SEP
14

Trade Optimism and Easy Money Set to Drive Stocks to Fresh Record Highs

Trade Optimism and Easy Money Set to Drive Stocks to Fresh Record Highs - MarketPulseMarketPulse

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The bull story for the rest of the year remains in place as trade war angst ebbs, the stimulative effect from lower rates kicks in, the US consumer remains resilient and credit markets show money is still available. The S&P 500 could rally another 3-5% as long as we don’t see a policy mistake by the Fed and a complete collapse in trade war.

As we approach earnings season, the consensus is likely to see stocks deliver hardly any earnings growth over the next 12 months, with a strong economic recovery seeing 12% gains, and recession led collapse seeing 15% drop. With the trade war lingering longer than most have expected, business investment is continued to remain stagnant. If we start to see a lot of pre-announcements over the next couple of weeks, we could see limited downside with US equities.

Over the past several trading days, cyclicals have been playing catchup as banks, retail, transports and energy all rallied strongly. They key to the next leg higher will depend on industrials and technology, thus re-emphaszing the importance of a substantial de-escalation in tariffs or even an interim trade deal.

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SEP
14

USD/CAD Canadian Dollar Lower on Record High Household Debt

The Canadian dollar fell 0.45 percent on Friday and will finish 0.78 pecan lower against the US dollar. Canadian households have a 174.1 percent debt to income ratio in 2019 Q2. Rating agencies have already downgraded some of the banks as the risk of higher defaults rises as consumers take on more credit that they can pay back, even at record low interest rates.



The resurgence of the US dollar with a strong inflation data on Thursday and beating expectations in retail sales drove the greenback higher. A 25 basis points interest rate cut by the The U.S. Federal Reserve is still priced in, but with the strong indicators it can do the bare minimum. The biggest headwind to the US economy has been the US-China trade war, but details are emerging this week that have injected optimism as tariff exemptions and delays could be paving the way for a trade deal sooner rather than later.

Gold and oil suffered setbacks this week. The yellow metal lost traction as risk appetite made a roaring return, and even the ECB guaranteeing lower rates for longer was not enough for the metal to keep trading above $1,500. Oil prices fell as oversupply concerns won out over bigger than expected drawdowns in the United States.

The main event next week will be the Fed’s monetary policy decision. The ECB did not disappoint with its actions, but the market was not overall convinced the central bank can achieve lift off of the economy on such a reduced runway. The Fed has more room to maneuver, but it could start shrinking as the White House and the market keep pushing for lower rates faster than economic indicators suggest stimulus is needed.

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SEP
14

OANDA Market Insights – Episode 82 (Podcast)

OANDA Market Insights - Episode 82 (Podcast) - MarketPulseMarketPulse

Home/Central Bank Watch/Currency/EUR/FX/GBP/Indices/Market Pulse/Media/Podcasts/USD

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OANDA Senior Market Analyst Craig Erlam previews the week’s business and market news with Jazz FM Business Breakfast presenter Jonny Hart.

This week they discuss the ECB stimulus package, Brexit, the trade war and next week’s interest rate decisions from the Fed, BoE and BoJ.

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SEP
14

Week ahead – Central banks the only game in town

Brexit, Fed and trade war remain in focus

For many months now, all of the attention has been on the trade war, Brexit and central bank easing. Next week is going to be no different as the UK Supreme Court rules on Boris Johnson’s prorogation of Parliament, talks continue ahead of a meeting between the US and China – following rejected rumours of a limited trade deal – and numerous central banks announce interest rate decisions.

One of those is the Federal Reserve which is almost guaranteed to cut interest rates on Wednesday, the only real question is whether they’ll signal more this year. The Bank of England, Bank of Japan and Swiss National Bank are among the others announcing interest rate decisions next week.

Friday is quadruple witching day for U.S. markets. When the quarterly expiration of futures and options on indexes and stocks occurs on the same day, surging volatility and trading can follow.

On Friday, there are ratings reviews on Denmark (Fitch), Norway (S&P), Spain (S&P), Sweden (Moody’s) and Spain (DBRS).

