US Open – China GDP falls to 6%, Turkey’s win, Brexit Vote looms, Oil rises, Gold stuck in range

News

US stocks and the dollar little changed in early Friday trade despite a worse than expected third-quarter GDP reading from China and heightened uncertainty regarding how Brexit will unfold over the weekend and a temporary cease-fire between Turkey and Syria. 

Asian markets sold off after China’s third quarter GDP figures showed the economy grew at 6.0%, the worst reading since A Few Good Men opened in theaters.  Financial markets want answers on how serious this downturn will be.  The trade war is having a strong impact and with global demand remaining vulnerable, we probably could see Chinese growth fall below the 6.0% next quarter.  The rest of the Chinese data for September showed improvements with retails sales and industrial production. 

Markets will likely remain fixated on the next critical face-to-face meeting between Presidents Trump and XI at the APEC Summit on November 16-17th.  Stocks will struggle to break out to uncharted territory even if we see better than expected earnings results leading up to the key summit. 

Turkey

The five-day ceasefire between Turkey and Syria initially was received as major de-escalation, but it really isn’t.  Turkey is appears set to secure more of the border shared with Syria as the ceasefire is more of warning for Kurds to leave the area.  This situation is likely to intensify next week and we could see lira weakness return. 

Brexit

Boris Johnson has a tough job ahead of Saturday’s Parliamentary vote.  He needs to convince MPs to vote for his Brexit deal or seek an extension of Article of 50.  Johnson may choose to try to take UK out of the EU with a hard exit at the end of the month, but that may be less likely as he could lose that battle in the courts, thus giving up a lot of recently won political capital. 

The upcoming Brexit vote is too close to call, but even if we see Johnson’s deal pass, this does not include a trade agreement so sterling’s gains would likely be capped around the 1.35 to 1.3750 region. 

Oil

Saudi Arabia needs oil prices to rise much higher in order for them to go forward with Aramco IPO.  It seems we are very far away from seeing this IPO happen, especially at the initially targeted value of $2 trillion. 

Oil did not get any help from the Chinese GDP data that further cemented global growth concerns.

Why is oil higher?  It seems a floor is in place for oil prices and expectations are growing that we could see OPEC + become more aggressive with their production cuts at the upcoming December. A very bullish sign for oil is how it performed after yesterday’s somewhat bearish EIA report.

Gold

Gold appears to be in ‘No man’s land’.  The trade war is the gift that keeps on giving, but uncertainty on  how much the Fed will fill the punchbowl has gold stuck in a range.  Gold could remain stuck between $1,470 and $1,530 until the October 30th Fed meeting.  The outlook should remain bullish for gold as the Fed will likely seek to deliver a market disruption and continue to support the Treasury yield curve. 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst at OANDA

With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg. He is often quoted in leading print and online publications such as the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University. Follow Ed on Twitter @edjmoya ‏

Ed Moya

Ed Moya

Products You May Like

Articles You May Like

Forex. My 300 pips Profit with Simple News Trading Strategies
Forex Trading LIVE Analysis & Trade Setups 11-12-2019 📈
Markets Spurred by Trade Optimism
China tries to squeeze more out of a small trade deal with America
USD/CAD flirts with technical pattern high

Leave a Reply

Your email address will not be published. Required fields are marked *