Calm Returns to Markets….but for how long?

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A semblance of stability is returning to financial markets as investors sweep aside trade disputes and global growth fears to focus on the US earnings season.

The overall market mood seems to be improving amid easing US-Saudi tensions and this continues to be reflected across global equity markets. Asian shares concluded Tuesday’s trading session on a positive note amid the rebound in risk sentiment while European stocks followed a similar pattern. Wall Street rallied as strong earnings from financial and healthcare companies boosted investor confidence with the Dow Jones jumping more than 500 points.

Although robust corporate earnings are likely to inject equity bulls with a renewed sense of confidence, the question is for how long? With the various fundamental themes weighing heavily on global stocks still present, it is too early to rule out further declines in the future.

Emerging market currencies fight back

Emerging market currencies are holding their ground against the Dollar with the Turkish Lira, South African Rand and Argentine Peso among many others venturing higher.

The near-term outlook for EM currencies could be positive if risk sentiment continues to improve and the Dollar weakens further. In China, the Yuan is struggling for direction against the Dollar with the USDCNY trading around 6.9100 as of writing. Technical traders will continue to closely observe how prices react around the 6.9000 level. A break below this region may open the gates towards 6.8870.

Currency spotlight – EURUSD

The EURUSD slammed into a brick wall in the form of 1.1620 on Tuesday before later sinking back towards 1.1575.

Although the technical picture on the currency pair remains somewhat bearish, the trend could shift if a daily close above 1.1620 is achieved. If bulls are able to conquer 1.1620, the next key levels of interest will be found at and 1.1670 and 1.1730. Alternatively, a breakdown below 1.1550 is likely to inspire a decline back towards 1.1450.

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