Joshua Mahony MSTA
Scope Markets
A strong day for European currencies has proven a drag on stock indices, with a Google fine hindering US markets
- Europe pulls back on FX strength
- Google hit with record fine
- Bank of England seeks to mitigate credit risk
European markets have been trading in the red today, as gains for both the euro and sterling took the shine off proceedings for exporters. News that the SNP have formally abandoned their plan for a second referendum before the completion of Brexit has helped the pound’s ascent, with GBPUSD hitting the highest level in a week. The IMF cut their outlook for the US economy today, which when considering the negative path of core PCE inflation, makes a September rate hike increasingly unlikely.
US markets are feeling the effects of the record breaking EU fine given to Google as a consequence of their preference of their own products within the shopping comparison service. This is just the latest in a long line of tit-for-tat fines between the US and Europe, with Deutsche Bank, VW and Apple all feeling the sharp end of international law.
The Bank of England today instructed banks to set aside an extra £11.4 billion in response to the growth in consumer credit which has far outstripped household incomes. One only needs to take a look back to 2007/08 to see how detrimental a highly indebted population can be. With the risk of a Brexit slowdown looming, the potential of a sharp rise in credit defaults thanks to rising to unemployment means there is a clear need for banks to raise their capital buffer. Interestingly enough, it is the BoE who sparked this rush to take on credit, with lower interest rates lowering the cost of borrowing, lowering the benefits of saving, and stimulating the economy while raising credit risk.
This material is a marketing communication and shall not in any case be construed as an investment advice, investment recommendation or presentation of an investment strategy. The marketing communication is prepared without taking into consideration the individual investors personal circumstances, investment experience or current financial situation. Any information contained therein in regards to past performance or future forecasts does not constitute a reliable indicator of future performance, as circumstances may change over time. Scope Markets shall not accept any responsibility for any losses of investors due to the use and the content of the abovementioned information. Please note that forex trading and trading in other leveraged products involves a significant level of risk and is not suitable for all investors.
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.