The dollar weakened against other major currencies after the Federal Reserve signaled a possible rate cut of as much as half a percentage point by the end of the year on Wednesday. It is important to note, that even though the Fed itself only projected rate cuts in 2020, the Fed Fund Futures now price in a 100% probability of a rate cut at the next monetary meeting. The dovish Fed kept the greenback subdued this morning giving stock markets an “artificial” boost as risk appetite increased. However, strong safe haven demand is an ominous sign that investors are also bracing for a global recession.
EU Markets Open Higher
European stocks opened sharply higher this morning as investors looked to an interest rate decision from the Bank of England later in the day. Forecasts point to a no change when it comes to BoE rates, however a hawkish stance by BoE Governor Carney could result to a strong bullish trend. The German Dax is also trading higher and will likely extend its rally today before the reality of the trade war hits home again.
Forex Preview: USD Plummets
The USD was sold off aggressively following the Fed statement and even the yields for the 10-year US Bond fell below the 2%. On Thursday morning, the greenback remained subdued giving room to safe haven currencies to rise. The EUR edged 0.6% higher is currently at $1.1290 as of 7:50 GMT. GBP also profited from the USD weakness and may be an interesting pick for the day with the BoE meeting coming up and Governor Carney known to have wanted to raise rates for a while already. GBP/USD was last seen trading 0.65% higher at $1.2721.
Oil Prices Rally
Oil prices also rose over 1.5 percent on Thursday morning as official data showed U.S. crude stocks fell more than expected and as OPEC and other producers finally agreed a date for a meeting to discuss output cuts.
A weaker dollar brought on by yesterday’s dovish Fed also boosted oil demand causing crude to touch the $55.55 level. Meanwhile, reports of a US drone shot down in Iran has increased tensions and even the probability of a US/Iran war.
Gold Hits Five-Year High, Bitcoin Steadies
Gold literally exploded to the upside, which should be a big warning sign to all these stock market buyers in my humble opinion. Gold prices jumped to their highest level in more than five years this morning adding 1.7% as of 7:50 GMT. Elsewhere, BTC remained well in the 9k range and could be looking at a re-attempt to touch a yearly high in due course.
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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.