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The net speculative long positions in the US dollar climbed to the highest levels since February, on rising expectations that the Federal Reserve (Fed) would proceed with an interest rate hike by the end of 2016. Although the FOMC Chair Janet Yellen sounded hesitant as she warned that ‘reversing a long-term damage may require more accommodative policy than otherwise’, the markets refused to readjust their expectations for a December rate hike, which is priced in at 66% on Monday morning.
The US dollar trades mixed against the G10 currencies, while emerging market currencies continue losing ground. The Turkish lira is among the worst performers against the US dollar; the USDTRY hit 3.1057 in Istanbul as the Central Bank of Turkey is expected to trim the upper corridor by another 25 basis points to 8% at this week’s monetary policy meeting.
The EURUSD rebounded from 1.0964 in Asia. The sentiment in the euro remains negative as the single currency opened softer against the pound and the yen in Frankfurt this morning. The European Central Bank (ECB) will meet on Thursday and is expected to maintain the status quo. Yet the markets broadly anticipate to hear more details from Mr Draghi regarding the future of the Eurozone’s monetary policy. The ECB should give more clarity on whether or not it will expand its 80 billion euro worth of asset purchases on monthly basis beyond March 2017, and if the answer is positive, how would it do given that the Eurozone's sovereign markets are facing quite restrictive eligibility issues.
In the UK, the pound struggles to take-off for a sustainable recovery. Offers against the US dollar are eyed at 1.2295, the major 38.2% retracement on Sep 29th to Oct 7th flash crash, if surpassed, could bring along a further recovery towards 1.2380 (200-hour moving average) and 1.2440 (Fibonacci 50% level). On the downside, stops are eyed below 1.2080 and 1.2000.
The FTSE started the week on a negative note and slipped below the 7000p level shortly after the opening bell. All sectors are in the red; energy stocks lost 1.11% in London, while Pearson erased 78 points off the FTSE 100 after the stock price tanked by 9.37% amid the significant 7% fall in sales during the first nine months of the year. Revenue in North America declined by 9%. Despite difficulties post the FT’s sell-off, the market remains 43% buyer in Pearson, aiming a 12-month target price of 885p (vs current price at 755p); 30% of investors remain hold, while only 26% are positioned on the sell-side.
European markets look set to turn lower at the start of trading on Monday. The new US and Chinese tariffs take effect today so traders in Asia and Europe look cautious. Both continents are more exposed to global trade than the US. For markets, the new tariffs …Read more
Whilst risk sentiment has been healthy across the week, this swelling optimism boosted US stock markets to an all-time high overnight. A rally in tech stocks, which have done a lot of lifting for the indices over the year, in addition to fading concerns over U…Read more
Despite a shaky end to trading on Wall Street overnight, which saw the Dow gain 0.6%, the S&P just 0.1% and the Nasdaq slip by the same, Asian markets moved broadly higher on improved sentiment. European bourses are taking the lead from the US over Asia, w…Read more
Asian markets took the lead from Wall Street overnight, rallying as the latest tit for tat measures in the escalating trade spat have not been quite as severe as the markets had been expecting. Tech stocks were also heavily in demand, bouncing back after steep…Read more
Traders are faced with a sea of red in risk-off trading as markets are set to open on Tuesday. Despite the fact the market has been expecting an escalation in trade tensions between the world’s two largest economies with further tariffs from Trump; the reality…Read more
Escalating trade tensions will once again be a central theme to driving sentiment and trading this week, with President Trump widely expected to levy tariffs on a further $200 billion worth of Chinese imports, potentially as soon as today. The elevated trade c…Read more
European bourses are set to take the lead from a positive session on Wall Street and Asia overnight. A drive higher from tech stocks on Wall Street helped lift Asian equities after their recent battering, pulling them off 2-year lows.
Asian markets were endin…Read more
Today will be a busy day for traders with 2 central bank rate decisions and US inflation data all due for release within a few hours of each other. The BoE monetary policy announcement will kick things off, followed shortly after by the ECB rate announcement a…Read more