Risk-off sentiment intensifies

21 December, 2018

It has been a painfully bearish trading week for global equity markets as fears over slowing global growth weighed heavily on investor sentiment.

Hopes of a possible Santa Clause rally were thoroughly crushed mid-week thanks to the Fed’s less dovish than expected policy statement. With growing fears of a possible US government shutdown paralyzing risk appetite, U.S stocks plunged on Thursday with the Nasdaq Composite Index on the brink of entering a bear market. Stock markets are clearly facing a perfect storm of headwinds such as global growth fears, US rate jitters and ongoing trade tensions among many other geopolitical risk factors.

In the currency markets, the Chinese Yuan stood out from the pack by appreciating despite the growing risk aversion. The Yuan’s appreciation is likely based on Dollar weakness rather than a change of sentiment towards EM currencies. While the local currency is seen extending gains in the near term, the medium to longer term trajectory remains heavily influenced by ongoing trade developments. Any signs of easing trade tensions will be a welcome development for the Chinese Yuan. Technical traders will continue to closely monitor how the USDCNY behaves around the 6.880 handle. A breakdown below this level is seen opening a path back towards 6.872.

Across the Atlantic, the Dollar’s status as a safe-haven currency was under threat amid fears over slowing growth in the United States. The flattening US treasury yield curve stimulated recession fears – ultimately reducing appetite for the Dollar. With the Fed’s 2019 rate hike outlook data-dependent, there will be a special focus on the pending U.S. GDP data. A solid GDP print is seen boosting the Dollar and fuelling speculation over the Fed raising interest rates sooner than expected. However, a disappointing print will be Dollar negative as fears mount over the United States experiencing an economic deceleration.

In the commodity markets, Gold is clearly benefitting from Dollar weakness, volatile equity markets, and expectations of fewer rate hikes in 2019. Geopolitical risks in the form of Brexit-related uncertainty, heightened political risk in Europe and concerns over plateauing global economic growth have also boosted appetite for the safe-haven metal. With the Dollar likely to weaken ahead of the US GDP print, Gold has the potential to extend upside gains. In regards to the technical perspective, prices have already secured a daily close above $1260. The next key level of interest can be found around $1272.

Source link  
Apple shares tumbled nearly 2%

Apple shares tumbled nearly 2% on Monday despite the company unveiling a series of new services at its campus in Cupertino, California. The technology giant...

Asia joins Friday's sell-off

The selloff in US and European stock markets from Friday has spread across Asia at the start of the new trading week, as concerns over the health...

Recovery of emerging markets

The recovery that emerging markets have managed to build throughout the first quarter of 2019 is set to extend further after the downbeat...

Will the old saying 'third time's a charm'?

The past trading week has overall been a grueling week of swings in either direction for the British Pound. In what's been a pivotal week for Brexit...

Pound at highest level since June 2018

It has been yet another dramatic 24 hours of swings both higher and lower for the British Pound as volatility continues in the lead up to the fast...

Brexit remains primary driver for Pound

What's it going to take to appease UK lawmakers on Brexit? Prime Minister Theresa May clearly hasn't been able to find a solution to that...

Pound climbs on 'improved' Brexit deal

The Pound has successfully managed to conclude a recent run of seven consecutive days of declines and has commenced the new trading week with...

Is the bull market under threat?

It has been a decade since the bull market started back in March 2009. If you dared to invest back then in the US's largest 500 companies, you would have earned...

ECB decision alerts Euro sellers

The EURUSD sank below the 1.13 only to pare back losses, after the European Central Bank confirmed reports and decided to offer cheap loans to banks...

In the past 24 hours Bitcoin has gained 0.37% and reached $3976.58765705. Open your trading account with the best cryptocurrency brokers on special terms today.

In the past 7 days the EUR/USD pair has lost -0.4259% and is now at $1.1296. Start trading and making money on Forex today.

In the past 7 days Ethereum has lost -3.23% and is now at $135.301421218. Have the most popular cryptocurrencies compared online 24/7.

Top Brokers offering Forex Market Analysis

Forex Currencies Forecasts

Top 10 Forex Brokers 2019

# Broker Review
5FIBO GroupFIBO Group85%