US futures waver on stimulus impasse and upcoming earnings season
US futures are little changed as investors reacted to the stimulus impasse in the United States. Over the weekend, divisions about the next stimulus package continued after the White House extended its offer to $1.8 trillion. Republicans criticised it for being too big while Democrats said that the funding was not enough. This means that reaching a deal that pleases the White House, House of Representatives, and the Senate will be difficult. Futures tied to the S&P 500 are down by 0.05% while those tied to the Dow Jones are up by 0.05%.
Futures are also wavering as the market waits for corporate earnings that will start on Tuesday when big banks like JP Morgan, Citigroup, and Wells Fargo release their earnings. Other top companies that will release their results this week are Blackrock and Johnson & Johnson. The market hopes that these companies will release better results than they did in the second quarter. For banks, they expect the Fixed Income Commodities and Currencies (FICC) to rise and the provisions for bad debt to decline. They also expect other firms’ revenue to show better revenue growth than in the second quarter.
The Japanese yen strengthened against the US dollar as investors reacted to better-than-expected machinery order numbers from Japan. Data from the official statistics bureau said that the core machinery orders increased by 0.2% in August. That was lower than the previous month’s growth of 6.3% but better than the expected decline of 1%. The orders declined by an annualised rate of 15.2%. Meanwhile, the country’s producer price index (PPI) declined by 0.2% in September and by -0.8% on an annualised basis.
The EUR/USD pair was little changed in the Asian session. It is trading at 1.1820, which is slightly below last week’s high of 1.1833. On the four-hour chart, the price is slightly above the 15-day and 25-day exponential moving averages while the signal and main lines of the MACD are above the neutral level. It is also above the ascending pink trendline. Therefore, the pair is likely to continue rising as bulls aim for the next resistance at 1.1850.
The GBP/USD pair rose to a high of 1.3030 as investors remained optimistic about Brexit. This is the highest it has been since September 9. On the four-hour chart, it is above the 25-day exponential moving averages while the RSI has moved close to the overbought level of 70. The Average Directional Movement Index (ADX) has also continued to rise. Therefore, the pair is likely to continue rising as bulls aim for the next resistance at 1.3050.
The XAU/USD pair rose to an intraday high of 1930, which is the highest it has been since September 21. On the four-hour chart, the price is above the 15-day and 25-day exponential moving averages while the RSI has continued rising. It is also a few points below the important resistance level of 1935. This price is along the upper side of the ascending channel shown in green. Therefore, the XAU/USD could continue rising as the market targets the next resistance at 1950.