FTSE drifts down, while sterling rallies

Chris Beauchamp IG

It is another cautious session across indices, with the FTSE 100 down 35 points in mid-morning trading.

Equities drop back once again.
Euro and sterling in bullish form versus the dollar.
Associated British Foods looks to a second half boost from Primark.

Stocks continue to drift lower, hit by a lack of major news that leaves investors waiting for further high profile earnings that might reverse the trend and provide a boost to equity markets. Weakness in European markets has been exacerbated by the strength in the euro and sterling, which have enjoyed good gains against the dollar over the past few sessions. The UK employment picture appears to be brightening, providing a further reason to stick with UK assets across the board; while the recovery has a long way to go the path appears to be the right one, and should see additional inflows for the UK as the year progresses. The lack of any further bad news on Brexit has provided another foundation for sterling gains and as the rebound in EUR/GBP continues to fade it looks like investors are still opting for the UK over Europe.

Food sales carried Associated British Foods through a tough year during which its Primark stores suffered heavily thanks to lockdowns and the lack of an online presence, but the hope now is that the reopening of the UK high street will help spread the load more evenly. The return to dividend payments certainly underlines the renewed confidence in the year ahead, although unsurprisingly the shares are a little softer this morning after a 9% rise for the year so far.

Ahead of the open, we expect the Dow to start at 34,047, down 30 points from Monday’s close.

Author

Chris Beauchamp

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.