- Euro Falls Back on Core Inflation Numbers
- GBP Hits Lows Despite Positive Data
- Markets Look to Bounce Back to End Week
Both the Euro and Pound started the session on Friday strongly, but fell back following the release of US inflation data which can in slightly higher than expected for August. Sterling in particular has been struggling to gain momentum despite more promising data released by the UK. The forex market appears to be trading largely on the domestic struggles of the Brexit trade debacle. US market futures are also trading positively as they try to rebound again following a big losing day on Thursday.
US Core Inflation Higher Than Expected
Numbers released today in the US show that core CPI inflation came in slightly higher than analysts had expected at 1.7% versus 1.6%. The core number removes volatile food and energy prices from standard CPI inflation. This has also risen on a yearly basis despite dropping from 0.6% to 0.4% for August on a monthly basis. The EUR/USD forex trading market dropped back on the news having previously pushed close to the $1.19 mark.
The move also follows on from comments yesterday made by ECB President Christine Lagarde. She stated that the rising Euro will be closely monitored. The currency has been boosted in recent weeks not only by a weakening US Dollar but also by the fact that European economies have started to bounce back well, in line with expectations.
Sterling Struggle Continues Despite Strong Numbers
The UK released a strong set of numbers for July which would indicate that the domestic economy there is also rebounding well. Industrial production, manufacturing production, and monthly GDP numbers all came in very positive. This did nothing to strengthen the Pound though as forex brokers noted a continued caution around the currency which dropped to multi-week lows early in the day.
These lows have largely been caused by traders who have essentially ignored the economic data and instead focused on the ongoing Brexit dilemma which the UK finds itself in the middle of. The EU has taken a very hard line on British attempts to pass a bill which would significantly alter their withdrawal agreement, threatening legal action. This ongoing saga continues to undermine the value of the Pound and increase caution among forex traders of the pair.
Strong Market Reopening as Wall Street Bounces Back
It has been something of a rollercoaster week for equities markets. A sharp pullback was followed by a rebound on Wednesday, but major markets were down strongly again yesterday. As the opening bell rang again today though, these major names particularly in tech, have attempted to stage another fight back.
Both the S&P 500 and the NASDAQ reopened strongly with gains of close to 1%. This follows a huge sell-off which has seen the NASDAQ fall of 10% in just three trading days. Although a correction had been largely anticipated following the huge run up of late, traders will be hoping to finish the week strongly and avoid back to back weekly losses for the S&P 500.
US Dollar Forex Market Comeback Continues as Stocks Struggle
- EUR & GBP Both Dip Ahead of US Data
- Slowdown in Durable Goods Orders Expected
- US Markets Under Pressure Again
What has been a turbulent week for both the forex market and others, is set to come to a close Friday with yet more uncertainty. The US Dollar has regained some much needed strength this week, though it is in the face of difficulty as many worry about a second wave of coronavirus cases. The Euro was down to a two-month low, while the Pound continued its recent negative run down to below the $1.27 mark prior to US Durable Goods data being released. Another tough day on Wall Street is also expected with market futures pointing downward.
Further Slump as Majors Await US Data
Since reaching highs in recent weeks which were more in response to USD weakness rather than their own strength, it has been a difficult road for both the Euro, and Pound. Both are down further today with the Euro nearing $1.16, a point it has not seen since July. The Pound meanwhile continues to falter and is now well below its recent peak.
The main issues at play here which forex brokers have noted, are the continued uptick in COVID-19 cases in Europe. This has created a negative sentiment which has carried the market lower. Those forex trading have become fearful of a return to lockdown restrictions, and another big stall in the economy. This fear is shared in the UK and has also impacted the Pound. British PM Johnson has noted that the UK will strengthen restrictions if needed. This comes at an increasingly difficult time for Britain as it struggles to address the ongoing Brexit trade deal issue.
American Data Expected to Disappoint
A huge drop off in US durable goods orders which had occurred during the shutdown was followed by rampant recovery within the last three months. The orders data impressed with double digit rebounds in two of the last three reported months. That growth rate looks set to slow dramatically today as August numbers are due later in the afternoon.
The durable goods order data which tracks long lasting consumer goods is expected to come in at an added 1.5% for the month of August. This is a big drop on the 11.4% growth in July and matches the drop off in improvement from the retail sales data which also came in at just a 0.6% improvement earlier in the month.
More Selling Predicted at Opening Bell
It has been a challenging week on Wall Street too with heavy sell offs to start the week only being slightly abated yesterday. Friday looks to be another down day for the markets at least at the open. The pre-market points to a drop of around 150 points in the Dow Jones.
September is traditionally a tough month for the markets, and this is proving to be the case. Even major names like Apple are suffering having lost almost 20% from their high point earlier in the month, while all the major indices are down more than 5% this month to date.
