ActivTrades’ Market Analysts have prepared for LeapRate their daily commentary on traditional markets for July 26, 2019. See details below:
FOREX
Mario Draghi spoke yesterday at the end of the ECB’s policy committee meeting and the Euro recovered some of the losses recorded during previous sessions, when it had hit 26 months’ lows. Mr Draghi issued forward guidance that, as the markets expected, pointed to a new easing cycle starting in September. But those that expected an immediate rate cut or a more pessimistic tone were disappointed. The President of the ECB was surprisingly upbeat on the prospects for the Euro zone economy, presenting the case for a moderate slow-down, rather than the gloomier scenario predicted by some. Despite the acknowledgement of some headwinds, Mr Draghi’s moderate optimism offered the Euro the support it had failed to find in the run-up to the ECB’s meeting.
Ricardo Evangelista – Senior Analyst, ActivTrades
GOLD
Yesterday’s ECB meeting went as investors forecast and failed to exceed expectations. New expansive measures seem to be ready but Mario Draghi and his team are not yet launching them. For this reason, stock markets weakened while gold declined from $1,430 to $1,415/$1,420. But the main scenario still seems unchanged. Investors are now counting down to the Fed’s meeting: most market players are confident that the US central bank will cut interest rates this time. Markets are also waiting for US GDP data later today. Traders are trying to predict how this data could impact the Fed’s decisions of next week. Any weakness would be seen as confirmation of the need for further rate cuts, with gold ready to continue, in this case, its rally.
Carlo Alberto De Casa – Chief Analyst, ActivTrades
EUROPEAN SHARES
European markets opened mixed for the last trading session of the week, following declines in Asia alongside US Futures. Shares in Europe remain under pressure as they struggle to consolidate after the drop seen yesterday following the ‘not-so-dovish’ ECB display on Thursday. Even though Mario Draghi’s press conference was mostly in line with what investors expected (no rate cut yet but ECB ready for a move in September), traders have been slightly surprised to hear the ECB stating that “risks remain titled to the downside” but chances of a recession stay low. The market’s reaction has been immediate and put significant pressure on stocks while the EUR registered solid gains against almost all major currencies except the U.S. Dollar, as investors now brace for the next FOMC meeting where a 0.25-point rate cut is likely.
Later today the focus will be on US GDP figures, as many anticipate cooler growth this quarter (exp 1.8% vs previous 3.1%). Higher-than-expected GDP data could paradoxically concern stock traders as it might rule out or delay further stimulus from the FED, even though this remains a very unlikely scenario.
In Europe, the best performance is being registered by Zurich with an SMI-20 trading towards 9,900.0pts today. The market is being driven by ROCHE HOLDING (+1.30%) which saw its sales boosted by new drugs in the pipeline.
SMI-20
Pierre Veyret– Technical analyst, ActivTrades