What Trading Opportunities To Look For In The Current Economy
Down She Goes: USD Heads South & Wall Street Turns Bearish
The US dollar index is currently trading at 98.56, down 0.17% or 0.17 points for the day. The greenback rally which has been a dominant feature of US economy for several months is slowing down. Wall Street stocks have lost traction, and sliding fast. The reasons for this are disappointing Q3 earnings reports and plunging oil prices. Analysts have adopted a wait-and-see approach when it comes to stocks, given that there is a high expectation of interest-rate hikes on December 14, 2016. According to the likelihood of interest rates rising (0.50% – 0.75%) on Wednesday, 2 November 2016 is just 9.3%. For Wednesday, 14 December 2016, the likelihood of a rate hike (0.50% – 0.75%) has diminished from 72% on Tuesday, 25 October 2016 to 67.5%, a day later. Additionally, the likelihood of rates remaining at their current level (0.25% – 0.50%) has increased from 21.7% to 25.8%. The greatest chance of a rate hike looks likely to be at the final meeting of the Fed FOMC on Wednesday, 14 December 2016.
WTI Crude Oil Slips below $50 per Barrel and Drags Markets Lower
While yields on government bonds appear to support the likelihood of a Fed rate hike in December, nothing is certain. The S&P 500 index continued to decline, after posting a loss of 0.4% on Tuesday, 25 October 2016. By 1 PM on Wednesday, the Dow Jones was up 0.28% at 18,220.63. The S&P 500 index was down 0.01% at 2,142.91, the Nasdaq was down 0.30% at 5267.44, and the NYSE composite index was down 0.04% at 10,545.60.
Apple Inc (Nasdaq: AAPL) was one such stock that delivered poor Q3 earnings reports, plunging the stock 3.6% lower.
Global equities markets are being dragged lower by the poor performance of Wall Street equities. Added to that are weak prices in crude oil. WTI crude oil (The US Benchmark) is currently trading at $49.43 per barrel, while Brent crude oil (The International Benchmark) is trading at $50.09 per barrel. The reason for the decline in WTI crude oil prices is the increase in US crude oil inventories.
Currency Traders and the GBP/USD Pair, EUR/GBP Pair and the USD/JPY Pair
Further abroad, the GBP and EUR have been on the retreat. Both currencies have plunged to multi-year lows. The GBP hit a 31-year low against the greenback, while the EUR is at a 7-month low. However, for UK and European companies this is good news when it comes to export growth and repatriated earnings. On Tuesday, 25 October, the EUR hit 1.0848 to the greenback, but it has since strengthened to 1.0919, up 0.28% on Wednesday.
The USD/JPY currency pair is trading at 104.5800, up 0.35%, while the GBP/USD currency pair is trading at 1.2231, up 0.35%. Two of the world’s most-watched currencies, the EUR/GBP is currently trading at 0.8928, down 0.07%. Binary options traders have been taking a short-term bearish view on the EUR/GBP pair. And speculators have also taken a short-term bullish perspective on the GBP/USD pair now that the US dollar index indicates weakness for the greenback.
Disclosure: None.
Thanks for sharing