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Positive risk sentiment amid Fed expectations

Frank Walbaum FX Strategies.Asia

Important news for the day

Thu, 04th, 14:30 CET US Unemployment claims.

US data

The core PCE data (ex-food & energy) hits markets on Friday and could decide whether markets keep their “soft-landing” mood or shift into caution. Equities have wobbled, yields stay elevated, and FX flows react to every small inflation hint — this makes Friday’s print a potential mover for further momentum or weakness of the Dollar. Currently the Greenback got a new push to the downside and is expected to weaken even further. The year could therefore end with a significantly weaker dollar, as US President Trump also wants to stimulate the US economy. Yet this time it is more driven by a lack of trust for the United States.

Market talk

The positive risk sentiment is expected to continue. The big miss at yesterday’s ADP employment change data from the US causes markets to believe that the FED might be well on track to cut interest rates next week. This, in turn, helps the positive risk sentiment as new liquidy will be added to the financial system. Stock markets continue to send positive signals as well. US indices pushed higher and after a positive week also the upward momentum during yesterday’s trading helped the market to print a bullish candlestick pattern. A breakout above a technical resistance level might hence occur today. The crypto market keeps pushing higher, too. Based on the weekly chart, Bitcoin seems to defend the technical support zone and other tokens continue to push to the upside as well.

Tendencies in the markets

Equities positive, USD weaker, crypto positive, oil sideways, Silver correcting, Gold correcting.

Author

Frank Walbaum

FX Strategies.Asia

Frank has been working in the TV business for several years. Acquiring his skills in Germany’s biggest broadcasting station, he then chose to work and live in Asia, which was in 2007.

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