Alpesh Patel
InvestingBetter.com
General market theme
Dollar’s weakness and inability to capitalize on the other majors’ lack of support has been the theme in the markets during the current month and that was made even more obvious yesterday after the release of the Fed press statement on the back of their meeting on monetary policy. The US policymakers appeared considerably less bullish and clearly concerned about the volatility in the global markets and the drop in oil prices turning the Dollar’s outlook even more bearish.
Price action highlights
The other major currencies benefited from this development and the Euro managed to rally to the 1.0900 area twice, before and after the release of the press statement. The fact that the Single currency couldn’t overcome the 1.0900 barrier though tells us another thing as well: with the ECB prepared to ease further if needed the Single European currency cannot benefit from Dollar’s weakness either. This should lead to further volatility and lack of follow-through between the 1.0780 and 1.0900 levels.
The Cable was on the defensive yesterday and failed to capitalize on Dollar’s lack of confidence and the reason behind it is pretty simple: investors believe that if the Fed is turning more bearish and could consider a less aggressive interest rate hiking schedule that could mean that the BoE could forget about hiking rates altogether in 2016. The UK currency remains bearish in its outlook and all rallies higher should be considered a selling opportunity at this time.
Focus of the day
Today our focus will be spread across the 3 main currencies: early in the morning the release of the UK GDP levels is expected to print in a bearish manner and that could take its toll on the under-pressure Pound and later around midday the German inflation levels will also play a role in dictating price action. A higher reading could push the Euro higher but it will take some serious momentum to overcome the 1.0900 barrier. Finally the US Durable Goods Orders report is also pending for release and with analysts expecting a lower reading this could be another reason for the Dollar to remain weak.
Past performance is not indicative of future results. Trading forex, CFDs and equites carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade any such leveraged products you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading on margin, and seek advice from an independent financial advisor if you have any doubts. The information provided by InvestingBetter.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. InvestingBetter.com are merely providing this information for your general information. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite. InvestingBetter.com and/or its owners will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained on InvestingBetter.com. InvestingBetter.com does not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.
Recommended Content
Editors’ Picks
EUR/USD hovers around 1.0700 after German IFO data
EUR/USD stays in a consolidation phase at around 1.0700 in the European session on Wednesday. Upbeat IFO sentiment data from Germany helps the Euro hold its ground as market focus shifts to US Durable Goods Orders data.
USD/JPY refreshes 34-year high, attacks 155.00 as intervention risks loom
USD/JPY is renewing a multi-decade high, closing in on 155.00. Traders turn cautious on heightened risks of Japan's FX intervention. Broad US Dollar rebound aids the upside in the major. US Durable Goods data are next on tap.
Gold price trades with mild negative bias, manages to hold above $2,300 ahead of US data
Gold price (XAU/USD) edges lower during the early European session on Wednesday, albeit manages to hold its neck above the $2,300 mark and over a two-week low touched the previous day.
Worldcoin looks set for comeback despite Nvidia’s 22% crash Premium
Worldcoin price is in a better position than last week's and shows signs of a potential comeback. This development occurs amid the sharp decline in the valuation of the popular GPU manufacturer Nvidia.
Three fundamentals for the week: US GDP, BoJ and the Fed's favorite inflation gauge stand out Premium
While it is hard to predict when geopolitical news erupts, the level of tension is lower – allowing for key data to have its say. This week's US figures are set to shape the Federal Reserve's decision next week – and the Bank of Japan may struggle to halt the Yen's deterioration.