Asian markets jump on vaccine, U.S. aid hopes gains capped by China data

Asian markets advanced toward a recent 2-1/2-year peak on Monday powered by hopes of a U.S fiscal package and expectations of a coronavirus vaccine by the end of this year, though weaker-than-expected Chinese data capped gains. MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) climbed 0.6% for its second straight day of gains, paring back slightly following third-quarter gross domestic product data from China. The index has risen in eight of the last 10 sessions amid a rally in risk assets buoyed by hopes of a coronavirus vaccine and expectations of a so-called "blue wave", which would see the Democrats claim victory in November's elections. Chinese shares started higher though the blue-chip index (CSI300) pared gains after China's GDP data missed forecasts, though separate monthly indicators pointed to an expansion in economic activity. China's gross domestic product (GDP) grew 4.9% in July-September from a year earlier, slower than the median forecast of 5.2%. Monthly indicators beat forecasts - industrial output accelerated 6.9% in September from a year earlier, when analysts were looking for a 5.8% gain from a 5.6% rise in August. Retail sales edged up 3.3% last month from a year earlier against expectations for 1.8% growth. "The rebound in Q3 GDP was less strong than expected, but was still a decent 4.9% YoY. September data beat expectations, suggesting a pickup in momentum towards the latter part of Q3," said Frances Cheung, head of macro strategy for Asia at Westpac in Singapore. "The pickup in momentum was broad-based, which bodes well for the Q4 outlook." Japan's Nikkei (N225) and Australia's benchmark index (AXJO) were each up 1.1%. Boosting overall sentiment, drugmaker Pfizer Inc (N:PFE) said on Friday it could have a coronavirus vaccine ready in the United States by the end of this year. E-Mini futures for the S&P 500 (ESc1) jumped 0.6% in Asian trading after House Speaker Nancy Pelosi said on Sunday she was optimistic legislation on a wide-ranging coronavirus relief package could be pushed through before the election. But with her negotiating partner, Treasury Secretary Steven Mnuchin, in the Middle East until Tuesday, such a timeframe would seem to be overly optimistic, analysts said. Investors are also concerned about rising coronavirus cases to help curb the spread of the disease. Global coronavirus cases rose by more than 400,000 for the first time late on Friday, a record one-day increase as much of Europe enacts new restrictions to curb the outbreak. Later in the week, key risk events include minutes of Australia's central bank meeting, the final U.S. presidential debate and global manufacturing indicators. Action in currencies was muted with the U.S. dollar, usually perceived as a safe-haven asset, (=USD) flat at 93.696 against a basket of six major currencies. [USD/] The euro (EUR=) slightly weaker at $1.1712. Sterling was slightly higher though it was still near two-week lows after UK Prime Minister Boris Johnson told businesses to get ready for a no-deal Brexit in case negotiations with the European Union fail to produce a free trade agreement. "EU-UK trade talks are flirting with collapse," ANZ economists said. "UK Prime Minister Johnson said the UK needs to prepare for a no-deal outcome, as both sides cannot agree on a Canada-style FTA. Talks resume in London on Monday, but without the political willingness to shift ground, there is little the negotiators can achieve." In commodities, Brent crude futures (LCOc1) slipped 14 cents to $42.79 a barrel, and U.S. West Texas Intermediate (WTI) crude futures (CLC1) fell 14 cents to $40.74 a barrel. Spot gold was a shade firmer at $1,900.8 an ounce.

