ActivTrades’ Market Analysts have prepared for LeapRate their daily commentary on traditional markets for August 7, 2019. See details below:
FOREX
The Yuan is recovering some of the ground lost earlier in the week against the Dollar, with both the onshore and offshore currencies up on the day by around 0.3%. This occurs as a result of the intervention of Chinese state banks, which reportedly have been tightening the supply of US Dollars, in an effort to support their own currency and prevent further devaluations. This action can be interpreted as a calculated measure by the Chinese authorities, who earlier in the week fired a warning shot, allowing their currency to drop below the psychological level of 7 to the Dollar. For the moment, Beijing appears to be intent on stopping short of opening a new front in the trade conflict, by adding currency to the equation, but the tone has been set and further belligerence from the US side is likely to trigger further yuan devaluations.
Ricardo Evangelista – Senior Analyst, ActivTrades
GOLD
As investors’ confidence in further cuts by the Fed grows, gold continues its rally and is getting closer to $1,500. After the new escalation of the trade war, investors are betting even more on bullion and are loading up on the precious metal. The move above the $1,450 level has made space for further rallies and the price hit a fresh 6-year top, while the threshold of $1,500 is no longer a mirage.
Carlo Alberto De Casa – Chief Analyst, ActivTrades
EUROPEAN SHARES
European stocks are edging higher, alongside U.S. Futures, following a string of good corporate reports. However, these bullish moves on stocks haven’t been registered with significant transaction volumes and no strong technical levels have been cleared yet, making the current very short-term trend a potential “pull-back” before the storm. Even if Monday showed the biggest one-day drop in global stocks since February 2018, several bearish leverages may indicate the slide is not over yet. Fears of escalating tensions between the U.S. and China linger after Beijing denied U.S. accusation of market manipulation as the nation said the new Yuan rate was decided by the market, not the government.
Meanwhile, movements on other asset classes also clearly indicate investors’ lack of interest on stocks as they shifted their focus to other markets like currencies following the surprising decision on rate from the RBNZ and speculations towards the next move on monetary policy from the Reserve Bank of Australia. Elsewhere, investors will also pay attention to policy maker Charles Evans’ speech (Chicago FED) in the afternoon as they are looking for clues on the FED’s next move.
Markets have entered into a consolidation phase in Europe, the Stoxx-50 index is heading back towards the 3,330.0pts level and the DAX-30 index is struggling to clear the 11,700.0pts level which could open the way to 11,735.0pts shortly. An increasing market volatility may be observed in the afternoon as investors await U.S. data on crude oil inventories, which could also have a strong impact on stocks.
DAX-30 index chart
Pierre Veyret– Technical analyst, ActivTrades