct. 30 at 1.2695 to keep its bottom of last Aug. 15 at 1.2661 unbroken spurring reversing by double bottom formation ended until now to forming a lower high at 1.3175 on Nov. 7.

Important levels: Daily SMA50 @ 1.3034, Daily SMA100 @ 1.3022 and Daily SMA200 @ 1.3377
Experienced S&R:
S1: 1.2826
S2: 1.2695
S3: 1.2661
R1: 1.3175
R2: 1.3256
R3: 1.3298

Kind Regards
Global Market Strategist of FX-Recommends
Walid Salah El Din


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