Shares in Europe are on course for a positive start with LCG pricing indicating a higher open on Wall Street. The dollar is up slightly after falling yesterday. Gold remains in a tight range while oil is rising for a second day.


Wall Street drops

Shares slumped on Monday in the biggest daily fall since Wall Street struck record highs last month. The US placing steel and aluminium tariffs on Argentina and Brazil caught markets off guard. Traders have had US-China trade tunnel vision. As Americans would say, this came out of left field. The new tariffs in South America are a reminder that with Trump as US President, a phase one trade deal with China doesn’t mean global trade just resets to the old status quo. Traders are buying the dip on Tuesday but there is a risk that markets have been placing too much emphasis on the trade deal, at the expense of ignoring other risks. The growing reticence from central banks, like the RBA overnight, to expand monetary stimulus is being ignored while the trade war takes centre stage.


Euro rebounds from 1.10 level again

A broad decline in the dollar after soft manufacturing data has pushed the euro to 2-week highs. A fourth monthly decline in US manufacturing was particularly disappointing in the wake of more upbeat data in China and parts of Europe. The rally in the euro yesterday was notable from a price action standpoint. It is the third time the 1.10 price handle has held off declines in EURUSD since breaking above it in early October. It’s a further indication that the euro is bottoming out after hitting 2-year lows in September this year.

New ECB President Christine Lagarde might be some of the reason the euro strengthened more than other currencies against the dollar. Traders are reading the tea leaves scattered by Lagarde in her first speech to the European parliament. Lagarde said she would be resolute on the ECB inflation mandate, seemingly indicating no plans to reduce the target rate from just under 2% to 1%. That’s dovish because the ECB isn’t meeting the target, and arguably needs more stimulus to reach it. On the other hand, the acknowledgement of the side-effects from the ECB’s ultra-accommodative policy is a notable shift from her predecessor Mario Draghi – who always minimised the negative effect on banks specifically. That is hawkish and another sign of the internal debate at the ECB about whether policy easing has hit a lower bound.


US opening calls

SP 500 to open 6 points higher at 3119

Dow Jones to open 44 points higher at 27,827

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

GBP/USD off 7-month highs, still firmer as Tories hold the lead

GBP/USD retraces from the new seven-month highs of 1.3180 but remains strongly bid, as weekend polls have reaffirmed a solid lead for PM Johnson's Conservatives. Cable dropped on Friday amid upbeat US data.


EUR/USD steadying above 1.1050 amid upbeat German export data

EUR/USD is trading above 1.1050, attempting a recovery after Germany reported an increase in exports in October. EUR/UDS dropped sharply on Friday amid upbeat US Non-Farm Payrolls and weak German industrial output. 


Forex Today: US-Sino trade tensions prevail, Boris closer to victory, EUR/USD licking its wounds

Trade talks: President Donald Trump has called on the World Bank to stop lending to China, a move that may aggravate tensions, with only six days to go until Washington is set to slap new tariffs on Beijing. Negotiations continue.

Read more

Gold: Sidelined after biggest daily decline in four weeks

Gold is lacking a clear directional bias in Asia, having registered its biggest single-day decline in four weeks on Friday. China's data may embolden President Trump to take more aggressive measures. 

Gold News

USD/JPY in search of a firm direction, stuck in a range above mid-108.00s

USD/JPY was seen oscillating in a narrow band and consolidated last week’s losses. US-China trade uncertainties continued underpinning the JPY’s safe-haven status. Investors now seemed reluctant ahead of the latest FOMC monetary policy update.


Forex Majors