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  • Weekly Focus: U.S. Government Shutdown Suspended, Non-Farm Payrolls Expected

Weekly Focus: U.S. Government Shutdown Suspended, Non-Farm Payrolls Expected

Investors made a deep sigh of relief as U.S. government shutdown threat was suspended last weekend. A shutdown is still possible, but only after November 17. 

It seems more like a miracle as the Congress came together on Sunday to avoid a government shutdown. This effort could cost House Speaker Kevin McCarthy his job after he ignored demands from hard-line Republicans and pushed a stopgap spending bill with a help of Democrats. So, the government has now enough funding to work in the nearest 45 days.

Markets were mostly demonstrating calm reaction on the news with U.S. 10-year Treasuries yields up to 4.62% from 4.59%, The S&P broad market index was modestly up by 0.4% to 4310 points. The U.S. Dollar was mostly unchanged. A true reaction might be manifested later after a speech of Federal Reserve’s (Fed) Chair Jerome Powell this Monday. Investors are expecting him to provide further guidance on how the Fed’s hardline hawkish stance would change after two weeks of massive sell-off in the debt market and suspension of a shutdown. If the hawkish stance would be confirmed investors may intensify a stocks sell-off.

So, we may have a strong volatility on Monday after the speech. This may result in prices moving in either direction, as Powell became an unpredictable speaker now.

As for the rest, investor may expect a rather standard Non-Farm Payrolls week. The data will be presented as scheduled after a government shutdown was averted. 

Technically, the S&P 500 index downside formation with a primary target at 4100-4150 points and extreme targets at 3700-3800 points has not changed. The nearest support is at 4280-4300 points. Short trades could be considered at 4380-4430 points. If the support will be passed a next target at 4190-4210 will be opened. 

Brent crude prices have made it above the resistance at $92.00-94.00 per barrel. But they continue to test this resistance. So, it would be better to wait for the price to climb to $96.00 per barrel threshold to confirm a bullish victory. This would send prices further up to $100.00-103.00 per barrel. The downside scenario may be activated it prices will return below $92.00 per barrel. Then they would dive to $82.00-84.00. If prices would fell below $74 per barrel a recession scenario with targets at $64-66 per barrel of Brent crude will be the option. 

Gold prices are moving inside the mid-term upside formation with targets at $2000-2100 per troy ounce that have already been met. But, the situation has changed dramatically as the important support level of $1980-2000 per ounce was smashed. Prices have dived deeper to $1835 per ounce. So, they would likely lo continue down to $1800-1820 per ounce.

The tension in the currency market is easing despite some upside moves of the Greenback. It looks more like a correction inside a reversal pattern so far. But a possible hawkish rhetoric by Powel may push the Dollar up again. A long trade with a small amount for GBPUSD from 1.23300-1.23500 with a target at 1.26200-1.26400 is intact. The first target is at 1.2400-1.24500. This is the level, where the decision to keep the trade or close it should be made. The long trade in the AUDUSD from 0.63800-0.64000 with a target at 0.66500 and the stop-loss at 0.63200 is still open.