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Safe Haven Assets Rise

Published 15/10/2018, 11:19
Updated 31/08/2022, 17:00

After a painful last week, equities fell further on Monday with Asian markets blinking red across the screen. The Nikkei fell 1.87%, while Hong Kong’s Hang Seng slid 1.50%. In Europe, the atmosphere is not much better as most indices headed lower, with the exception of Italian equities that barely kept their heads above water. However, the uncertainty created by the clash between Italy and the European Union regarding Italy’s budget is far from over.

It will likely continue to weight on equities and especially financials. In FX, investors don’t where to stand against the backdrop of tense Brexit negotiations and Italian budget jitters.

The greenback has erased partially last week’s losses but still trades with a clear downtrend bias. The single currency edged slightly higher on Monday morning with EUR/USD rising 0.03% to 1.1563. The currency pair currently sits on the 1.1558 support, implied by the 50% Fibonacci level of its August-September rally.

We expect US rates will stabilise as investors finish pricing in the US Fed’s hiking cycle, which should end in 2020. On the long-end of the curve, the pace of the Fed balance sheet unwinding will be closely monitored. Nevertheless, the US central bank has already well communicated about this matter and no surprises are expected.

Disclaimer: While every effort has been made to ensure that the datat quoted and used for the research behind this document is reliable, there is no guarantee that it is correct, and Swissquote Bank and its subsidiaries can accept no liability whatsoever in respect of any errors or omissions, or regarding the accuracy, completeness or reliability of the information contained herein. This document does not constitute a recommendation o sell and/or buy any financial products and is not to be considered as a solicitation and/or an offer to enter into any transaction. This document is a piece of economic research and is not intended to constitute investment advice, nor to solicit dealing in securities or in any other kind of investment.

Although every investment involves some degree of risk, the risk of loss trading off-exchange forex contracts can be substantial. Therefore if you are considering trading in this market, you should be aware of the risks associated with this product so you can make informed decisions prior to investing. The material presented here in not to be construed as trading advice or strategy. Swissquote Bank makes a strong effort to use reliable, expansive information, but we make no representation that it is accurate or complete. In addition, we have no obligation to notify you when opinions or data in this material change. Any prices stated in this report are for information purposes only and do not represent valuations for individual securities or other instruments."

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