Top 5 cryptocurrencies to watch this week: BTC, XRP, ADA, XMR, ATOM

In the past three years the U.S. Securities and Exchange Commission has shot down several applications for a Bitcoin (BTC) exchange-traded fund. This dashed hopes of many investors who believed Bitcoin price would rally higher if an EFT was approved. Although investors no longer pin BTC’s future on the existence of an ETF, regulators could eventually adjust their anti-crypto stance in the future. In an interview with Cointelegraph, SEC Commissioner Hester Peirce said that the regulator will have to become accommodative to innovation as several people from both the crypto space and traditional financial institutions seek their guidance. Bloomberg’s latest crypto newsletter predicts that a Bitcoin ETF could see the light of the day if Democratic presidential nominee Joe Biden is elected as the next U.S. President. The author believes that a change in guard may bring regulatory clarity that could attract investments into digital assets. However, even if President Donald Trump is re-elected, Bloomberg expects Bitcoin to extend its uptrend through his second term as the digital asset will be buoyed by the rising debt-to-GDP, quantitative easing, and Bitcoin hash rate. Even if Bitcoin only rallies at half the speed of its 1,400% gain from 2016 to 2020, it would rally to $80,000 by 2024. The long-term forecasts are encouraging and so are the short-term charts. Let’s analyze the top-5 cryptocurrencies that may outperform in the short-term. BTC/USD The breakout of the symmetrical triangle on Oct. 8 attracted buyers who pushed the price above the overhead resistance at $11,178 on Oct. 10. However, the bears have not yet given up completely as they sold the rally to $11,482.44 on Sep. 10. The bulls used the dip to buy and did not allow the price to break below $11,178. This suggests that the sentiment has changed from sell on rallies to buy on dips. The moving averages on the verge of a bullish crossover and the relative strength index above 64 indicate that the advantage is currently with the bulls. If the buyers can push the price above the overhead resistance at $11,500, the next stop for the BTC/USD pair could be $12,000 and then $12,460. This bullish view will be invalidated if the pair turns down from the current levels and breaks below the 20-day exponential moving average ($10,853). Such a move will suggest that the current breakout was a bull trap. The trend on the 4-hour chart has turned bullish with both moving averages sloping up and the RSI in the overbought territory. The buyers will again attempt to push the price above $11,500 and if they succeed momentum is likely to pick up. However, if the price turns down from the overhead resistance, it could consolidate in a tight range of $11,468.98–$11,178 for some time. A break below $11,178 will be a sign of short-term weakness. XRP/USD The bears defended the $0.26 overhead resistance on Oct. 10, but they could not sustain the selling pressure today. This shows that the bulls are buying on every minor dip and are currently attempting to push XRP above $0.26. A breakout and close (UTC time) above $0.26 will complete an inverse head and shoulders setup that has a pattern target of $0.300288. The moving averages on the verge of a bullish crossover and the RSI close to 60 suggest advantage to the bulls. Contrary to this assumption, if the XRP/USD pair turns down from the current levels and breaks below the 20-day EMA ($0.246), it will show that the bears are aggressively shorting on rallies to $0.26. he bears are attempting to defend the $0.26 resistance but they have not been able to sink the price below the 20-EMA. This suggests that the bulls are accumulating on dips. The upsloping moving averages and the RSI near 60 suggest that bulls have the upper hand in the short-term. A break below the 20-EMA will be the first sign of weakness and the advantage will turn in favor of the bears if they can sink the price below the $0.24 support. Conversely, if the bulls can push the price above $0.26, a new uptrend is likely. The pair could face resistance at $0.266 and then at $0.28 but the trend will remain bullish as long as the price remains above the neckline. ADA/USD The failure of the bears to sustain Cardano (ADA) below $0.90, between Oct. 7 to 9, attracted aggressive buying by the bulls who then pushed the price above the moving averages. The moving averages on the verge of a bullish crossover and the RSI near 62 suggest that the buyers have the upper hand. If they can propel the price above the neckline, it will complete a reversal setup that has a pattern target of $0.1331. This bullish view will be invalidated if the ADA/USD pair turns down from the current levels and breaks below the moving averages. Such a move will suggest that the breakout above $0.104044 was a bull trap. The rebound off the immediate support at $0.1040440 suggests that the sentiment has turned positive as the bulls are viewing dips as a buying opportunity. However, unless the bulls drive the price above the neckline, the bears will again try to sink the pair back below $0.1040440 and the 20-EMA. If they succeed, the pair could drop to the 50-simple moving average and below it to $0.90. Conversely, if the pair rebounds off the 20-EMA, it will indicate strength and increase the possibility of a break above the neckline. XMR/USD Monero (XMR) is in an uptrend with both moving averages sloping up and the RSI in the overbought zone. The bulls will now try to extend the up-move to $140 and above it to $150. In a strong uptrend, the corrections usually last for one to three days and the bulls view the dips to the 20-day EMA ($105.96) as a buying opportunity because it gives a low-risk entry point with a good risk to reward ratio. However, if the XMR/USD pair turns down from the current levels and drops back below $121.427, the bears will try to drag the price to the 20-day EMA. A break below this support will be the first sign of weakness. The ascending triangle pattern completed on a breakout and close (UTC time) above $113.211. This bullish setup has a pattern target of $132.739. The buyers are currently attempting to sustain the price above $121.427. If they succeed, it will suggest that $121.427 will now act as a strong support. Even if the price dips back below this level, the bulls will again try to buy the dip to the 20-EMA. If the pair rebounds off this support, it will indicate strength and increase the possibility of a resumption of the uptrend. ATOM/USD Cosmos (ATOM) broke out and closed (UTC time) above the neckline of the inverse head and shoulders pattern on Oct. 10. This breakout has seen further buying today and the bulls have pushed the price above the $5.877 resistance. The ATOM/USD pair could now start a rally that may reach $7.40 and then $8.877. The 20-day EMA ($5.17) has started to turn up and the RSI has risen into the positive territory, which suggests a possible change in trend. Contrary to this assumption, if the pair turns down from the current levels, the bears will try to sink the price back below the neckline and the 20-day EMA. If that happens, it will indicate that the current breakout was a fake one. The trend will turn in favor of the bears if the pair drops below the right shoulder at $4.549. The bulls have pushed the price above the overhead resistance at $5.877 that could start a new uptrend. The upsloping moving averages and the RSI is in the positive territory suggest advantage to the bulls. This positive view will be invalidated if the bulls fail to defend the breakout level during the next retest. If the price becomes pinned below the neckline this will be a sign of weakness.

