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Dollar Gains From Tech Stocks Turmoil; Sterling Weakens By Investing.com

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By Peter Nurse

Investing.com – The dollar gained in early European trade Wednesday, with the sharp selloff in U.S. equity markets prompting traders to ditch riskier currencies in favor of the world’s reserve currency. 

At 3 AM ET (0700 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was up 0.1% at 93.562. The index has risen just short of 1% over the last week, climbing from the more than two-year lows it touched earlier in the month.

“The tech selloff has caught the market by surprise and it is a bit jittery as to whether there are broader implications,” said Bank of Singapore currency analyst Moh Siong Sim, in a Reuters report.

“It might force some position unwinding in other parts of the market, and that’s probably what we’re seeing right now,” he said.

slipped 0.1% to 1.1768, continuing to retreat from the 1.20 level it briefly touched last week before European Central Bank chief economist Philip Lane’s comments that the exchange rate mattered to monetary policy.

With this in mind, Thursday’s ECB meeting looms large, with investors looking to closely monitor any comments on the euro given it has still risen 10% since coronavirus lockdowns started in March, even with the recent retreat.

“We think it is too early for the ECB to forcefully talk down the euro this week,” analysts at ING said, in a research note. “We don’t look for Trichet-like comments on a ‘brutal’ EUR appreciation. Rather, President Christine Lagarde may highlight that the central bank monitors the euro closely while reiterating that the exchange rate isn’t seen as a target.”

Elsewhere, worries about Brexit trade negotiations have pushed the pound down to levels last seen at the end of July. dipped 0.4% to $1.2939, while rose 0.3% to 0.9093.

Britain will set out its blueprint for life outside the European Union later Wednesday, publishing legislation a government minister acknowledged would break international law in a “specific and limited way”.

This is unlikely to be received favorably in European circles, increasing the likelihood of a messy end to the post-Brexit transition period at the end of the year.

“While we still see an above 50% probability of a deal, the lack of risk premia priced in suggests further downside to the currency in coming weeks, particularly if little progress is made ahead of the 15 October deadline,” said ING, in a research note.

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Pound Holds Steady on Brexit Deal Optimism By Investing.com

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© Reuters.

By Yasin Ebrahim

Investing.com – The pound held steady against the dollar on Monday, shrugging off renewed demand for the safe-haven greenback on expectations the U.K. and EU will eventually reach a Brexit deal after both sides agreed to push out the deadline to reach a consensus. 

fell 0.13% to $1.3024.

Brexit talks, which resumed last Thursday, were extended to Wednesday, when EU Brexit negotiator Michel Barnier is expected to attempt to bridge some of the divide between the U.K. and EU.

Ahead of the talks, Barnier’s effort to clinch a deal could receive a boost on hopes German Chancellor Angela Merkel may be able persuade French President Emmanuel Macron to ease his stance on the key sticking point of fishing rights.

Britain has stressed that it prefers to take control over access to its waters, when the Brexit transition period ends. Macron, however, fears that a softer stance on fisheries could see French fishermen sacrificed.

The optimism on progress this week had been tempered somewhat following reports the U.K. is waiting until after the U.S. election to reveal its negotiation strategy as a Joe Biden victory could weaken Britain’s negotiation stance. Biden had previously stressed that a U.K.-U.S. deal would depend on Britain securing a deal with the EU.

British Prime Minister Boris Johnson, however, said Brexit and the U.S. election result were “entirely separate,” according to U.K. media reports.  

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Markets Week Ahead: Dow Jones, US Dollar, Stimulus, GBP, Brexit, EUR, ECB, JPY, BoJ

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Global market sentiment remains fragile heading into a busy week. The Dow Jones and US Dollar eye ongoing fiscal stimulus talks as the election nears. GBP/USD remains glued on Brexit negotiations. …



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XAUUSD Coils Ahead of Next Big Break

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Gold Price Forecast Talking Points:

  • Gold prices remain in a falling wedge pattern that’s been building for more than two months.
  • Ahead of this recent digestion, Gold prices were breaking out with aggression, setting a fresh all-time-high in early-August. Are bulls waiting to drive that next break?
  • The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.

Last week saw Gold prices tease a bullish breakout. But, buyers stepped back before a re-test of the prior October high and, so far, Gold prices have continued in the digestion backdrop that’s become commonplace over the past two months.

As looked at last week, Gold prices remain in a falling wedge pattern after the bullish breakout drove through the August open. This isn’t the first time that Gold prices have formed a falling wedge during this recent bullish cycle, as similar scenarios presented itself in Feb-May of last year and then again from September-December. Such formations will often be approached with the aim of bullish breakouts, begging the question as to whether or when buyers might be ready to resume the bigger picture trend in the yellow metal.

Gold Forecast

Gold Forecast

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To learn more about falling wedges, check out our DailyFX Education section.

Gold Daily Price Chart

Gold Daily Price Chart

Chart prepared by James Stanley; Gold on Tradingview

Gold – Deeper Support Potential

On a shorter-term basis, there could be scope for a deeper pullback while that longer-term wedge remains in-play. Price action in Gold appears to be slipping below the bottom-side of the 1900-1920 zone, and underneath price action is another area of possible support running from 1859-1871. This zone is what helped to catch the low in early-August, and came back into play in late-September. Prices in Gold could dip down to this zone while still remaining above the September swing-low; setting the stage for another run at resistances of 1900, 1920 and eventually 1933 (the October swing-high).

Top Trading Opportunities in 2020

Top Trading Opportunities in 2020

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Gold Four-Hour Price Chart

Gold Four Hour Price Chart

Chart prepared by James Stanley; Gold on Tradingview

— Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX





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