FXTM Weekly Roundup: China trade war, Fed rate de­ci­sion in fo­cus

Financial Mirror (Cyprus) - - MARKETS - Mar­kets Re­port b

In­vestors en­tered the trad­ing week adopt­ing a “wait and see” ap­proach as Pres­i­dent Trump’s tar­iffs on $200 bil­lion worth of Chi­nese goods came of­fi­cially into ef­fect on Mon­day.

Fears over the tit-for-tat tar­iff bat­tle be­tween the United States and China pro­moted a risk aver­sion mood within eq­uity mar­kets, emerg­ing mar­ket cur­ren­cies and riskier as­sets un­der pres­sure.

Dol­lar bulls were miss­ing in ac­tion de­spite the mar­ket un­cer­tainty, which fu­elled spec­u­la­tion that the Dol­lar rally was com­ing to an end.

In­vestors were wait­ing in an­tic­i­pa­tion for the Fed­eral Re­serve rate de­ci­sion on Wed­nes­day which con­cluded with a 25-ba­sis point rate hike. Fi­nan­cial mar­kets of­fered a fairly muted re­sponse to the rate in­crease as this move was al­ready heav­ily priced in. How­ever, the key take­away from the meet­ing was the re­moval of the word “ac­com­moda­tive” from the state­ment which sug­gested slower in­ter­est rate in­creases next year.

The Dol­lar sur­pris­ingly ap­pre­ci­ated on Thurs­day as in­vestors over­looked the dovish Fed meet­ing but fo­cused on prospects of a rate hike in De­cem­ber.

Other than the Fed, the most pop­u­lar talk­ing point across fi­nan­cial mar­ket head­lines was the re­lent­less ap­pre­ci­a­tion wit­nessed in global Oil prices af­ter OPEC and Rus­sia re­jected Trump’s de­mand to boost out­put. Brent Crude soared to lev­els not seen since No­vem­ber 2014 when it was above $82.0. With loom­ing U.S. sanc­tions against Iran and fall­ing pro­duc­tion from Venezuela ac­cel­er­at­ing the tight­en­ing of mar­kets, Oil prices have scope to ap­pre­ci­ate fur­ther.

It was a ter­ri­ble trad­ing week for the Pound thanks to Brexit un­cer­tainty and po­lit­i­cal drama in West­min­ster. The Pound’s down­side was fu­elled by an ap­pre­ci­at­ing Dol­lar which sent the GBPUSD to­wards 1.3050. With fears of a “hard Brexit” sour­ing in­vestor ap­petite for the Bri­tish Pound, the out­look re­mains bear­ish.

Gold prices tum­bled to a fresh monthly low, fol­low­ing re­ports of the U.S. econ­omy ex­pand­ing 4.2% dur­ing the se­cond quar­ter of 2018. With the metal break­ing be­low the $1,190 sup­port and poised to con­clude the week on a neg­a­tive note, bears could take the driver’s seat in the new trad­ing week.

The up­com­ing trad­ing week will be jam-packed with eco­nomic re­ports from the United King­dom and the United States. Much at­ten­tion will be di­rected to­wards the UK PMI which could of­fer in­sight into the health of Bri­tain’s econ­omy. All eyes will be on the U.S. jobs re­port which could spark volatil­ity across fi­nan­cial mar­kets. For in­for­ma­tion, dis­claimer and risk warn­ing note visit: www.ForexTime.com

FXTM Brand: ForexTime Limited is reg­u­lated by CySEC and li­censed by the SA FSCA. Forextime UK Limited is au­tho­rised and reg­u­lated by the FCA. FT Global Limited is reg­u­lated by the IFSC.

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