European markets look set to start the week on the front foot, taking the lead from a stronger session in Asia and a sixth straight positive close for Wall Street, on Friday.

Wall Street managed to eke out another higher close on Friday, although the rally showed signs of running out of steam, as US equity indices ended the day well below session highs. The Dow closed just 19 points higher and the S&P just 0.04% higher as a combination of profit taking prior to the public holiday weekend and political jitters concerning Russian interference in the 2016 US Presidential elections.

If traders were in any doubt over profit taking prior to the holiday weekend after weekly jumps of 4.5% and 4.3% respectively for the Dow Jones and the S&P, the indictment of 13 Russians over interference in US Presidential election, was sufficient motivation for traders to cash in. The US stock markets are closed for trading today for President’s day. However, these political jitters could still be played out in the US dollar, which will trade through.

Dollar sub 89.00
The dollar is seen selling off breaking through 89.00 in early trade. With little on the economic calendar today, fears stemming from the Russian Indictments and nerves ahead of the FOMC minutes release on Wednesday, from a Fed which is unlikely to sound profoundly hawkish, the dollar could be vulnerable to deeper losses.

Weaker dollar & political nerves send gold higher
Gold traded close to its 18-month high overnight as the weaker dollar worked to the yellow metal’s advantage. Flows into safe havens, such as gold, have increased following the charges on the 13 Russians for their meddling in the US Presidential elections. Whilst there is still no evidence of collusion between Trump and the Russians, there are certainly jitters in the market, as investors keep in mind the adage “there is no smoke without fire”. Gold is trading at $1353, after having traded $1360 early on Friday. A continued sell off in the dollar and more headlines over Russia could see gold bulls target $1366 in the near term, before attacking resistance at 1380.

Fundamentals supporting WTI bulls
Oil is also seen capitalising on the weaker dollar. Whilst WTI has pulled back from three-year highs, fundamentals are supporting the bulls. WTI bears had been focusing on the rising US production potentially overshadowing any good work by OPEC limiting production. However, with, the latest Baker Hughes Rig count adding just 7 active rigs, compared to 26 the previous week and OECD and China Import Data showing demand forecasts clearly increasing, WTI could look to charge higher towards resistance seen at $63.50. On the downside a move below $58.07 could see open the door to an extended selloff.

Chinese retaliation concerns could weigh on miners
Strong gold and oil prices mean we could see precious metal miners and oil majors leading the FTSE higher. Meanwhile concerns over retaliation from China over Trumps potential tariffs on steel and aluminium could keep the miners out of favour. Given the heavy weighting of the miners this could mean that the FTSE trails behind its European counterparts. Banks will also be under the spotlight this week as they report. The market is expecting a solid set of figures all round so we could see some buying interest before the updates kick off with HSBC on Tuesday.

Opening calls
FTSE to open 13 points higher at 7307
DAX to open 93 points higher at 12,544
CAC to open 24 points higher at 5305

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.

Recommended Content


Recommended Content

Editors’ Picks

USD/JPY drops toward 142.00 ahead of BoJ policy decision

USD/JPY drops toward 142.00 ahead of BoJ policy decision

USD/JPY has turned south, approaching 142.00 in the Asian session on Friday. Markets turn risk-averse and flock to the safety in the Japanese Yen while the Fed-BoJ policy divergence and hot Japan's CPI data also support the Yen ahead of the BoJ policy verdict. 

USD/JPY News
AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD attacks 0.6800 in Friday's Asian trading, extending its gradual retreat after the PBOC unexpectedly left mortgage lending rates unchanged in September. A cautious market mood also adds to the weight on the Aussie. Fedspeak eyed. 

AUD/USD News
Gold price treads water below record peak, awaits Fedspeak

Gold price treads water below record peak, awaits Fedspeak

Gold price hovers below the all-time peak touched earlier this week amid a bearish US Dollar and rising bets for more upcoming rate cuts by the Fed. Concerns over an economic downturn in China keep the safe-haven Gold price afloat. Fedspeak remains on tap. 

Gold News
Bank of Japan set to keep rates on hold after July’s hike shocked markets

Bank of Japan set to keep rates on hold after July’s hike shocked markets

The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session. 

Read more
XRP eyes gains as Ripple gears up for stablecoin launch, Grayscale XRP Trust notes rising NAV

XRP eyes gains as Ripple gears up for stablecoin launch, Grayscale XRP Trust notes rising NAV

Ripple (XRP) gained 2.3% since the start of the week. The altcoin’s gains are likely powered by key market movers that include Ripple USD (RUSD) stablecoin, Grayscale XRP Trust performance and the demand for the altcoin among institutional investors.

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures