- GBP/USD Falls from Highest Point Since March
- Other Major Forex Markets also Stabilize on Data Release
- Stock Markets Show First Dip in 7 Days
Major markets around the world were pausing for breath on Tuesday after several days of steady strength. The strong comeback in the markets is showing signs of fatigue as traders begin to take profits after unprecedented growth in recent days. This has impacted the forex market too. Both the GBP/USD market, and the EUR/USD market after impressive recent recoveries have taken a backward step.
Pound Retreats From Recent Peak
Forex brokers and analysts noted a steady move toward the US Dollar on Tuesday and decidedly away from the Pound. This is in line with the broader market movement to a slightly more risk averse stance following the recent days of growth. All eyes for the moment will be on the Fed meeting tomorrow and whether any further quantitative easing measures will be introduced. This appears unlikely with rates widely expected to remain the same, though the door will still be left open for more stimulus to be provided.
Similarly across the pond in the UK, the Bank of England are scheduled to meet on Friday. They too were rumored to be considering a move toward negative rates, though this seems to have been put off, particularly with the market strength which has become apparent in recent days. Both of these meeting could do a lot to shape the short-term picture for the GBP/USD.
EUR/USD Also Drops Back Slightly
The EUR/USD also fell today to a weekly low point as it now trades back around 1.13 levels. With a quiet day in terms of economic news from the bloc, it is likely this forex trading fall back is the result of an early dip in the US as well as a move toward conservatism as traders await the outcome of Wednesday’s Fed meeting.
Another factor which may well have influenced the currency beyond increased US Dollar strength is the release of German trade data. This came in much as expected with both imports and exports sharply declining by 16.5%, and 24% respectively. Although this had been expected during the coronavirus lockdown period, it may still have rocked traders who were buoyant after such strong market gains in previous days.
US Markets Fall Sharply After Consecutive Gains
Following 6 consecutive days of positive movement and market gains, stocks fell sharply at the opening bell on Wall Street today. Giving back almost all gains from the previous day, the Dow Jones slumped 1.4% at the time of writing with other major indices following a similar pattern.
There continues to be much positivity with the economy opening up again, but the general consensus from analysts across the industry is that it may just be a case of, too much, too soon. Even though data is improving with more than 2.5 million jobs added in May, there is still a way to go before full recovery can be declared.
US Dollar Forex Market Dips on Hopes of New Stimulus Deal
- Dollar Loses Strength on Fresh Deal Hopes
- Market Eyes Fed Speakers and Presidential Debate
- Big Stock Rally Sees Confidence Return
The Dollar lost some strength in the forex market today as hopes lifted that a new fiscal package could be agreed in Washington. This comes as it was announced Monday that the democrats are to unveil a $2.2 trillion dollar aid bill. Also on the mind of traders today is the upcoming presidential debate, the first of the season which is slated to take place later on Tuesday. Meanwhile, stock market futures look quiet at the market takes a breather following a strong rally to start the week.
Coronavirus Aid Bill Brings Renewed Optimism
Republicans and democrats to date have failed to reach agreement on any additional stimulus for the US economy. House speaker Nancy Pelosi announced on Monday though, that the democrats will put forward a new, compromised proposal for agreement. This package is worth a total of $2.2 trillion. Prior talks had broken down in August with both sides unable to agree a deal, though there seems to be renewed hope this time around.
This has brought a sense of confidence to many forex trading the markets, and has led to a push away from the relative safety of the US Dollar again. The US Dollar Index has retracted slightly on the news, though it is still a long way above previous lows from August. The proposed new stimulus package is also set to include another $1,200 payment to each American taxpayer.
Fed Speeches and Presidential Debate Awaited
It will be a busy day for many from the Federal Reserve. There are many scheduled to address congress today and provide an update on the fiscal situation as they see it. This list does not include Federal Reserve Chairman Jerome Powell, though forex brokers and analysts alike, expect the message which is delivered to be similar to last time out. That was that to broadly encourage the government to provide additional stimulus.
The other big speakers of the day will be in debate format as President Trump and Joe Biden take the stage in the first of three televised US Presidential debates scheduled prior to the election. Many will be hoping that a clear winner here can provide more certainty to the economy moving forward. Something that is missing in the current moment.
Markets Look to Pick Up From Strong Recovery
There was a much needed positive day on Wall Street yesterday. Major markets started the week up more than 1.5% each. The Dow S&P 500, and NASDAQ all passing these levels. Traders will be hoping to carry on with that positive momentum when the opening bell comes later this morning.
It remains to be seen if the market will show any reaction to the proposed new stimulus bill, though this evening’s debate is poised to have a bigger impact than usual. Either way, it promises to be an eventful couple of days for trading on the equities front.
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.