Three scenarios for market reaction to the upcoming U.S. midterm elections

The upcoming midterm elections have attracted the attention of the financial markets, as they can give an answer to the question of whether the American people will continue to support Trump. A potential victory of the Democratic Party could seriously undermine the president's initiatives. The President, who is severely restricted in his legislative initiatives, could be similar to the "lame duck" situation, the last time we saw it during final years of Obama's presidency.
Wall Street has its own interest...

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Wave Analysis: #AUDCAD is like to rise further and re-test the next resistance level 0.9520. Read more

Wave Analysis: #Gold is like to rise further and re-test the next resistance level 1242. Read more

Important upcoming events and publications for November 7 (GMT):

🇩🇪 07:00 German Industrial production haven't got a strong influence on the #EUR dynamics usually, but it's still a good country and region economic activity indicator. If the values are ​​worse than have expected, we'll see some pressure on the euro quotes.

🇺🇸 15:30 U.S. oil inventories and production data can seriously spur increased volatility. In connection with the US sanctions against Iran, the reserves and production dynamics has a significant impact on the #Brent and #WTI prices. Now market's attention is drawn to the growth during the previous six weeks in a row, which has spurred the decline in prices.

🇳🇿 20:00 The Reserve Bank of New Zealand Interest Rate Decision can seriously affect the course of pairs with #NZD. In market focuse is the official comments direction (whether there will be hints of readiness to the tighten policy).

Visit https://ru.fxpro.news/economic-calendar/ for more details.

Often after the elections, even if their results meet expectations, there is some upswing in the markets, following the reduction of the uncertainty.
Now the focus of the market returns to other macrotrends. At the time of writing, Chinese indices and Japanese Nikkei225 have returned the increase since the beginning of the day and have entered the red zone to preserve fears before the trade wars.

The dollar has been losing ground since the beginning of the month, following the recovery of the demand on the U.S. stock markets and the return of demand for the pound and the euro.

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Futures for #SP500 adds 0.2% after the U.S. elections in line with forecasts.

Wave Analysis: #NZDUSD is like to rise further and re-test the next resistance level 0.6840. Read more

Wave Analysis: #Brent Crude Oil is likely to rise further and re-test the next resistance level 75.55. Read more

🗓 Important upcoming events and publications for November 8 (GMT):

🇩🇪 07:00 Germany trade balance is in a trend to decline from the end of 2017, both due to the exhaustion of the effect of euro decline and due to the slowdown of China's growth. Interrupting this trend is able to increase somewhat optimism around #EUR.

🇪🇺 10:00 European Commission economy forecasts can become a troublemaker in pairs with #EUR, as it can ultimately influence the policies of the European authorities, which can affect the market performance.

🇺🇸 13:30 US Unemployment claims remain a good indicator of the nation labor market health. In case of updating multi-year lows and, conversely, a sharp jump upwards, it may affect the positions of #USD.

🇺🇸 19:00 The FOMC rate decision and accompanying statement will be the focus of attention and may cause violent market volatility, including #USD. Investors will look for hints of willingness to raise rates in December.

Visit https://fxpro.news/economic-calendar/ for the details.

The U.S. main indices held an impressive rally with growth by more than 2% for #SP500. Now rally has stalled as focus shifts to Fed’s monetary policy decision

No changes from FOMC is expected today, but however, there is room to strengthen the American currency.

According to CME’s FedWatch tool, the markets price only 80% probability of raising the rates again by the year end, which is lower than a month ago.

In the case that the Fed shows its confidence in the economy and is determined to prevent overheating, the U.S. dollar may return to growth, which was interrupted at the beginning of the month due to the pre-election uncertainty.

At the same time, it is not wise to completely exclude surprises. The heightened turbulence of the markets last month may capture the central bank's attention.

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In your opinion, how the upcoming FOMC Meeting would affect the U.S. stock market?
anonymous poll

The market will be under pressure – 11
👍👍👍👍👍👍👍 55%

The market will rise – 6
👍👍👍👍 30%

Meeting results won’t affect – 3
👍👍 15%

👥 20 people voted so far.

Wave Analysis: #Silver is expected to fall further and re-test the next support level 14.30. Read more

Wave Analysis: #AUDCHF is likely to rise further and re-test the next resistance level 0.7400. Read more

🗓 Important upcoming events and publications for November 9 (GMT):

🇬🇧 09:30 UK GDP can seriously affect the #GBP dynamics. According to forecasts, the economy is expected to grow by 0.1% in September, and by 0.6% in the third quarter, after 0.4% in the second. This will be a preliminary assessment, which most rarely coincides with expectations and therefore may have the most serious impact on the markets.

🇺🇸 13:30 The US Producer Price Index is expected to add 0.3% in October and accelerate to 2.7% y/y. Stronger inflation data could spur an increase of #USD on speculation that the Fed will raise rates faster.

🇺🇸 15:00 US UoM Consumer Sentiment Index is able to influence the #USD. A rise above 98.6 (the previous value) could have a positive effect on stock markets and weaken the dollar positions on renewed demand for risks.

Visit https://fxpro.news/economic-calendar/ for more details.

The growth wave of the dollar on Thursday supported the Fed. Keeping the policy unchanged, the U.S. Central Bank called the economy "strong" and highlighted the need to maintain its course to gradual rates hiking.

At the same time, it is worth mentioning that over the past month the markets have become less believing that the Fed will produce more than three increases in rates next year. Latest data from CME’s FedWatch tool indicate that investors are considering a 27.8% chance to see more than three hikes, against 31.5% a month earlier.

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Despite a small decline immediately after the announcement of the election results, the U.S. dollar has turned to growth, adding 1.2% to the Wednesday lows.

#WeeklyTrends:

📈 US indices have rapidly risen after the US elections, allowing to dismiss the decline in October. The Thursday-Friday correction does not look so scary now, as long as the S&P500 remains above the 200-day average;

📈 The US dollar has also returned to the growth after a slight hitch against most competitors, as the US Fed confirmed confidence in the economy strength. The raising interest rates are in focus. This attitude of the Fed is enhancing the divergence with many central banks of other countries where economic data is not so strong;

📉 Falling oil is gaining momentum again. The trend for a sharp decline persists for more than a month. During this period, the prices of the main brands (Brent and WTI) lost more than 20%, formally entering the bear market. The reason, as in 2014, is overproduction of oil and unwillingness to lose its market share.

📉 Disputes over the Italy budget are in no hurry to retreat. The single currency and government bonds once again have come under pressure: the issue may remain in the market’ focus next week.

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#FxProMedia: TOP-6 most interesting publications of this week:

1️⃣ Yahoo Finance: "Will We See a Lame Duck After the US Election?"
2️⃣ Reddit.com: "Weekly economic highlights"
3️⃣ Investing: "Untimely Hawkishness Of The Largest Central Banks"
4️⃣ Nasdaq: "How FOMC will Affect the Markets Today"
5️⃣ BolsaMania: "Morgan Stanley: el petróleo puede caer a 77 dólares pese a las sanciones a Irán"
6️⃣ Trading View: "Closing below $70 is a sign for further losses for Brent"

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Wave Analysis: #Copper is expected to fall further and re-test the next key support level 265.00. Read more

Wave Analysis: #GBPJPY is expected to fall further and re-test the next support level 147.00. Read more