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SEP
13

Bitcoin Rebounds on ECB Cut Looks Ahead to Fed

Cryptocurrencies had a volatile trading week. Risk appetite returned to the market with the news that US and China were defrosting their trade negotiations. The crypto world saw a correction to the downside at the beginning of the week as Bitcoin had attracted investor flows as a safe haven, so naturally it was being sold against other assets.

The European Central Bank (ECB) monetary policy decision announcement to cut the deposit rate deeper into negative territory and restart its quantitative easing (QE) program by buying 20 billion euros of bonds a month sent a strong signal that rates will remain low for longer. Crypto rose as the US dollar is softer as the U.S. Federal Reserve is heavily anticipated to follow suit next week with a 25 basis points interest rate cut.



Bitcoin traded within the 10,000 to 10,300 range this week as the ECB rate decision was the catalyst for higher price levels. The Fed has been monitoring US economic indicators and so far the picture is mixed, but with pressure from the White House and the market already pricing in a rate cut, it would be a huge disappointment if the central bank doesn’t deliver.

Lower rates around the world is driving investors to seek higher yields and returns in alternative asset classes. Interest in cryptocurrencies remains high and interest from emerging markets to avoid capital controls or currency devaluations could push the price of Bitcoin above 10,500 if the Fed follows through, and higher if there is a more dovish monetary policy decision like some members of the rate setting committee have suggested.

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SEP
13

Oil Falls on Demand Concerns and Oversupply

Oil Falls on Demand Concerns and Oversupply - MarketPulseMarketPulse

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Oil slipped to around $60 a barrel on Friday as concern about a slowdown in the global economy and oil demand outweighed hints of progress in the U.S.-China trade dispute.

The Organization of the Petroleum Exporting Countries and the International Energy Agency (IEA) both issued reports this week pointing to an oil surplus next year, despite an OPEC-led pact to cut supply that runs until March.



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SEP
13

Gold Higher on US dollar Softness

Gold Higher on US dollar Softness - MarketPulseMarketPulse

Home/Commodities/EUR/Forex News Round Up/USD

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Gold prices rose back above the key $1,500 level on Friday as the U.S. dollar slipped on the back of a strong euro, though hopes for a thaw in Sino-U.S. trade tensions supported equity markets, capping bullion’s gains.



Spot gold was up 0.6% to $1,507.96 per ounce as of 1156 GMT, up marginally for the week.

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SEP
13

Pound Soars on No-Deal Brexit Declining Possibility Even as Doubts Remain

Pound Soars on No-Deal Brexit Declining Possibility Even as Doubts Remain - MarketPulseMarketPulse

Home/EUR/Forex News Round Up/GBP/USD

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The pound has hit its highest level against the dollar since July amid hopes a no-deal Brexit can be avoided.

Sterling jumped more than 1% on Friday to over $1.24 against the dollar, its highest level in seven weeks.



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SEP
13

China Adds US Farm Goods to Tariff Exclusions

China Adds US Farm Goods to Tariff Exclusions - MarketPulseMarketPulse

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China plans to exclude American farm goods, including soybeans, from tariffs in the latest move to ease trade tensions before the two countries restart trade talks next month.

The Chinese Ministry of Commerce said Friday that China welcomed President Donald Trump’s decision to delay tariffs by two weeks and said it will exempt U.S. agricultural products such as soybeans and pork from additional tariffs.



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SEP
13

US CFOs Still Sceptical About a US-China Trade Deal

US CFOs Still Sceptical About a US-China Trade Deal - MarketPulseMarketPulse

Home/Currency/EUR/Forex News Round Up/USD

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If you follow the markets, there’s been recent reason for optimism about a U.S.-China trade deal. Some investors are buying it — literally — with recent gains in stocks attributed to positive signals from the U.S. and China after a volatile August. But there’s one group of market insiders not buying the talk: corporate executives. In other words, the people who run the companies whose publicly traded shares have been rebounding.

Top executives in the U.S. and around the world are not placing bets that the U.S.-China trade war will be resolved anytime soon. In fact, corporations say they expect to feel the pain of trade tensions over the next six months, according to the third-quarter CNBC Global CFO Council survey. The quarterly survey finds CFOs around the world increasingly are worried about U.S. trade policy as a business risk factor.



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