Euro reverse gains

8 May, 2017

French say “no” to populism and “yes” to a united Europe following a similar trend in Austria and The Netherlands over the past six months. Macron's decisive victory on Sunday is a clear sign of a resistance to populism after Trump’s election and the Brexit vote. The Euro hit a seven-month high, to trade above 1.10 against the dollar as an initial reaction, but pulled away in a classic “buy the rumor, sell the fact” style given that traders were already positioned for a Macron win. The Euro appreciated by 2.5% since the first round of voting, suggesting that the good news was already priced in, and now it requires a fresh catalyst to determine the next move.

The next challenge for Macron is going to be the parliamentary elections in June, and given that there’s a lack of significant support, it remains highly uncertain whether the President can build a parliamentary majority. However, I don’t think this is going to be a major concern to the Euro.

The next political risk event in the EU is the Italian general election, due to be held in March 2018. As there are ten months until this key event, investors and traders should shift their attention from politics to macro fundamental drivers.

The key macroeconomic indicator from the Eurozone, along with fewer political risks, will likely lead to inflows of capital to European markets, especially as valuations look more attractive than the US. But the Euro’s direction will be more influenced by the actions of the European Central Bank. If the ECB is thinking of starting the tapering process, the next meeting on June 8 could be a time to announce the beginning of the exit. Therefore, I see more upside risk than the downside to EURUSD.ВВ ВВ 

Moving into the US, the economy added 211,000 jobs in April and unemployment rate fell to 4.4%. The better than expected data validates the Federal Reserve’s statement that recent weakness in some economic data would prove transitory. However, not all chunks of the jobs report were robust enough. The labor participation rate fell to 62.9% from 63%, and annual wages dipped by 0.2% to 2.5%.ВВ  While this will not stop the Fed from raising interest rates in June, Friday’s US retail sales and inflation figures will provide a better indication of whether a rate hike is a done deal or not.ВВ 

Oil prices inched 1% higher early Monday after a steep decline last week, sending both benchmarks to their lowest levels since December, and many traders were left wondering whether further downside risk lies ahead. The factors moving oil prices haven’t changed much recently; it’s all about inventories and US Shale vs. OPEC. The latest negative factor was weaker import figures from China. At this stage, OPEC members have no choice but to talk up prices by signaling an extension to the production cuts agreement, but the ability of Shale to keep pumping at relatively low prices remains the largest threat. I still believe that markets will eventually rebalance at a later stage in H2, and prices will recover, but the recovery won’t be a straight line.


Source link  
Yuan approaches critical level

The trading week kicked off with a panicked sell-off in Chinese equities which simply expresses growing fears in financial markets. Rising U.S...

Gold shines on Italy turmoil

Gold is poised to remain in the limelight this week after aggressively appreciating roughly $18 in a three-hour window. The yellow metal surprised markets...

Fed hike failed to satisfy dollar bulls

Despite U.S. President Donald Trump's dissatisfaction with the Fed's monetary policy tightening measures, the Fed as expected raised interest...


Trump makes mark at United Nations

Although a variety of headlines are circulating following the speech from President Trump at the United Nations, financial market movements are slightly...

Dollar path hinges on Fed dot plot

The U.S. Dollar has enjoyed a robust rally over the past seven months. An economy growing above potential rate, fiscal stimulus, low unemployment...

Risk aversion returns as tariffs take effect

Politics and trade tensions are expected to be the key market drivers this week. President Trump's tariffs on $200 billion worth of Chinese goods...


Investors await China's response

U.S. President Trump moved forward with imposing 10% tariffs on $200 billion of Chinese imports effective next week. Trump's move has obviously...

EM Currencies slide as Dollar appreciates

Emerging market currencies have been treated without mercy by a broadly stronger Dollar, yet again. The Dollar Index appreciated to its highest level this year...

Pound crumbles as UK inflation fails to rise

Repeated signs of easing inflationary pressures in the United Kingdom could plant a seed of doubt among investors about whether the Bank...


In the past 24 hours Bitcoin has gained 4.97% and reached $6644.07522196. Open your trading account with the best cryptocurrency brokers on special terms today.

In the past 7 days the EUR/USD pair has gained 0.5919% and is now at $1.1596. Start trading and making money on Forex today.

In the past 7 days Ethereum has lost -8.84% and is now at $209.085376508. Have the most popular cryptocurrencies compared online 24/7.


Top Brokers offering Daily Forex Market Reviews


Forex Currencies Forecasts


Top 10 Forex Brokers 2018

# Broker Review
1easyMarketseasyMarkets91%
2FXTMFXTM88%
3HYCMHYCM87%
4Alfa-ForexAlfa-Forex86%
5FxProFxPro85%
6FIBO GroupFIBO Group84%
7OctaFXOctaFX83%
8HotForexHotForex82%
9FXCMFXCM80%
10AvaTradeAvaTrade77%
  


Share: