GO Daily News: Wednesday 13/06/2018
Go Daily News Wednesday 13/06/2018By Deepta Bolaky
Muted reactions were seen across the markets following the historic meeting between the President Trump and Kim Jong-Un. It was a positive event resulting into the signing of an agreement intended to denuclearize but investors were mostly concentrating on the upcoming central bank meetings this week. It is reported that US also agreed to suspend military drills in South Korea.
Despite the subdued reaction, investors are reassured that there is some degree of calm on the geopolitical front event tough it might be only temporary. Major US equities indices, European bourses and Asian stocks ended the day pretty much flat.
WS30, US500 and NDX100 (Hourly Chart)
Source: GO Markets MT4
Following a drop of 0.08% in the CBOE Volatility index, safe havens like Yen and Gold, which normally rise during periods of volatility, fell. After being on bid mode yesterday, Gold prices fell by 0.34% and is currently trading at $1,295.70 as of writing. Aside from the political instability, renewed US Dollar strength also put pressure on the prices of the yellow metal.
After an initial boost from Iraq against lifting supply, Oil prices took a beating on the API reports of an increase in crude oil stock by 883k barrel.
Bolstered by a strength in the Chinese Steel markets, Iron ore prices rose on Tuesday.
FOREX & CRYPTOCURRENCIES
Moving on to the forex market, investors turned their focus to the central bank meetings. Attention is directed mainly to the FOMC meeting today.
The US Dollar rebounded to 3- weeks high ahead of the FOMC meeting and strengthened against its major rival currencies. The Dollar caught the bid tone on the news that Powell is “considering” holding a meeting press meeting after every policy meeting. This news were interpreted as bullish because the markets forecasted key policy changes over the months.
AUD was the worst performing currency yesterday amongst the G10 currencies. Lack of data after the long weekend is exposing AUD at the broad market sentiment. Australian jobs reports scheduled on Monday could give some direction to AUD.
In UK, Theresa May emerged victorious on a key vote against Tory rebellion. GBP edged higher on the votes against the Lords “meaningful vote” but dropped after mixed UK data. Sterling trades might see some volatility or trading opportunities today on the release of UK inflation figures.
Soft German data reinforced the fact that the Eurozone is experiencing a soft Q2 making it hard to restore investor confidence given the ongoing trade and political concerns already unsettling investors.
With a drop of 0.08% in the CBOE volatility index, overall risk sentiment has improved.
The cryptocurrency markets are still under immense pressure. After a hyped period last year, Bitcoin tumbled to fresh lows and the overall cryptocurrencies market are coming under increased scrutiny as there are concerns over the viability of this market.
Source: GO Markets MT4, Bloomberg,TradingFloor.com, CNBC, AFR
Markets are dominated by central bank meetings this week. Fed and ECB meetings will see talks about the bond buying programme.
What to expect in the upcoming FED meeting scheduled today:
A 25bps rate hike is widely expected.
- Traders will keep a close watch on the “tone” used by the central bank to gauge future interest rate hikes.
- Talks about balance sheet normalisation. Fed to plan the gradual policy shift adopted during the financial crisis.
Other key events on the calendar:
- RBA’s Governor Philip Lowe Speech
- UK inflation figures
See more information about the coming week with our Economic Calendar