Two trades to watch: EUR/USD, S&P500

EUR/USD slips ahead of retail sales data & midterms

EUR/USD is falling away from parity as investors look ahead to eurozone retail sales and US mid-term elections.

Retail sales are expected to rise 0.3% MoM in September after falling -0.3% in August. Weak sales are expected to reflect higher interest rates and high inflation. On Monday, ECB President Christine Lagarde reiterated that inflation was too high and that the ECB will continue working to bring inflation down.

Yesterday EUR/USD briefly rose above parity supported by stronger-than-expected German industrial production and Eurozone investor confidence data, and a weaker USD.USD fell yesterday despite yields rising.

In addition to EZ retail sales and the US midterm elections and ECB speakers will be in focus.

Where next for EUR/USD?

EUR/USD’s recovery from 0.9740 has stalled just shy of parity after having pushed over the 20 & 50 sma. The RSI is over 50 and the 20 sma is crossing above the 50 sma in a bullish signal.

Buyers could look for a move over 1.0090 the October high to bring 1.0980 the September high into focus.

On the flip side, sellers could look for a move below 0.9870 the 20 & 50 sma, ahead of 0.9730 the November low.

US government gridlock good for stocks?

The S&P500 finished yesterday higher for a second straight day, despite some signs of caution. The S’7P500 closed 0.96% higher above the key 3800 level.

Attention is now firmly on the midterm elections, where the Republicans are widely expected to perform well, as the hands of the Democrats. Recent polls point to the Republicans winning a majority in the House of Representatives. They could even do the double and win the Senate as well, given the level of content amid multi-decade high inflation and looming recession fears

So what does this mean? Effectively the result means gridlock in government, which will severely limit what Biden will be able to achieve in the final two years of his term.

Historically a gridlocked government is good news for stocks, with politicians given less room to meddle.

Where next for the S&P500?

The S&P500 has risen from its November low of 3770, retaking the 20 & 50 sma before running into resistance around 3800.

With the RSI supportive of further upside. Buyers will look to rise over 3800 ahead of 3920 the October high, to create a higher high.

Support can be seen at 3750 the 20 sma and rising support trendline, and 3700 the November low

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.