FXTM Research Analyst
There is no doubt
that persistent trade tensions between the United States and China have left a
mark on emerging market currencies.
The rising risk
aversion created from ongoing trade uncertainty developments has negatively
impacted appetite for riskier assets and this continues to be reflected across
financial markets. With trade disputes also fueling
concerns over slowing global growth consequently pressuring oil prices, this is
bad news for the Naira and Nigerian economy. Should a US-China trade war result
in oil prices collapsing, Nigeria’s economic recovery and exchange rate
stability may be threatened. For Nigeria to shield itself against external
risks and oil price volatility, there needs to be a stronger push on
diversification away from oil reliance to other sustainable sources of economic
growth.
Bitcoin explodes higher as bulls shift into higher gear
Bitcoin is
positioned to remain a major talking point across financial markets this week
after jumping as much as 10% yesterday to almost $9000.
With no industry
news or reports behind the abrupt upside, the primary factor behind Bitcoin’s
aggressive appreciation is likely based around price action. The technical
picture suggests that the cryptocurrency remains heavily supported by the
bullish ‘golden cross’ formation on the daily charts. This occurs when the 50-day simple
moving average crosses above the 200-day moving average. With prices slowly
approaching $9000, the path of least resistance certainly points north. A solid
daily close above $9000 has the potential to open a clean path towards $10,000.
Pound lost in Brexit drama and political chaos
The past few days
have certainly not been kind for the British Pound which remains one of the
weakest G10 currencies.
Theresa May’s resignation is likely to
add to the uncertainty over Brexit and what to expect in the coming months.
With fears of a no-deal Brexit mounting by the day amid the drama, the British
Pound remains fundamentally bearish. Technical traders will continue to watch
how prices behave around 1.2620. A solid daily close below this point will
signal a selloff towards 1.2500 in the short to medium term.
EURUSD hovers around 1.1200
The Euro remains
on standby below 1.1200 as investors digest the results of the European
Parliament elections. With concerns over Italy’s budget denting appetite for
the Euro, the EURUSD is positioned to trend lower.
Taking a look at the technical
standpoint, the EURUSD remains bearish on the weekly charts as there have been
consistently lower lows and lower highs. Sustained weakness below 1.1200 is
likely to open a path towards 1.1100 and 1.1000, respectively.
Commodity spotlight – Gold
Gold struggled for direction today with
prices hovering around $1283 as sizzling US-China trade tensions and Brexit
uncertainty sent investors rushing towards the Dollar. Although the precious
metal got off to a slow start this week, bulls remain in control above $1280.
Should this level prove to be reliable support, the next key point of interest
for Gold may be found around the $1300 psychological level.
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