Today, market sentiment is one of risk
aversion. European stocks face another cautious session with rising
US-China tensions and no progress in negotiations on the new US stimulus
The Dollar regains some of the ground lost
on Thursday, with the currency's DXY index trading again above
93.00. Traders are likely to take a cautious approach to
currency risk ahead of the US-China trade talks on 15 August.
Today, the market sentiment is one of risk aversion. There are no signs of progress in the negotiations on the aid plan for the coronavirus in the United States, and US Secretary of State Mike Pompeo said the White House could ban other Chinese applications that it considers to jeopardise the country's national security.
The Dollar traded on the defensive during the Asian session on Thursday, as investor optimism about the approval of new fiscal stimulus in Washington seemed to decline, which reduces the currency's attractiveness.
European stocks started higher today and are continuing to hold the gains,
thanks to the successful recovery of initial losses by the end of all trading
sessions on Tuesday, and also because of the fresh summer record for the U.S.
broad market S&P500 index futures above 3325, where it stood on midday Wednesday.
Some positive earning reports in Europe fuelled the movement as even the travel
and leisure sectors, which are considered to be the most exposed to the
corona-related restrictions, led the morning surge.
inflation in developed economies have become a curse since the Great financial
crisis of 2008. It discourages producers, as inconsiderable rise of prices
means low demand and difficulties in sales. Thus, the growth of the economy is
also under threat. Developed economies have been struggling for several years
to meet the inflation target of two % and yet have hardly succeeded in it.
quantitive easing programs and lowering interest rates throughout the globe have
been tailored to meet this ultimate goal. Such efforts were made consistently by
market sentiment is an appetite for risk. News that the United States and China
will meet to discuss trade and expectations of progress in negotiations in
Washington over a stimulus package are driving the current positive sentiment
in the market.
retreated in the Asian session on Wednesday, following up on the previous day's
losses, with more bets that the US Federal Reserve will ease monetary policy
further and with investors attentive to negotiations in the US Congress on new
market sentiment is relatively mixed. Democratic leaders and White House
officials seem cautiously optimistic after another round of talks on Monday
about the new coronavirus aid package, under increasing pressure to reach an agreement
since millions of Americans are living without the $600 a week unemployment
benefit supplement, and U.S. President Donald Trump has launched potential
gained ground on the Yen this Tuesday in Asia, after robust economic data has
increased risk appetite by putting the Yen under pressure as a safe asset.
market sentiment is of an appetite for risk. Good manufacturing and service
data across Europe and China are fueling hope for a faster-than-expected
equities and U.S. futures continue to rise this Monday, before another week of
results as discussions continue over a US pandemic relief package.
Yields of US
Treasurys fell on Friday, registering a weekly and monthly fall due to fears
over the economic consequences for the global economy of the coronavirus.
investors assessed the potential terms of the next stimulus package and the
easing of coronavirus infections, while digesting the results of major US
companies. The Federal Reserve’s Chairman Jerome Powell also dominated the
attention of the markets.
In Europe, the
Stoxx Europe 600 index gained 0.5%, at the end of a session in which it
fluctuated between gains and losses. The German DAX index closed at the
waterline, the French CAC index lost 0.2% and the British FTSE 100 index rose
narratives of the U.S. Federal Reserve’s (Fed) Chairman after a rather
walkthrough-room meeting yesterday have not impressed the markets much. It was
too casual by pandemic time standards and prompted assets that had been rising
in price madly for several days in a row, like gold, silver or some currencies,
only to repeat their previous highs this time. That was followed by a slamming
wave of profit taking, which triggered some downside pullbacks. For example,
just a little bit below $1954/toz in gold spot contracts for now after testing
$1980/toz last night.
Futures for the U.S. Dollar Index (DXU0), which tracks the Greenback weighted
average position against a basket of six other currencies, are already four %
down since the beginning of July. Now they are located more than ten % lower
than its highest values in March, at the peak of the quarantine-related
safe-haven demand for the U.S. currency. After such a long trip, some currency
pairs may take a kind of time-out for the nearest couple of trading sessions,
ahead of the proposed announcement of the U.S.