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Daily Market Review – 03/05/16

While many traders who are based in Europe and the Americas often turn a blind eye to what is happening in Asia, it is a good idea to know what is taking place in China, Japan and Australia among others. The global economy has grown so integrated that when one of the Asian giants coughs everyone feels the affect. Having said that the Reserve Bank of Australia lowered their main interest rate early on Tuesday by 0.25%. This sent the AUD down across the board in FX.

Also from China, the Caixin Manufacturing PMI came in weaker than expected. This has set off tremors among early morning traders and financial institutions because it refutes many analysts who have recently proclaimed that the Chinese economy is healthy – it is not. Stock markets will have to interpret the outcome and decide if their outlooks for the Asian economy and – thus the global economy – are rosy or cloudy. Wall Street turned in gains yesterday, this occurred even as the ISM Manufacturing PMI from the States proved disappointing.

The USD The USD The USD is the official currency of the United States of America. It is the largest reserve currency... More is the official currency of the United States of America. It is the largest reserve currency... More has continued to be put on its heels against the majors (except the AUD early today) with FX traders starting to doubt in tandem that the Federal Reserve The Federal Reserve The Federal Reserve The Federal Reserve is the Central Bank of the United States of America and sets the monetary policy When used by traders and investors monetary policy When used by traders and investors monetary policy When used by traders and investors monetary policy usually refers to Central Bank policy concerning ... More usually refers to Central Bank policy concerning ... More usually refers to Central Bank policy concerning ... More ... More is the Central Bank of the United States of America and sets the monetary policy... More is the Central Bank of the United States of America and sets the monetary policy... More has the ammunition to raise their interest rate in June. Recent data from the States this past week including yesterday have been negative, now jobless data lurks in the immediate shadows and the Greenback The USD is the official currency of the United States of America. It is the largest reserve currency... More has proven weaker against the EUR The EUR The EUR is the official currency of the European Union. Presently 19 out of the 28 collective  nati... More is the official currency of the European Union. Presently 19 out of the 28 collective  nati... More and GBP The GBP The GBP is the official currency of the United Kingdom. The GBP is a major currency and currently ra... More is the official currency of the United Kingdom. The GBP is a major currency and currently ra... More so far this week.

The U.K. will release PMI Manufacturing data at 8:30 GMT today. The U.K. economy is not strong either. However the GBP after getting scorched early in the year because of fears of a Brexit has been battling back largely on the sentiment that U.K. voters will decide to stay in the European Union. It is still an open question what the outcome of the June vote will be, but traders are certainly starting to take positions now and ‘vote’ with their money.

Commodities also need to be watched carefully. Crude Oil and Gold have done well recently. But why? The global economy has not exactly shown signs of massive growth. Crude Oil has certainly shown the capability of holding onto its gains recently, the move has also been taking place – not so coincidently – with the USD getting weaker. The possibility of divergence could be nearing. Has Crude Oil grown too strong?

Crude Oil chart this morning approximately 6:30 GMT, 3 May 2016

Crude Oil chart this morning approximately 6:30 GMT, 3 May 2016