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Forex Markets: Dollar strength drives key market breakouts – Richard Perry

Forex Markets

Finally after weeks of dull sideways trending forex markets, finally there have been some decisive moves that traders can begin to back.

The big driver has been the dollar strength of the past week that has been gathering pace to generate a series of key breaks on forex markets yesterday.

The big headline grabber has been the 31 year low on Cable (though a combination of sterling weakness and dollar strength), but also the strong dollar has broken a primary downtrend against the yen, whilst also pulling big corrective moves on gold and silver.

Helped by an improvement in US economic data, further hawkish comments from FOMC members Jeffrey Lacker (expected from a hawk) but also Charles Evans who is far more of the dovish persuasion.

This is helping to add weight behind a December rate hike by the Fed, which is becoming ever more likely. The other big angle for the forex markets is the sterling weakness that has helped to drive FTSE 100 to agonisingly within 3 ticks of its all-time high at 7122.

Now that sterling has broken decisively to new lows, the forex markets will be looking at FTSE 100 increasingly as a negative correlation play. The day following a big move can often be key to see the market’s outlook, so that means today’s moves will be intriguing.

Wall Street closed lower by -0.5% and Asian forex markets have been mixed to slightly positive (Nikkei +0.5%) still without any Chinese markets as they remain on holiday. European markets are looking to give back some of yesterday’s gains in the early moves.

The forex markets show mixed moves across the majors but there is a hint that the dollar may be set to unwind some of yesterday’s gains. Gold and silver have bounced slightly after yesterday’s pummelling, but as yet the rebound is fairly minimal. Oil is another 1%higher in early moves.

Today we get an idea of how the dominant services sectors are performing around the world, starting with the Eurozone Services PMI at 0900BST which is expected to be 52.1 with the Eurozone composite PMI at 52.6.

The UK Services PMI is at 0930BST which is expected to drop back to 52.1 (from 52.9). ISM Non-Manufacturing is at 1500BST and is expected to improve to 53.0 (from 51.4). In other data, the ADP employment change is at 1315BST and is expected to show 166,000 (down from 177,000) with US International Trade at 1330BST (-$39.5bn exp) and Factory Orders at 1500BST (-0.1% MoM exp).

Forex Markets: The Euro Snapback – Simon Smith The single forex markets currency has been most notable for the ever tighter trading ranges that ha…Oct 5 2016nigerianews.info


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