Market Analysis

The euro is edging up against the US dollar

FOREX

The euro is edging up against the US dollar this Friday morning, following the release of disappointing GDP figures from the US on Thursday. As July comes to a close, the single currency looks set to end the month with modest gains over the greenback, after what has been a rollercoaster 30 days. The low point for the Euro occurred after the ECB announced a new monetary strategy, which essentially meant that the current dovish policies will stay in place for longer than previously expected. Such a scenario weighed on the single currency. However, when the end of July started to approach, losses were reversed as the state of the US labour market remained a cause for concern, forcing the Fed to dilute some hawkishness out of its message, which caused dollar losses.

Ricardo Evangelista – Senior Analyst, ActivTrades

 

GOLD
Gold is little changed this Friday, holding on to the previous session’s gains and remaining close to multi-week highs. As the realization that the US Federal Reserve is unlikely to tighten its policies anytime soon sinks in, the outlook for the US dollar turns into bearish territory. The greenback typically moves inversely in relation to gold, therefore, as the US dollar risk currently lies to the downside, the precious metal could continue to find support in the short term.

Ricardo Evangelista – Senior Analyst, ActivTrades

 

EUROPEAN SHARES

Stocks slid lower at the open in Europe on Friday, alongside US Futures and extending losses registered during the Asian session. Despite a solid bullish reaction sparked by both the FED and China yesterday, investors remain cautious towards riskier assets as the near-term outlook remains unclear for some sectors. Even if the FED will keep its extremely dovish policy in place for some time, signs of a slowdown in growth sectors such as Tech, are tempering the bullish enthusiasm. Meanwhile in Europe, investors will keep an eye on today’s inflation report, in order to get more visibility on the ECB’s next move. Many are wondering when Christine Lagarde will ‘shut the party down’ with the tapering of the massive bond-buying program. That said, even if companies with stretched valuations may register limited bearish pull-backs in the near term, the overall mood remains bullish for stocks. However, higher market volatility and lower volumes than usual are making markets complex to navigate, which explains the rising appetite for a more defensive play as portfolio managers diversify their exposure across other sectors but also other asset classes.

Pierre Veyret– Technical analyst, ActivTrades          

 

 

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