Today, the Indian rupee currency rose in value as the country’s Finance Minister, declared government’s moves to boost the economy. Meantime, Fed Chair Powell said that the US stays in a safe place and the bank will act appropriately in the upcoming meetings.
Gold markets rallied significantly during the trading session on Friday as we continue to see the bully should run pick up momentum. This was especially interesting considering that Jerome Powell spoke during the day, and that means we are looking through the speech and now at the likelihood of central bank easing.
Gold markets initially fell during the week but found enough support near the $1500 level to turn things around of form a bit of a hammer. We are at extended levels though, so the question then becomes whether or not we can continue this move.
The US dollar has gone back and forth during the week but has broken down from the same resistance barrier that we have seen. Ultimately, this is a market that continues to see a lot of trouble at the same levels after a less than clear Jerome Powell speech.
The British pound initially fell during the week but then rallied towards the crucial 1.2250 level again. This is an area that has been important more than once, so it makes sense that we are struggling just a bit here. That being said though, I think that the market is simply bouncing from a very low level.
The Euro continue to hover during the week, going back and forth as there is a lot of uncertainty out there. Ultimately, the Federal Reserve and the ECB are both looking very dovish, so it causes a bit of confusion. Ultimately, one should take a look at the greater economic situation to see where the next likely move is.
The Australian dollar continues to show a bit of weakness, as the US/China trade situation does not seem to be getting any better. If that’s going to be the case, then there’s no reason to think that the Australian dollar will be able to pick it up.
The US dollar has initially tried to rally during early trading on Friday but has ran into a little bit of a brick wall. That being said, the inclusion of the Jerome Powell speech will certainly have a significant amount of influence on this market.
The British pound has gone back and forth during trading on Friday, as we continue to see a lot of volatility in Sterling. Quite frankly, there is nothing on the horizon that looks like the Brexit is going to be salt, so this should offer a nice selling opportunity at higher levels.
The British pound continues to go back and forth against the Japanese yen which makes quite a bit of sense considering we have so much in the way of risk out there right now. Remember, this pair will fall if there is more of a “risk off” attitude out there, and therefore it’s going to struggle to rally.
The Euro continued to reach lower levels during the trading session on Friday, as we have continued to see a bit of negativity in the Euro, but with Jerome Powell getting ready to release a speech in Wyoming, we could see a bit of a short-term reaction.
The Australian dollar went back and forth during trading on Friday yet again, as we are still stuck in a bit of a consolidative rut. However, the biggest problem this market has comes from other countries, not Australia itself.
(Bloomberg) -- Emerging-market investors said Friday’s escalation in trade tensions between the U.S. and China is likely to prevent any rebound in asset prices.While another rate cut by the Federal Reserve could provide some relief in the short term, trade tensions are expected to linger for much longer. China’s decision to impose $75 billion in retaliatory tariffs on U.S. goods shows that no quick resolution is in sight. Donald Trump said he would respond later today.“In the medium term, EM might remain under pressure mainly due to trade risks related to the U.S. elections and a higher probability of a recession,” said Claudia Ceja, a strategist at BBVA in Mexico City.Developing-nation assets took a hit Friday after China announced the new tariffs, but the impact was latter offset by Jerome Powell’s much anticipated speech in the Jackson Hole summit that kept bets on a rate cut alive. The Fed chairman said the U.S. economy is in a favorable place, but faces “significant risks” as growth abroad slows amid trade uncertainty. Then Trump said he would retaliate against China and markets went back down.Here is what analysts, strategists and money managers are saying about today’s drivers for emerging markets:Ceja, from BBVA:Chinese “retaliation was expected, though, markets had been a bit calm about that since Trump decided to postpone initial tariffs until December”“Overall, trade risks have been mounting and so a higher risk premium is to be expected. MXN will most likely remain under pressure as at some point, ahead of the U.S. elections, further tariffs might be a threat as well”“The Fed might offset such risks for the FX world, however, it depends on the degree to which they are willing to act”“The theme is the effectiveness of monetary policy, and since it seems that the effectiveness is lower due to both the starting point of interest rates and the business cycle, the surprise might be if they are considering some other kind of tools”Brendan McKenna, a strategist at Wells Fargo in New York“It’s obviously an escalation in the trade tensions and it’s putting some pressure on emerging currencies”“The tariffs look pretty aggressive too, oil exports and a 25% tariff on autos”“I guess there hasn’t been as much progress as both sides claim there has been the last few days”“We had a retaliation built into our most recent forecasts”McKenna is not planning to change any of his forecasts yet, “although we have to see what Trump and other U.S. policymakers respond with”Sacha Tihanyi, deputy head of emerging market strategy at TD Securities in New YorkInvestors are digesting Powell’s “emphasis on trade as the key uncertainty, and in light of the China news this morning, the market is taking it as validation of the easing that’s priced-in”Powell’s commentary on trade “just shows that this long-burning issue remains, and will continue to be at play for the general future, so we should all expect that”China has been emboldened “to up the trade pressure as they see his pressure points” after Trump’s latest round of tariffs and backtracking ahead of holiday shopping seasonMichael Reynal, a portfolio manager with RS Investment Management in Des Moines, Iowa“The news is clearly negative for a resolution of the tariff dispute and will impact oil, soft commodities and other markets”“I hope this is a negotiation tactic. China has a stronger position than many people realize as trade is simply not a large factor in GDP growth”“China’s long term goal is to open its capital market, and I worry that a hardening of relations with the U.S. -- or the West -- may slow that process”Jan Dehn, the London based head of research at Ashmore Group, which oversees $85 billion in emerging-market assets“Market sees this as an escalation and doesn’t like it. It is frightening so people feel they have to sell some EM FX. I think it is bad news, but hardly a big surprise. We know that Trump does not like free trade and does not like China”Says “the big ‘new kid’ on the block is a U.S. recession, or the prospect of one. It is not priced yet, not even close. U.S. recession will provide plenty of short term instability”“The external environment can continue to deliver negative surprises and EM can in the short term be on the back foot, but it is only temporary volatility”To contact the reporters on this story: Aline Oyamada in Sao Paulo at email@example.com;Justin Villamil in Mexico City at firstname.lastname@example.org;Sydney Maki in New York at email@example.comTo contact the editors responsible for this story: Julia Leite at firstname.lastname@example.org, Philip SandersFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The cocktail of news fueled XAU/USD to initially break above the 1,500 level that was a resistance a few hours ago, but now the unit is recovering its mojo, and it is rallying as investors are taking positions on the speculation for more rate cuts as soon as September.
This week was not a busy one for macroeconomic events, and it was also the quietest period of the summer lull, so most of the markets did not have strong moves. The brightest event of the week promises to be the speech of the Fed Powell’s head in Jackson Hole, starting at 14:00 GMT.
Based on the early price action, the direction of the EUR/USD on Friday is likely to be determined by trader reaction to the uptrending Gann angle at 1.1067.
Investing.com - U.S. stocks traded lower Friday after Federal Reserve Chairman Jerome Powell reiterated that the central bank will act “as appropriate” to sustain the economy, in a speech that also blamed trade policy for much of the global economic slowdown.
Investing.com - Gold prices turned higher on Friday after China announced retaliatory tariffs oU.S., increasing demand for the safe-haven precious metal ahead of a widely anticipated speech from Federal Reserve President Jerome Powell.
Gold is likely to rally if Powell is dovish, however, gains could be limited because traders have priced in the 25-basis point rate cut in September. Powell is going to have to go above or beyond the one rate cut in order to trigger a meaningful rally.
Moody's Investors Service on Friday said it's revised downward its GDP growth outlook for 16 Asian economies. The revision came due to sharp slowdown in "externally-oriented" economies, as well as domestic factors holding back Japan, India and the Philippines. Softer capital formation has mirrored the weakening in exports, especially for trade-reliant economies such as Korea and Hong Kong, Moody's said.
After a sharp move higher yesterday on the back of positive Brexit comments, the British pound has eased lower in early trading on Friday.
A relief rally in EUR/USD yesterday was short-lived as sellers pushed the exchange rate back towards the lower bound of a one-week range. Powell will be speaking later today, and volatility is expected.
Based on the early price action, the direction of the AUD/USD on Friday is likely to be determined by trader reaction to the pivot at .6749.