Fundamental Analysis

Greenback Extends losses as Stocks Hold Gains

April 11, 2018
US Equities
The US stock futures hold steady, defending the gains of the Chinese President Speech. Stock market worldwide was strong yesterday, as markets got excited and traders felt some relief in the pressure of the trade war. US major indices couldn’t break the highs of last week, since some of the market participants, are still cautious and waiting for clear decisions regarding the trade war.

The greenback extended losses on Tuesday, as risk appetite improved. Today is a busy day on the US economic calendar as the consumer price index and FOMC meeting minutes are due. Core CPI numbers year on year are expected to rise above 2% for the first time since April last year. Strong inflation numbers will ensure that the Federal Reserve will continue tightening their monetary policy by hiking interest rates.

Euro gained strength yesterday on the comments of the European Central Bank policymaker, Ewald Nowotny, where he stated that the bond buying program held by the ECB will be reduced by the end of this year. The president of the ECB, Mario Draghi, will be speaking at the Generation Euro Student’s award Ceremony.
The British Pound rallied to two weeks high on the favored risk appetite and the positive outlook of the British economy. Markets are pricing in a chance of 80% that the Bank of England will be raising rate in May. The cable gained strength also from the comments of one of the Monetary Policy Committee members, Ian McCafferty, where he expects the wage growth to prove stronger than what the BoE expects, which will add pressure on inflation. In terms of data, manufacturing production, industrial production, and the trade balance are due today.
Gold prices rose for the third consecutive day, on the weakening United States Dollar. Moreover, gold prices are gaining some ground as investors are posing for the geopolitical tension. The world awaits the response of the United States on the use of the chemical weapons in Syria. Investors rush to gold in the cases of political and financial uncertainty as they consider it a Safe

Oil traded at the highest in two weeks as the geopolitical tension is rising. West Texas Intermediate is less than two dollars away from posting the highest price since 2014. However, the increase in the US crude inventories that was reported by the American Petroleum Institute on Tuesday, pared some of the gains. Oil traders are waiting for the official crude inventories to be released Energy Information Administration today.
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