Asian markets followed Wall Street higher overnight and European futures are also pointing to a broadly firmer start on the open, amid growing optimism of stimulus in major economies which are showing signs of being negatively impacted by the ongoing US - Sino trade dispute.  

Risk sentiment continues to improve after taking a significant hit in the previous week. The prospect of policy makers being willing to offer additional support to their economies is music to the ears of traders. This is the sugar high that is cushioning the market from continued uncertainty.

At the end of last week ECB policy maker Olli Rehn said impactful polices were needed to support the eurozone economy, Germany has also pledged a significant increase in fiscal spending as protection from an economic crisis. China unveiled a move to reduce corporate borrowing costs to sure up its slowing economy and just last night the RBA said it stood ready to cut rates again if deemed necessary. There are growing expectations for loser monetary- and in some places fiscal- policy across the globe.


Eyes to Jackson Hole

Investors are now looking ahead to Friday’s speech by Federal Reserve Chair Jerome Powel for further clues as to the direction of US policy. Whilst the market is fully pricing in a rate cut from the Fed at it next meeting in September, the Fed sent out a different message after the July cut, which was “a mid cycle adjustment”. Discrepancies between market expectations and the Fed’s intended path need to be realigned. Friday provides a perfect opportunity to do this.


Flows out of safe havens, recession fears let up

Stimulus optimism is fuelling risk appetite this week after risk sentiment took a hammering of late. With expectation of further support for struggling economies, investors are once again prepared to pick up riskier assets like equities. We are also seeing flows out of havens such as the Japanese yen, gold, which has sunk back towards $1480 and bonds. Bond yields have rebounded following last weeks' inversion, easing recession fears whilst supporting risk sentiment.


Oil steady on easing middle east tensions

Oil was holding steady in early trade on Tuesday, a sign that geopolitical tensions in the middle east are easing. Oil rallied 1.8% in the previous session in response to a drone attack by Yemeni separatists on Saudi oil fields over the weekend. However, as oil production was unaffected the market’s reaction was short lived. The release of the Iranian oil tanker by Gibraltar also served to ease tensions. Whilst the prospect of stimulus is offering support to the price of oil, a recent report by OPEC pointing to demand dropping by 40,000 bpd for 2019 and the expectation of an oil surplus in 2020 could keep any gains capped.

This information has been prepared by London Capital Group Ltd (LCG). The material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. LCG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. Spread betting and CFD trading carry a high level of risk to your capital and can result in losses that exceed your initial deposit. They may not be suitable for everyone, so please ensure that you fully understand the risks involved.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD rebounds after dismal US PMIs

EUR/USD is trading closer to 1.0850, rising in response to weak US PMIs, with the services one pointing to contraction. Earlier, German Manufacturing PMI beat estimates. 


GBP/USD advances to 1.2950 after US data

GBP/USD is trading around 1.2950, taking advantage of US weakness stemming from a downfall in Markit's Services PMI in the US. In Britain, the Manufacturing PMI exceeded estimates. 


Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Consolidation process underway

The Crypto board continues to be immersed in an emotional leg-breaking, consistently punishing the emotional state of the traders with its continuous changes of direction.

Read more

XAU/USD unstoppable, breaks to fresh 2020 highs, approaching $1650/oz

XAU/USD is trading in an uptrend above its main daily simple moving averages (SMAs) while breaking above a bull channel. Gold is printing fresh 2020 highs hitting $1646.64 per ounce on an intraday basis.  

Gold News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info

Forex Majors