ActivTrades’ Market Analysts have prepared for LeapRate their daily commentary on traditional markets for July 11, 2019. See details below:
The US Dollar is under pressure, following Jerome Powell’s testimony to the congress, which started yesterday. The Chairman of the Fed said, in a pre-written statement, that there are challenges to the growth of the US economy, mainly arising from growing trade tensions.
Having also mentioned below target inflation, Mr Powell effectively laid the ground for a rate cut in July and even managed to out-dovish the FOMC; the subsequent publication of the last meeting’s minutes showed that even the more dovish members of the committee were less assertive than Mr Powell in making the case for a rate cut. As a result, the greenback lost ground to all other major currencies and the S&P 500 broke through the 3000 points barrier, for the first time ever.
Ricardo Evangelista – Senior Analyst, ActivTrades
European stocks edged higher on Thursday following gains in Asia overnight after U.S. indices hit record highs at the end of the trading session. These bullish moves took place after Jerome Powell confirmed June’s job data didn’t change the Fed’s outlook as global uncertainty caused by the trade war with China remains.
The FOMC minutes published after the Fed’s Chairman testimony showed a rate cut could still be appropriate in the ‘near term’ if the incoming data showed further deterioration. However, the market is already pricing in such a cut and investors now wonder whether it is going to be a 0.25% or a 0.5% one. Volatility will likely increase with the release of the CPI data from the US later today as these numbers are closely watched by Fed’s members. In Europe, traders will pay attention to the ECB’s minutes of the June meeting due today.
They come at an interesting time for the European Central Bank as investors will be curious to see if Mario Draghi’s dovish turn will be confirmed or not. For now, the Stoxx-50 index is trading slightly above the 3,500.0pts while the DAX-30 index remains steady over 12,350.0pts.
Pierre Veyret– Technical analyst, ActivTrades