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  
Economic calendar is relatively light

Today is Martin Luther King’s Birthday, which is a Bank Holiday in the United States. As a result, the Economic Calendar is relatively light today...

US Tax Bill passes

On Wednesday, the US Senate approved the tax bill 51 for and 48 against, while the House of Representatives gave it final approval, passing it for the second time in two days after...

US dollar 'treading water'

USD is treading water ahead of the expected enactment of President Trump’s tax bill. The initial euphoria of lower corporation tax, that many...


CB Monetary Policy Unchanged

Thursday saw the latest Monetary Policy Committee (MPC) report from the Bank of England. The BoE stated that further modest increases...

No Surprises as Fed Raises Rates

The Federal Reserve, as expected, raised its benchmark interest rate by a quarter of a percentage point, to a range of 1.25% to 1.5%. The latest hike...

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...

  


Share: