Slower growth could end risk rally

6 October, 2015

A strong rally in equity markets has come on the back of the weaker marco data as rate expectations are pushed back which makes risk assets more attractive. The issue investors face however is that if the global slowdown continues then this will impact corporate profitability further and the strength in equities we’ve seen in the past few days could be short lived. Investors look to be slowly but surely reducing the chances of a 2015 Fed rate hike as reflected in the currency and fixed income markets. The recent nervousness in financial markets and concerns over China is filtering through to the wider global economy as yesterday saw lacklustre services data not just from the US, but the Eurozone and in particular the UK which saw its lowest reading for the services PMI since May 2013. This translated into sterling weakness as GBPUSD retreated from the 1.5200 level again and it remains just above key support at 1.3450 on GBPEUR (just below resistance at 0.7435 for EURGBP).

Overnight there were no surprises from the RBA who kept rates on hold at 2% which led to a spike higher in AUDUSD back above the 0.7100 level and the Aussie sits at 0.7110 at the time of writing. For the remainder of today things are quiet on the economic data front but later on tonight there will be a speech from the ECB’s Mario Draghi and even later from the Fed’s voting member William who’s been calling for a hike in 2015.


Source link  
CB meetings dominate the week

With no impactful economic data releases on the calendar today, the markets are focusing on a plethora of Central Bank meetings scheduled...

No Surprises from BoC & ADP

In an unsurprising move, the Bank of Canada decided to hold its benchmark lending rate at 1%, after two small hikes earlier in 2017. The BoC stated...

Moderate Gains for USD

On Monday, the US Commerce Department released Factory Orders data for October, indicating that the continued strength in the Manufacturing...


OPEC Extends Output Cuts

On Thursday, OPEC (Organization of Petroleum Exporters) and non-OPEC producers led by Russia agreed to keep output cuts until the end of 2018...

US Economy Expands Faster Than Predicted

Data released on Wednesday showed that the US economy expanded at its quickest pace since 2014 in Q3. The US Commerce Department said that...

Political Turmoil in Germany Hurts EUR

The EUR lost ground against many of its peers on Monday on news that Chancellor Angel Merkel’s efforts to form a coalition government had collapsed...


USD Suffers on Subpoena News

The Trump Administration is back in the spotlight with news of a report that Special counsel Robert Mueller’s investigators have issued a subpoena...

Positive data negated by tax plan opposition

The US Labor Department released data on Wednesday showing the consumer price index edged up by 0.1% in October after climbing by 0.5%...

Data Boosts EUR Can CPI Boost USD?

EUR received a boost on Tuesday, as data from Destatis showed German Preliminary GDP climbed to 0.8% in Q3, beating forecasts of 0.6%. In addition...

  


Share: