Dollar holds back its gains and Euro keeps the upward trend
There we go again reaching towards the sky with both our hands and leaving the world beneath up behind. World stocks hit a new record high on Monday, as U.S. futures followed by Asian stock on better-than-expected company earnings and strong U.S. jobs data deflected attention from the rising geopolitical tension over North-Korea’s nuclear program.
The Dow Jones recorded its eighth consecutive record high on Friday, with MSCI’s broadest index of Asia-Pacific shares outside Japan adding 0.50% on Monday. Out of the 1000 companies that comprise the MSCI world index 67% have beaten expectations according to Reuters’ data. MSCI Europe showed that 61% of the constituents have either met or beaten expectations.
European stocks slumped near session lows after rising 1% on Friday, the most since July 12, thanks to the drop in the Euro. The STOXX Europe 600 Price Index declined 0.3%, led by a drop in IT, travel and real-estate shares, and offsetting advances for ArcelorMittal, BHP Billiton Plc, and Anglo American Plc after iron ore and steel prices climbed. Travel and leisure shares fall 0.6%, tech retreats 0.5% Basic resources surged 1.1%. Germany’s DAX Index sank 0.2%.
In currencies, the EUR saw some early buying pressure this morning, coinciding with the Bund liquidation, as EUR pairs popped through overnight levels. No fundamental factors sparked the movement, with EUR/CHF seeing the main bullish pressure, yet resistance was found at 1.15 and we now trade at largely pre-announced levels. GBP was unmoved following contradicting reports in UK press over reports on Brexit costs and remains comfortably above 1.30. The Telegraph noted that the UK is prepared to pay EUR 40b1n for Brexit divorce bill; however, source reports in the Guardian dismissed this as inaccurate speculation.
In commodities, copper prices traded choppy with initial upside seen as Dalian Iron Ore and Rebar futures surged at the open of China metals trade, which was due to reduced stockpiles and firm demand. However, copper then failed to hold onto the gains and retreated amid a cautious risk tone in China. WTI futures failed to test the $50.00/bbl level and ran into some resistance around $49.60 on Friday, following the latest Baker Hughes Rig Count. Oil does continue to trade in this August; 48.50 — 50.00 range, as we are set to see an OPEC compliance meeting this week. Global demand has seemingly picked up of late, however, with China now overtaking the United States as the world’s largest importer of crude importing an average 8.55m1n BPD in the first half of 2017, above the 8.12mln BPD. WTI has been softer yesterday morning, down 1.20% as we have broken through 49.00/bbl. Libya’s Sharara oil field (largest in the country), is said to face stoppage due to protests, according to press reports.
The euro’s continued resilience is a testament to growing investor confidence in the growth story of the European Union amid disappointment over U.S. President Donald Trump’s failure get tax reform and infrastructure spending plans off the ground.
EURUSD – After the release of the NFP on Friday, the common currency dropped lower towards the 1.1730s where it found enough support to keep the currency afloat for the time being. The pair then rose higher towards the 50% Fibonacci level at 1.1810 where it currently tries to break above.
GBPUSD – The weakness is very much apparent on the pair after it didn’t even budge from the lows it posted after NFP Friday. The 1.3020 seems to be supportive for the time being as the pair tries to cover some of the losses but seems to be stuck below the 1.3060.
USDJPY – Back above the 110.50 level, the USDJPY is enjoying these lofty levels forming a bullish flag after NFP Friday. It has been stuck in a range between 110.90 and 110.65; any break from either of these boundaries will control the sentiment of the pair.
USDCAD – The Canadian dollar has posted its sixth straight day of losses against the USD. It approaches the 25-EMA on the Daily Chart at 1.2700 which is supposed to be resistive for the pair since it a big round number, that traders and investors can base their decisions on.
AUDUSD – Volatility on the pair is quite evident as it goes all over the place during the day; however, it currently posts its fifth day of losses against the dollar sending towards the 0.7890 which has been supportive in the past and arguably the most important support at the moment. A break below said level will signal more downside for the pair.
Dow Jones – The Dow Jones futures have has recorded 9, yes 9, straight days of gains as it continues to trade above the 22,000. The mentioned level is now a supporter of sorts for the index as any movement below that will be considered a buying opportunity for investors as they would be seeking value.
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***Information contained in this news letter are gathered from third parties and should not be regarded in any way as trade advice or recommendations by CM Trading. CM Trading does not recommend or advise traders or investors in their decision making, but merely provides information from the market for its clients as additional information being made available as per the events occurring in the financial markets.
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