Financial market research and analysis

Our analysts have their fingers on the pulse of the world's financial market news.

CFD trading is high risk and may not be suitable for everyone.
Equities rally on rising dovish Fed bets
The trading week started with a strong risk appetite, after the weak jobs report in the US boosted the expectations of a Federal Reserve (Fed) rate cut in July, the Japan’s GDP growth met analyst expectations and the Chinese exports surprisingly rose 1.1% in May despite the escalating trade war. The Chinese trade balance significantly improved from $13.84 to $41.65 billion in May on the back of an unexpected rise in exports and a sharp decline of 8.5% in imports.

Asian equities traded in the green, as the Hang Seng rallied past 2%. Safe haven currencies and gold (-0.92%) cheapened.

Weak NFP figures boosted Fed doves

The US economy added 75’000 non-farm jobs in May, far below the 175’000 expected by analysts and 263’000 printed a month earlier; the average hourly earnings stagnated at 0.2% month-on-month versus 0.3% expected. The soft data came after the Fed Governor Jerome Powell said that the Fed could cut rates, if necessary, to give support to the US economy. Today, the markets clearly believe that a rate cut is necessary; the probability of a July rate cut surged to 80% according to the activity on US sovereign bonds. The US 10-year yield is testing the 2% level for the first time since September 2017.

Hence, bad economic news has been good news for the markets. The S&P500 recorded its best week since November. The S&P500 (+1.05%), the Dow Jones (+1.02%) and Nasdaq’s Composite index (+1.66%) closed higher on Friday; the US equity futures extended gains in Asia.

The US dollar rebounded at the start of the week, after the dollar index tested the 200-day moving average support (96.54) on Friday. The greenback is stronger against its G10 peers on Monday and although the actual sentiment remains negatively biased, a further USD correction is not off the table given that the Fed dovishness will likely mark the beginning of a new low-rate festival for major central banks in the coming quarters.

As such, the European Central Bank (ECB) revised its forward guidance at its monetary meeting last week, saying that it would not raise the interest rates before mid-2020, rather than spring 2020 as discussed in the previous meetings. The EURUSD cleared the down-trending channel top and hit the 200-day moving average (1.1320) on the back of a softer US dollar. Trend and momentum indicators remain comfortably positive for the euro, yet the RSI (64%) hints that the market is approaching the overbought territory and the short positions could soon come back to challenge. The EURUSD could see resistance near 1.1395, the 61.8% retracement on January – May decline.

European markets will be closed on Monday due to bank holiday.

FTSE set for a strong positive open

Across the Channel, the pound remains offered below 1.2751 (minor 23.6% retracement on March – May depreciation) against the US dollar on the back of a hectic political environment after Theresa May’s forced step down. The FTSE is expected to open 30 points higher at 7361p on the back of a softer pound.

The UK has a busy economic calendar on Monday and the market expectations are on the soft side. The UK’s GDP may have contracted by 0.1% month-on-month in April, while the industrial and manufacturing production may have fallen 1.0% and 1.4% on month respectively. The trade deficit, on the other hand, may have improved along with the index of services in April. The data will likely set the mood for the pound markets this Monday. Any disappointment in data could further weigh on Cable, while a positive surprise may not be enough to boost the sentiment among the GBP-bulls and to reverse the negative trend. Cable will remain in the bearish consolidation zone below 1.2872, the major 38.2% retracement.

USDJPY tests the 108-support

In Japan, the Nikkei (+1.09%) and Topix (+1.03%) gained as the first quarter GDP growth improved from 2.1% to 2.2% (annualized) as analysts expected. The Japanese yen was one of the biggest losers against the greenback, as safe haven currencies were exchanged for better-yielding assets.

Data-wise, the preliminary trade data hinted at a 98.2-billion-yen deficit in April, versus 5-billion surplus penciled in by analysts. This being said, the data showed that the deterioration in the current account may be softer, from 2847.9 billion yen to 1707.4 billion versus 1514.5 billion expected, despite the disappointing trade figures. The USDJPY traded near the 108.50 mark in Tokyo. Resistance is eyed at 109.55 (major 38.2% retracement on April – June decline).


Global equities rally, Eurozone yields converge after ECB delivers disputed stimulus
Asian equities gained after the European and US markets closed in the green, as the European Central Bank (ECB) delivered more stimulus to boost inflation and Trump administration hinted at an interim trade deal with China to ease tensions before the next face… Read more


Euro tests $1.10 but ECB doves could be hard to satisfy
The European Central Bank (ECB) meeting is what matters the most to worldwide traders today. The ECB is expected to take monetary action at today’s meeting to give a boost to the depressed Euro zone economy as a result of the rising global trade tensions, slow… Read more


Downside correction in sovereign bonds continues ahead of ECB, Fed meetings
Asian equities mostly gained on Wednesday, but stocks in mainland China remained on the back foot despite the Chinese government’s dismissal of quotas and approvals for foreign investors. The latter move was interpreted as a sign of desperation and an increase… Read more


Sovereign bond sell-off hit sentiment, gold dives below $1500
A global sovereign bond sell-off sent the US 10-year yield to two-week highs.The 10-year German bund yield eased to -0.585% from above -0.70% at the beginning of this month. The euro held ground above 1.10 against the greenback, but the topside remained limite… Read more


Equities gain on Chinese stimulus, GBP worried ahead of production data
Asian equities kicked off the week on a positive note as lower-than-expected jobs report in the US consolidated the dovish Federal Reserve (Fed) expectations and the People’s Bank of China (PBoC) announced more monetary stimulus amid country’s exports fell 1% … Read more


Hexo is still a good play for cannabis investors
Hexo Corp is a leading player in cannabis industry with more than $1 billion market cap after the acquisition of Newstrike Investors like Hexo for its renowned international partnerships Revenues grow steadily, but investors are concerned with company burn… Read more


NFP in focus, US jobs at risk due to trade war
The US dollar gained against most G10 currencies, except the kiwi, amid the strong data tapered the dovish Federal Reserve (Fed) expectations. The ADP employment data revealed on Thursday that the US economy added 195’000 private jobs in August, versus 148’000… Read more


World equities rally, GBP extends gains
Equities rally worldwide as US and China said to meet early October in Washington, Hong Kong announced the withdrawal of the extradition bill and British MPs rejected a snap election by next month.The US markets closed Wednesday’s session in the green. S&P… Read more