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Market Outlook: Mexican central bank cuts and cuts again

Fighting a stagnant economy
November 15, 2019

The Financial Times reported from Mexico City yesterday that Banxico, the central bank, cut its key lending rate for at the third consecutive rate-setting meeting; trimmed another 25 basis points so that the rate now stands at 7.5 per cent. They also downgraded their view on economic growth for this and next year, saying ‘’the third quarter of 2019 shows that stagnant economic activity has maintained as observed for several quarters’’. More unusually they noted that the country should ‘’improve the rule of law, abate corruption and combat insecurity’’.

The European Investment Bank said yesterday that it will no longer fund any projects to develop fossil fuels from late 2021 (one year later than originally planned); this includes traditional natural gas ones. ‘’This is an important first step – this is not the last step’’ said vice president of the bank Andrew McDowell.

DAX 30

Still overbought and such tiny little candles. Car maker Daimler said yesterday that it will cut 10 per cent of managerial roles worldwide because profits are likely to fall significantly over the next 2 years. This because it needs to meet CO2 emission targets and ‘’the industry is in transformation’’.

 

SHORT TERM TRADER: Small short at 13200; stop above 13325. Target 12300.

 

POSITION TAKER:  Square.

FTSE 100

Prices drooping a little so that any bullish momentum has dissipated. Today the Chinese embassy in London condemned an attack yesterday on Honk Kong’s Secretary for Justice Teresa Cheng. In London to promote Hong Kong, she was surrounded by masked protestors and fell to the ground, hurting her hand. The embassy also called on UK police to investigate the incident.

 

SHORT TERM TRADER:   Short at 7370; stop above 7435. Target 7175.

 

POSITION TAKER:  Square.

S&P 500

Overbought once again as we inch to a new record high, with price action of the last fortnight in itself another potential broadening top. I understand that we are unlikely to know the identity of the bank/s borrowing daily from The Fed’s discount window for at least 2 years. This is the process of swapping Treasury bills and other short-term paper for cash, a funding vehicle that Fed chairman Jerome Powell insists is NOT QE.

 

 

SHORT TERM TRADER: Square.

 

POSITION TAKER:   Square.

BRITISH POUND/US DOLLAR

Holding quite comfortably at the 20-day moving average.

 

SHORT TERM TRADER:  Will re-buy on a close above 1.2975 today.

 

POSITION TAKER:  Long at 1.2950; stop below 1.2750. Target 1.3350.

EURO/US DOLLAR

Just about holding Fibonacci 61 per cent retracement support but bearish momentum is steady. Faced with warring factions at the ECB, new head Christine Lagarde whisked them off for an off-site treat at Schlosshotel Kronberg, a glamorous spa resort in Taunus, Hesse, an upmarket outer suburb of Frankfurt.

 

SHORT TERM TRADER:  Short at 1.1050; stop above 1.1100. Target 1.0930.

 

POSITION TAKER:  Square.

GOLD

This week’s high is probably now in place as the market consolidates neatly under what is now horizontal resistance.  

                            

SHORT TERM TRADER:  Short at 1520; stop above 1500. Target 1440.

 

POSITION TAKER:  Short at 1507; stop above 1520. Target 1440.

Nicole Elliott is a long-standing member and Fellow of the Society of Technical Analysts and has taken over the IC’s trading coverage.  She is regularly interviewed and quoted by the financial media, is a conference speaker, and author of several books on charting.