New Restrictions Hurt GBP Forex Market as US Pledges More Aid
- GBP Had Started Stronger on Positive Rates News
- Mixed Opinions From US as Powell Pledges Support
- Markets Continue to Struggle With Second Wave Fears
The Pound has struggled to catch a positive break again today as the UK announce new restrictions to curb the spread of COVID-19. The GBP forex market has struggled for some time to break back to anything high of $1.30 against the Dollar. There were mixed messages too in the US with differing approaches supported the Fed Hierarchy. Meanwhile, markets opened higher, but remain weighed down by fears of a returning coronavirus.
Pound Bounces Back to Tough Position
There was an early boost on Tuesday for Sterling. The currency had originally jumped on comments from the Bank of England Governor Andrew Bailey which dispelled the thought of negative interest rates which many fear have been under consideration. This boost in the forex market was short lived though. The Pound was sent back in the opposite direction by an announcement from leader Boris Johnson that new restrictions will be imposed.
Those forex trading the market remain poised to hear exactly what these new restrictions will be. The exact details are currently being laid out by Johnson, but they are to include increased penalties for non-wearing of masks, and the closure of hospitality venues from 10pm. These changes are being made at what the PM referred to as a “perilous turning point”, and are sure to further rock the currency and economy which has seen a host of troubles lately.
Not All Agree as Powell Pledges Continued Support
Chief of the Federal Reserve Jerome Powell backed up his previous stance strongly on Tuesday in comments to the House Financial Services Committee. He said the Fed “remains committed” to the long-term support of the economy, and will use all their available tools to do so. He noted that although the economy had started to pick up, the road ahead remains vastly uncertain. His tone was one which did not rule out more support, noting that the Fed will continue its support for “as long as needed”.
This sentiment was not echoed by everyone though. There was a different view from Federal Reserve Bank of St. Louis President James Bullard. He is of the opinion, along with several others, that the economy now has enough momentum to get back on its feet even without further economic stimulus.
Markets Open Cautiously Again
US markets have endured a very tough September so far. This challenge only intensified on Monday with another large scale sell-off. The Dow Jones suffered its worst day of the month, while the S&P 500 shed more than 1% en-route to a fourth consecutive losing day.
Forex brokers were not alone in feeling a slight return to form on Tuesday. The major indices climbed a little higher on the opening bell, hopes being held that the slump is over. The next moves though will be largely driven by the news on coronavirus cases, and any further financial aid.
Forex Market Majors Down Further Amid Fiscal Uncertainty
- EUR/USD at Monthly Low as Fed Remain Hesitant
- Pound Falls Further on Negative Rates Possibility
- US Jobless Numbers Drop Lower Again
The EUR/USD continued to fall on Thursday. Hitting its lowest point in one month, the market seems to be heading on a downward trajectory as there was no rush to further stimulus despite a grim economic outlook from the Fed. The GBP also continued to struggle lower on news from the Bank of England that negative rates remain under consideration. In the US meanwhile, although the number of jobless claims fell more than expected, the total still remains challengingly high.
Dollar Strength Returns as Euro Falls
Demand for the US Dollar has rebounded slightly todays as the Euro has continued to slip back against the currency. The pair has now reached its lowest point in a one month period with forex brokers projecting a further battle ahead. This comes in the wake of the FOMC meeting, and comments from chief of the Federal Reserve Jerome Powell that although more fiscal support may be needed, nothing in particular seems to be forthcoming from the Fed at this moment.
The Fed reluctance to add any more stimulus, coupled with the poor retail sales figures showcased for August in the US would appear to have pushed those forex trading the markets, back toward the relative safety of the Dollar. Though this may be no bad thing for the struggling Greenback, it leaves the Euro in a tentative position with many already seeing it as largely overbought.
Brexit Trade Hope Balances Struggling Pound
News that the Bank of England are looking into the possibility of setting negative interest rates to stimulate the economy of the UK made sure that Sterling started off the day with added woes. The Pound bounced back slightly though on news that a Brexit trade deal may not be as dead in the water as was previously expected.
Though the EU and UK have both been at loggerheads during the trade negotiations and with no positive resolution in sight, news emerged today that the UK has offered some concessions on fisheries to the EU. This has prompted the EU chief negotiator, Michel Barnier to say that he still believes a deal can be done. This though, would still appear a long way from certain.
US jobless Claims Slightly Lower Than Expected
Initial unemployment claims continued to trickle down for the last week in the US. Coming in at 860,000 the number of new claims slightly beat estimates, with the number of continuing claims also falling. This number still remains staggeringly high though at 12.6 million.
The general consensus is, that while the numbers are continuing to fall slowly, indicating that more and more people are getting back to work, the numbers remain too high, and falling at too slow a pace to really boost the economy. This is another factor which has backed a push back into the US Dollar as much of the road ahead remains still unknown.