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Praet’s ‘No Taboo’ means ‘more ECB QE’ and weaker euro
Yen gained in Tokyo, Japanese stocks traded south on uncertainties before the BoJ meeting. The US dollar could soon slip below 120 against the yen, yet euro-dollar is definitely comfortable above 1.10 mark for the moment as FOMC is given almost no chance of hiking the interest rates at this week’s meeting.

The euro above $1.10 may not last however as the ECB is ready to fight full-hearted to prevent any appreciation in the euro. ECB’s Praet said there is ‘no taboo’ on ECB’s policy path.

‘No Taboo’ is naturally interpreted as ‘ more QE from December’. Hence, it is just a matter of time for the EURUSD to resume its slide toward 1.08/1.05 band.

The euro demand as funding currency, which is responsible for its metamorphosis into a ‘safe-haven’ currency at times of carry unwind, is still a sizeable upside risks on the euro-complex. And the negative euro rates will certainly not be helpful to eliminate any of the motivation for the cheap euro funding. Even less when the Fed will start raising the US rates.

DXY tops at 97, US 10y yields are back below 2.05%.

The Fed could take a breather as US lawmakers found a common ground on budget to avoid a second government shutdown in three years.

We had no doubt that a deal on the US debt ceiling would be reached to avoid any default risk walking into the election year. However, the concretisation of an agreement between the White House and US lawmakers will certainly remove some political uncertainty for Fed as it starts its two day meeting.

The Fed is expected to maintain the status quo. And frankly, a Fed rate hike could even be inappropriate given that all leading central banks, except the BoE, are stepping back to unorthodox monetary policies. Status quo per se is a sufficient hawkish divergence for the Fed. Raising the US rates could cause an inappropriate USD appreciation and the Fed would then be the only one to blame.

21-5-2019

Nasdaq with US tech sector plummet on Huawei decision
Wall Street closed lower as the fallout from Huawei dragged down tech stocks. The Nasdaq plummeted 1.7% on Monday as the crackdown on China’s largest telecommunications and electronic equipment maker pressured the US technology sector. US chip makers tumbled a… Read more

20-5-2019

Oil jumps as OPEC signals intention to maintain cuts
Markets Mixed As Google Suspends Business with Huawei Asian markets put in a mixed performance overnight as investors paused, waiting for new developments in the US – China trade dispute. This comes after a week of escalating tensions between the two powers. … Read more

17-5-2019

Pound below $1.28 as Theresa May prepares to leave
Wall Street closed higher for a third straight session overnight as solid economic data and robust earnings from the likes of Cisco and Walmart boosted sentiment. Investors put US China trade dispute anxieties behind them and continued to jump back into equiti… Read more

16-5-2019

Trump's Visible Hand Drives Markets
The Dow and the broader US market extended the relief rally on Wednesday amid easing trade tensions. News that Trump would restart trade talks with China boosted optimism that the two powers could avoid a prolonged, economically damaging trade war. But it woul… Read more

15-5-2019

Stocks Rebound with Chinese Stimulus Hopes
Asian markets followed Wall Street higher overnight as trade war fears eased. Markets across Asia rebounded from 3 ½ month lows on a softening of stance from Trump and amid growing expectations of further stimulus from the Chinese government. Despite the advan… Read more

14-5-2019

Worst Day on Wall Street Since Jan 3
Wall Street closed deeply in the red on Monday. The Dow shed over 600 points and the S&P dumped 2.5% in the worst trading day since 3rd January. Investors rushed to take risk off the table as China raised tariffs on US imports, a retaliatory measure to the… Read more

13-5-2019

Futures Plummet As Investors Eye Trade Dispute Impasse
As we head into the new week, trade tensions will remain a key focal point for the markets and risk sentiment. In the UK specifically, Brexit and Theresa May’s ability to cling to power ahead of next week’s European elections will be an important driver of dom… Read more

10-5-2019

Yield Curve Inverts But "Beautiful Letter" Keeps Deal Hope Alive Despite Tariff Increase
Global equity markets were mixed as investors digested the latest headlines from the US – China trade talks. Asian markets pared earlier gains, European bourses are pointing to a stronger open, whilst US futures head south. The mixed response from the market r… Read more