Spreadex Market Update
US Midterms Uncertainty Weighs on USD
The US Dollar continued its decline yesterday as the US midterm elections got underway. With voting finished now and counting well underway the Dollar index is sitting tentatively back above the October lows for now, having broken below them yesterday. Initial results show that Republicans have made gains in several key states including Florida and Georgia. However, Democrats have beaten expectations so far including a key win in Pennsylvania.
Looking at the results so far for Congress, Republicans are leading 197 – 167 in the race to get 218 and win the House. Democrats are leading 48 – 47 in the race to get 51 and win the Senate. While a win for the Republicans in the House looks likely, for now, the Senate remains very close to call. USD is likely to stay pressured throughout the day as the final results come in, suggesting Democrats have lost control of Congress.
Key Factors for Today
- USD weakens as uncertainty builds around US midterm results
- Mixed action in stocks – DAX the clear winner yesterday
- Disney streaming numbers now match Netflix
- Quiet data sheet today – focus on elections results
- Weaker USD fuels FX reversals
- Metals breakout – oil capped by uncertainty
Coming Up
- USD – US Midterm elections results ongoing
- GBP – BOE’s Cunliffe speaks
- Oil – EIA Inventories update
Mixed Day for Stocks as US Election Uncertainty Dominates
It was a mixed day for equities markets yesterday. We saw strong gains in Europe, seeing both the Dax and the Eurostoxx breaking out higher, along with decent gains initially in the US before some weakness crept in later in the session. In the UK, the FTSE remains hemmed in by a stronger Pound this week while in Asia, the Nikkei is giving back gains today after a decent rally yesterday. The Hang Seng and Shanghai Composite are also turning lower as scepticism over the China-reopening story leans on sentiment.
Disney Streaming number Bloom but Earnings Miss Forecasts
In the US, earnings season comes to a close today and the focus will be on vegan meat firm Beyond Meat and freelance tech firm Fiverr. Yesterday, Disney shares fell as the company undershot Q3 earnings forecasts. Disney posted EPS of $0.30, well below the $0.58 expected on revenues of $20.15 billion, again below estimates for a $21.26 billion result. The results sadly overshadowed the huge news that Disney added 12.1 million new streaming subscribers, well above Netflix’s 2.1 million subscriber growth in the same quarter with overall streaming levels now matching that of Netflix.
Weaker USD Fuels Reversals in FX
In FX, the decline in the US Dollar this week has allowed for risk currencies to rebound strongly with AUD, CAD and NZD each pushing against the Dollar. If today’s midterm results fuel a deeper sell off in USD, quite a few pairs look poised for a key reversal here including EURUSD which is currently testing the October highs. Very quiet data sheet today so focus will be on the incoming US midterm results with only a dramatic turnaround for the democrats likely to revive USD ahead of tomorrow’s headline CPI release.
Metals Breakout on USD Weakness but Crude Capped by Uncertainty
In the metals and commodities space, both gold and silver rallied firmly yesterday with silver breaking out to its highest levels since June and gold rallying over 3% on the day. Both metals look set to advance further while USD stays pressured. Oil prices were not so lucky yesterday with crude futures selling off by around 4% and now down around 6% from the week’s highs. Uncertainty around the US midterm elections as well as fears over the china demand outlook are creating near-term headwinds for oil prices. Traders now brace for today’s EIA update
It's easy to open an account
- Fill in our simple online application form
- Fund your account
- Start trading the global markets instantly!
SEARCH FOR AN ARTICLE:
Enter a keyword and search for all relevant articlesMARKET ANALYSIS
RECENT POSTS
DISCLAIMER
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64% of retail investors lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. For professional clients, spread betting and CFD trading can also result in losses larger than your initial stake or deposit.
Spreadex Ltd is authorised and regulated by the Financial Conduct Authority, provides an execution only service and does not provide advice in any way. Nothing within this update should be deemed to constitute the provision of investment advice, recommendations, any other professional advice in any way, or a record of our trading prices. This update does not constitute or form part of an offer of, or solicitation for a transaction in any financial instrument, nor shall it or the fact of its distribution form the basis of, or be relied on in connection with, any contract therefore. Any persons placing trades based on their interpretation of the comments or information within this update does so entirely at their own risk.
No representation, warranty, or undertaking, express or limited, is given as to the accuracy or completeness of the information or opinions contained within this update by Spreadex Ltd or any of its employees and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions. As such, no reliance may be placed for any purpose on the information and opinions contained within this update.
The information contained within this update is the intellectual property of Spreadex Ltd and is protected by UK and International copyright laws. All rights reserved. Users may however freely download, distribute and reproduce extracts of the contents, subject always to accrediting Spreadex Ltd as the source and providing a hyperlink to www.spreadex.com.
