Dollar leads the currency markets; sterling and euro lose ground
|FTSE, dollar higher in early trade
The markets are now rife with expectations that the Fed will imminently cut interest rates to the point that any comment from the Fed’s central bankers is being filtered that way, irrespective if it was really meant in this context. This is what happened with a sideways comment by a Fed official which then boosted Asian markets and helped European gauges open higher.
Talking about a low interest rate environment New York Fed President John Williams has said that it would be the wisest to cut rates at the first sign of economic trouble but the bank’s spokesman later explained that this was said in terms of a theoretical scenario and was not an indication of the Fed’s future policy plans.
Nevertheless, European investors took the comment and ran with it, being in need of positive news after the recent set of European corporate earnings which were mostly underwhelming. The FTSE gained 0.63%, with miners, oil firms and travel expert TUI leading the charge higher and the DAX traded 0.9% up.
Further help for European shares came from the unexpectedly strong earnings from Microsoft which helped improve investors’ risk appetite.
Dollar leads the currency markets; sterling and euro lose ground
The dollar yo-yoed in line with the Fed's Williams' comment, and the subsequent clarification, ending up higher across the board before European markets opened.
Having been sliding consistently over the last few weeks the pound now looks as if it has formed a base against the euro and the dollar. The final tally of Conservative party votes on Johnson versus Hunt is due out Tuesday which will provide more clarity for the pound’s next direction.
Brent gains 1.2% as Gulf tensions rise
The tensions in the Persian Gulf are picking up again after the US reportedly shot down an Iranian drone, causing oil prices to spike 1.18% this morning. Brent crude is actually only trading at $62.66 which is not high given where it was in recent weeks but as the oil prices lost over 7% in the space of last week, this morning’s recovery looks more remarkable than it probably is. Still, with the situation in the Straits of Hormuz turning into a powder keg again, Brent crude prices will remain propped up.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.