Markets poised to range trade ahead of New Year

We expect activity across financial markets to drop significantly next week as investors remain on the sidelines ahead of the upcoming Christmas holiday break. With the economic calendar virtually void of Tier 1 economic reports, markets are poised to range trade ahead of the New Year.

With global growth fears weighing heavily on investor confidence, financial markets remain at threat of concluding 2018 on a risk-off note. US rate jitters, ongoing trade tensions and political risk in Europe among many other geopolitical risk factors are likely to expose stock markets to downside shocks.

In the currency markets, appetite for safe-haven Japanese Yen and Swiss Franc could remain robust on risk aversion. Emerging market currencies are also seen benefiting despite the risk-off sentiment thanks to a weakening Dollar.

Brexit related uncertainty will continue gripping the Pound, while the Euro is likely to extend gains on Italy’s budget truce with the European Union. Focusing on commodities, Oil markets are poised to conclude 2018 on a bearish note amid oversupply fears and concerns over weaker Oil demand.

Gold has clearly benefitted from the market chaos, with Dollar weakness, volatile equity markets and expectations of fewer rate hikes in 2019 fuelling upside gains. Gold is seen shining into 2019 if a yearly close above $1,260 is achieved.

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