Global bourses wobbled this morning after minutes from the Federal Reserve's last policy meeting disproved previous expectations that the central bank would embark on a series of deep interest rate cuts. With a rather light calendar ahead, investors will now be focusing on the Jackson Hole Central Bankers meetings on Friday for further clues on future monetary policy. The Jackson Hole meeting will also possibly guide markets as far as longer-term positions are concerned.
We’ve seen a slight bullish stock market tone from the US yesterday which has not been followed up in Asia and markets remain on a sideways trend. However, with Gold and other safe-havens on the rise, this may be a sign that we will see a broader decline in global bouses very soon.
Forex Preview: EUR/USD Recovers on Upbeat German PMIs
The EUR/USD recovered this morning after a set of unexpected German PMI data eased concerns over the health of the German economy. Overall we may be better off trading shorter time frames as the volatility has been very limited this week. After initial pushes in the FX market mostly retracements had followed while the ECB Account of its last Monetary Policy Meeting at 11:00 GMT, may also provide some clues on the EUR/USD price action.
Brexit Talks at a Standstill
UK Prime Minister Boris Johnson will set off for the Group of 7 meetings this weekend in France, where he will be faced with a great deal of pressure by the rest of the E.U. ahead of a potentially chaotic no-deal Brexit on Oct. 31. “Coming empty-handed at the EU meetings will not change or reactivate previous debates,” Merkel told Johnson adding that it's not the problem for the EU if the UK chooses to leave the Union but theirs.
Meanwhile, the UK will sign a "continuity" trade agreement with South Korea on Thursday, allowing businesses to keep trading freely after Brexit. If Johnson plays his cards right this weekend, GBP pairs could gain momentum. We would expect some healthy volatility if any major developments arise after the G7 while long-term strength in the Pound could follow. We may also see USD strength should Brexit talks make headway and the US decides to actually slash their interest rate further; in which case the EUR will be the currency that shines through and we may see a lot of buying interest return to the common currency.
Oil Prices Fail to Break Resistance, Gold Steady
Elsewhere, oil prices failed to turn bullish at resistance and turn bearish despite a drawdown U.S. crude inventories. Gold prices meanwhile remained little changed, holding above the key $1,500 level, as investors now look to the Jackson Hole meeting for clues on future U.S. interest rate cuts. If Powell remains hawkish at Jackson Hole this Friday we would expect to see some healthy gains for XAU/USD.
Risk Warning: CFDs are complex instruments and come with a high risk of losing your invested capital due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
The content of this material and/or any information provided by BDSwiss Group should not be in any way construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument and it is not intended to provide a sufficient basis on which to make investment decisions, in any manner whatsoever. Any information, views or opinions presented in this material have been obtained or derived from sources believed by the BDSwiss Research Department to be reliable, but BDSwiss makes no representation as to their accuracy or completeness. BDSwiss Group accepts no liability for losses arising from the use of this data and information. The data and information contained herein are for background purposes only and do not purport to be full or complete.
Recommended Content
Editors’ Picks
US economy grows at an annual rate of 1.6% in Q1 – LIVE
The US' real GDP expanded at an annual rate of 1.6% in the first quarter, the US Bureau of Economic Analysis' first estimate showed on Thursday. This reading came in worse than the market expectation for a growth of 2.5%.
EUR/USD retreats below 1.0700 after US GDP data
EUR/USD came under modest bearish pressure and retreated below 1.0700. Although the US data showed that the economy grew at a softer pace than expected in Q1, strong inflation-related details provided a boost to the USD.
GBP/USD declines below 1.2500 as USD rebounds
GBP/USD declined below 1.2500 and erased the majority of its daily gains with the immediate reaction to the US GDP report. The US economy expanded at a softer pace than expected in Q1 but the price deflator jumped to 3.4% from 1.8%.
Gold holds near $2,330 despite rising US yields
Gold stays in positive territory near $2,330 in the second half of the day on Thursday. The benchmark 10-year US Treasury bond yield is up more than 1% on the day above 4.7% after US GDP report, making it difficult for XAU/USD to extend its daily rally.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.