Spreadex Market Update
Central Bank Signals Drive Market Sentiment Higher
Central bank communications took centre stage over the weekend, guiding market movements towards higher ground. Amidst light trading activity, gold shone as the dollar faltered, while yield dynamics added intrigue. Crude oil navigated through volatility, capturing attention with its erratic journey.
Key Factors for Today
- Dallas Manufacturing Index outperforms expectations
- ECB Officials weigh in on rate hike projections
- Speculation swirls around another RRR cut in China
- Australia emerges as a leading performer among major commodity currencies
Market Movers
- The Dallas Fed Manufacturing index surpassed predictions, registering at -17.2 versus the anticipated -21.0, leading to a boost for the Russell 2000.
- Equities found support as murmurs of the Fed reaching peak rates fuelled positive sentiment, contributing to the dollar's retreat from the 104.40 high.
- ECB President Christine Lagarde's resolve to combat inflation was echoed by ECB official Robert Holzmann (Austria), who indicated a potential rate hike in September, contingent on unforeseen developments.
- Chinese reports speculated on a potential Reserve Requirement Ratio (RRR) cut by the People's Bank of China (PBOC) to bolster liquidity.
- Australian confidence gained momentum, fostered by Chinese support, with consumer confidence rising to 78.1 from 75.8, reflecting positively on the AUDUSD.
Economic Calendar
- German GfK Consumer Confidence
- S&P/Case-Shiller Home Price Index
- JOLTs Job Openings data
- CB Consumer Confidence metrics
- API Crude Oil Stock Change figures
The Big News
Central Bank Communications Set the Tone
Central bank chatter reverberated across global markets, shaping the course of the trading week. In the aftermath of ECB President Lagarde's resolute stance on tackling inflation, ECB official Robert Holzmann chimed in, hinting at an imminent rate hike in September, provided no unexpected disruptions emerged. Contrasting with his German peers, Holzmann's optimism appeared rooted in his projection of a sub-4.0% inflation figure for August, compared to the 5.0% previously forecasted. In contrast, ECB Official Joachim Nagel preferred a data-driven approach, refraining from offering rate hike signals until data affirmed the move.
Euro Seizes Opportunity Amidst Divergence
The euro capitalised on this divergence of opinions, resuming its ascent from the 1.0790 level against the dollar. Riding above the 200 SMA, the next resistance loomed at the 1.0900 level, marking a pivotal threshold for the currency pair's performance.
US-China Dynamics and the Prospect of Liquidity Enhancement
As the China Securities Journal floated the idea of an additional RRR cut by the PBOC to enhance liquidity, the US-China trade dynamic took a step towards reconciliation. The agreement to establish an Export Control Enforcement Exchange signalled a collaborative effort to de-escalate tensions. In the wake of these shifts, gold's upward trajectory remained steady, eyeing the 1934/oz area for its next resistance after overcoming support at 1913/oz.
Australia's Resilience and Emerging Frontiers
Australia's economic resilience, fuelled by Chinese backing, propelled it to the forefront among major commodity currencies. ANZ/Roy Morgan's consumer confidence report added to the positive sentiment, revealing an uptick from 75.8 to 78.1. Such resilience cemented the AUDUSD's rebound from $0.6400, with the 0.6500 region potentially emerging as the next resistance level.
It's easy to open an account
- Fill in our simple online application form
- Fund your account
- Start trading the global markets instantly!
SEARCH FOR AN ARTICLE:
Enter a keyword and search for all relevant articlesMARKET ANALYSIS
RECENT POSTS
DISCLAIMER
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64% of retail investors lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. For professional clients, spread betting and CFD trading can also result in losses larger than your initial stake or deposit.
Spreadex Ltd is authorised and regulated by the Financial Conduct Authority, provides an execution only service and does not provide advice in any way. Nothing within this update should be deemed to constitute the provision of investment advice, recommendations, any other professional advice in any way, or a record of our trading prices. This update does not constitute or form part of an offer of, or solicitation for a transaction in any financial instrument, nor shall it or the fact of its distribution form the basis of, or be relied on in connection with, any contract therefore. Any persons placing trades based on their interpretation of the comments or information within this update does so entirely at their own risk.
No representation, warranty, or undertaking, express or limited, is given as to the accuracy or completeness of the information or opinions contained within this update by Spreadex Ltd or any of its employees and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions. As such, no reliance may be placed for any purpose on the information and opinions contained within this update.
The information contained within this update is the intellectual property of Spreadex Ltd and is protected by UK and International copyright laws. All rights reserved. Users may however freely download, distribute and reproduce extracts of the contents, subject always to accrediting Spreadex Ltd as the source and providing a hyperlink to www.spreadex.com.
