Speeches of the presidents of American and European banks Janet Yellen and Mario Draghi today at the Jackson Hole Symposium
The prospect of a U.S. Government shutdown on the back burner with the likely hood of that happening quite negligible we see the stock market in the European Area rise. Global risk staged a rebound and markets unwound some of the yesterday’s safe-haven moves.
Over in the European Area, the Euro Stoxx 600 index gained on the back of cyclical stocks, as it inched up 0.5%. This gain was established even though U.K.’s Dixons Carphone plummeted by almost 29% after the mobile phone retailer downgraded expectation for full-year profit.
The Asian MSCI index (excluding Japan) gained shaking off jitters that gripped markets after the U.S. President comments on Shutting down the government along with bailing out of the North America Free Trade Agreement (NAFTA). South Korea’s Kospi Index increased by 0.4% and the ASX added 0.1%. Hang Seng Index rose 0.4%. In Japan, the Nikkei fell 0.4% dragged down by a strong yen and steel makers who have reported the country’s biggest producer was cutting prices.
In Economic News, today we had the U.K. Second Estimate GDP which was expected at 0.3% and did not disappoint coming in as expected. However, the U.K. GBP did not fare well at the news since it erased the gains that it has posted and dropped lower trying to break below the 1.2770-support and failing.
Across FX, the USD edged up against some other major currencies after falling on worries about a possible U.S. government shutdown. The dollar is down 14% against the euro this year. The dollar index which tracks the U.S. currency against a basket of six other major currencies, gained 0.2% to 93.311 on Thursday, following the previous day’s 0.4% slide. The euro slipped 0.1% at $1.1790, after climbing 0.4% on Wednesday on surveys that showed German and French manufacturing and services were expanding.
Meanwhile, in commodities, oil was steady, holding on to most of their recent gains after another fall in U.S. crude inventories indicated a tighter market, and as a tropical storm headed towards oil producing facilities in the Gulf of Mexico. Brent was flat at $52.58 per barrel
Looking at the day ahead, in the US, there is the Kansas City Fed manufacturing index, initial jobless claims, continuing claims and existing home sales data. Away from the data, as noted earlier the Jackson Hole symposium kicks off. Back in Italy, the ECB governing council member Visco (governor of Italy) will speak. Let’s not forget the crowning jewel of “low liquidity August”, the Jackson Hole Symposium, which is going to attract lots of investor attention with August being a particularly dry month. The speeches on this Friday, today, by Janet Yellen and Mario Draghi will surely have an effect on the market. It is also important to note that investors will be paying close attention to what these Central Bankers say and don’t say.
The dollar posted modest gains and Treasuries sagged as investors wait for a key labor data and clues on monetary policy direction from annual central bankers gathering in Jackson Hole that begins Thursday.
EURUSD – With such low volatility the pair is forming what is called an inside day, where the High and Low of the day are both less than that of the previous day. Even though the pair is currently at the 1.1800 which has become a pivotal point, it waits for tomorrow’s speeches to continue in either direction
USDJPY – Quite the uncertainty in the pair, with all the political uncertainty that has shrouded all other fundamental information out there. More importantly, the pair stares down the barrel of the Jackson Hole Symposium as it tries to figure out a direction.
GBPUSD – The pair seems to be holding its own for the moment ahead of the Jackson Hole Symposium as it trades at the pivotal point of 1.2800, climbing to that level after dropping to a low of 1.2770 on the U.K. Second estimate GDP. There is also the fact that the Brexit negotiations are still underway as more negative news from that part will influence the pound even more negatively.
AUDUSD – A hammer is forming on the daily chart on the pair. This shows a positive sign for the pair since it shows that buyers are seeing the value, which means that the pair should start moving positively.
USDCAD – The positive effect of oil is helping the CAD rally against the dollar as the pair drops to the 1.2530s closing in on the support of 1.2525.
Dow Jones – The index has gained some of the losses it manifested on Tuesday after Donald Trump’s Comments. As the effect wears off, the index has risen back towards the 21850 after visiting the 21750.
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