ActivTrades’ Market Analysts have prepared for LeapRate their daily commentary on traditional markets for August 2, 2019. See details below:
FOREX
The US Dollar is down against other major currencies in Friday’s morning trading, as the markets digest the latest move by President Trump, who yesterday tweeted about his intention to raise additional tariffs on $300 billion-worth of Chinese imports. The timing of the announcement is probably not coincidental and may be part of a strategy pursued by the American president, trying to force the hand of the Fed to drive interest rates lower. The Fed cut rates last Wednesday, by 25 basis points, but Jerome Powell disappointed those who expected a higher degree of dovishness, saying it was only a mid-cycle correction.
However, the latest escalation in trade tension, seen by the Federal Reserve as the biggest threat to the growth of the global economy, is likely to have an impact in the central bank’s future monetary policy. This is the reason for the Dollar losses; markets are pricing in a now increased likelihood of further easing.
Ricardo Evangelista – Senior Analyst, ActivTrades
GOLD
The gold race is back on track and bullion is well positioned to reach new peaks. Trump’s decisions to slap new tariffs against China pushed investors to further bet on the precious metal and the price quickly recovered after the fall seen in the hours which followed the FOMC meeting. Futures prices are now playing with the resistance area of $1,450, while the spot price is around 1% lower, with a trend that still appears bullish.
The scenario is slightly more complicate for silver, as the component of the demand for this metal coming from industrial sector is much higher than gold (where jewellery and investment dominate) and the trade war could have a more significant impact on the grey metal.
Carlo Alberto De Casa – Chief Analyst, ActivTrades
EUROPEAN SHARES
European stocks fell alongside Asia shares overnight and U.S. futures are currently pointing to a lower open. This sell-off took place after the surprising announcement from President Trump that the U.S. will proceed with an additional 10% tariff hike over the remaining $300 billion of Chinese goods coming to the U.S. When explaining the reasons behind such a hike, Donald Trump said he thinks President Xi Jinping wants to reach a deal but things are moving fast enough. An immediate price reaction has been noticed on global stock indices as investor sentiment has been smashed following this week’s disappointing FED and fears of a new cycle of escalating tensions between Washington and Beijing.
Markets are becoming significantly volatile ahead of the last big event of the week: the non-farm payroll report due in a few hours. Today’s job report is expected to be lower than the previous one (previous 224K vs expectations 160K) which could paradoxically play the game of stock traders as it would induce the FED to move closer to another cycle of rates cut.
Pierre Veyret– Technical analyst, ActivTrades