Markets reacted in euphoric way to the pivotal G20 meeting when a truce between China and US was announced. While negotiations are about to be resumed present tariffs will not be removed. Could this optimism persist? In this analysis we present 3 markets to watch.
The key indices opened with bullish gaps on Monday. While for US500 it meant fresh all-time highs, the French FRA40 landed just short of that accomplishment. Interestingly, the 5500-5600 zone has stopped bulls ever since November 2017! Will it be finally broken or is that another bearish setup?
After a bullish gap buyers are unable to extend the rally. A similar opening (albeit at lower levels) led to sharp declines after the G20 in December 2018. Source: xStation5
Some may wonder why the US dollar is the major winner after the G20. The direct response is that a truce pretty much eliminates a scenario of 50bp cut at the July Fed meeting – something that the markets have already started discounting. However, amid weak macro data the Fed looks bound to cut (and more than once) and that may leave the mark on the greenback.
Technically USDIDX is in the upwards trend for as long as there is no new lower low (previous one is at 95.17). Source: xStation5
The OPEC meeting takes place right after the G20 meeting where Russia and Saudis discussed a 9-months extension of present cuts. With booming US output and mixed demand prospects, the OPEC+ seems to have no choice but to limit deliveries. Prices will react to any Iran-related news in a short term as well.
OIL prices have broken the $66 resistance – the next key level is at $68.50. Source: xStation5