Pound Swings on Brexit Headlines as Traders Brace for Volatility Ahead.

The pound swung between gains and losses against the dollar Thursday as traders mulled differing headlines that suggest little progress on the U.K. and EU breaking the deadlock in Brexit talks. GBP/USD fell 0.28% to $1.2891, though had been as high as 1.2979 and as low as $1.2820. The U.K. and EU continued talks in Brussels to iron out key issues holding up the potential post-Brexit deal, but differing reports of progress suggest both sides remain wide apart on reaching a consensus. Reuters reported, citing an EU official, that were no signs of a "landing zone" on key sticking issues, including fisheries and the level playing field in the latest trade negotiations with the U.K. That cooled optimism from an earlier Financial Times report, citing unnamed sources, that a landing zone on state aid has been identified but "fishing is the last sticking point." The U.K. has made it clear it is unlikely to cave in on demands to take control over access to its waters and fish when the Brexit transition period ends, rather than stick with the EU’s Common Fisheries Policy, which set fishing quotas among EU member states. "So now, we're going to be absolutely crystal clear with the EU …. if you're not going to talk turkey with us, that's fine. We can leave, we can say that's it, no negotiated outcome. We're ready, come what may," Cabinet Office Minister Michael Gove said. The latest round of trade talks kicked off against a souring backdrop after the EU followed up on its threat to take legal action against the U.K. after it failed to scrap its internal market bill that undermines the withdrawal agreement. Pressure on negotiators to break the stalemate is building ahead of the European summit in mid-October, when EU negotiator Michel Barnier is slated to provide the EU with an update on Brexit negotiations.

Stock futures rise in overnight trading following a 4-week losing streak

Stock futures climbed in overnight trading on Sunday following a four-week losing streak on Wall Street. Futures on the Dow Jones Industrial Average rose about 100 points. The S&P 500 futures gained 0.3% and the Nasdaq 100 futures climbed 0.3% as well. The S&P 500 and the 30-stock Dow were coming off their fourth straight negative week, shedding 0.6% and 1.8%, respectively. It marked the first time since August 2019 that the two benchmarks suffered a four-week losing streak. The tech-heavy Nasdaq eked out a 1% gain last week, posting its first positive week in four as the technology sector rebounded slightly from the recent deep rout. Signs of a worsening pandemic continue to keep investors on edge. New daily coronavirus cases topped 1,000 in New York state on Saturday, marking the first time the state’s new infections have broken the 1,000 threshold since early June. Major averages are on track to post steep losses for September, a historically weak month for stocks. The Dow and the S&P 500 have fallen 4.4% and 5.8%, respectively, while the Nasdaq has dropped 7.3%. The declines followed a massive comeback from the coronavirus sell-off that saw the S&P 500 climb more than 50% from its March bottom. “When markets get to the kinds of extremes we saw a month ago, it tends to take a very deep correction before the worst is behind us,” Matthew Maley, chief market strategist at Miller Tabak, said in a note on Sunday. “It also usually sees several ‘waves’ of a decline.” Investors continue to monitor the developments on further fiscal stimulus after negotiations between House Democrats and the Trump administration fell apart in early August. House Speaker Nancy Pelosi said Sunday a last-minute coronavirus aid deal remains on the table as House Democrats try to forge ahead on a smaller aid package costing about $2.4 trillion. The chamber could vote on the bill as soon as next week. Meanwhile on Saturday, President Donald Trump announced that he will nominate Judge Amy Coney Barrett to fill the vacancy left by the death of Justice Ruth Bader Ginsburg on the Supreme Court. The move sets up a confirmation fight just weeks before Election Day. Hearings to consider Trump’s nominee are set to begin Oct. 12, Senator Lindsey Graham said late Saturday.