The green wave, which has begun Wall Street since yesterday, continues to echo, and it also definitely color the Asian markets in the “color of money”. I now expect it to go through the European markets, raising the risk-on sentiment.
Indicatively, the futures of major European indices point to a higher opening, as we expect European indices to record solid growth. Despite the slowdown in global growth and the trade war, Powell’s comments that the Fed are ready to act, even with interest cuts to keep the US economy, have led to the strongest one-day rally in US stocks. The FED also maintains its position of “observers” over the development of the war and the US economy. Well … Trump wanted low interest rates, apparently will get them at the end of this year.
From a technical point of view, we expect the indices to hold more than 200 – average averages, maintaining bullish sentiment, with the DAX key moment holding over 12,000, CAC40 over 5,200 and FTSE over 7,200, which are psychological levels.
Given today’s risk appetite, we expect a gold correction, a weaker yen, a Swiss franc and a US dollar. The Fed’s insinuation that they are already looking at interest rates so soon should also suggest to the ECB a potential move to preserve the economy of the Eurozone. Powell simply linked the points: trade war, cold technological war, geopolitical tension … The bond market already appreciates more than one interest rate cut by the end of this year. And it will not be because of Trump. Let us not attribute this fundamental, economic move to it.
Today, the economic calendar is rich in data, with PMI data capturing the calendar. All data will be important and will impact markets today, and later in the day we also have ADP change in US employment and ISM.
For oil traders there is also something to keep them under pressure, and that’s the national data on oil stocks. Last week we saw weekly API data for oil stocks that surprisingly showed bigger inventory. Petrol responds, of course, with a downward trend, but today, given the risky attitude, we can witness oil for a slight recovery.
Of course, do not overlook the background noise that can break the fragile recovery brought about by the potential intentions of one person, one institution. The trade war, Brexit, and the global risks have not gone away, but with the worsening of relations with Mexico, things do not look good. Trade with caution.
Trader Martin Nikolov