Currency Market Do Not Share Trade Optimism

Key US indices continue to rush historical highs. Futures on S&P500 crossed the 3100 mark, adding one third to the price against the lows of the end of last year.
Alexander Kuptsikevich

Again the growth was based on the promises of Larry Kudlow, the White House economic advisor, said that US and China ‘getting close’ to trade deal. However, as many times before, he did not provide any details and did not give promises.

To see the full picture, we should also take into account that Trump still promises to raise tariffs if the deal is not reached. However, Kudlow’s optimistic tone after his meeting with Trump increased stocks purchases.

The US dollar retreated 0.3% on Thursday, which also indicates a potentially increased demand for risky assets. Although, the dynamics of other markets set up to a cautious touch of highs rather than a broad market rally.

On Friday, Asian indexes grew to Thursday closing levels, but lose a significant part of the growth from the initial jump on the opening. The Chinese yuan traded close to 7.0, but shy grew further from this point, which looks like a significant line on the sand. It is worth mentioning the suffering of South American currencies. The Chilean peso lost 2% on Thursday, bringing the losses since the beginning of the week to 7.7%. The Brazilian real and Argentinean pesos are also under increased pressure this week.

The cautious mood in the markets also applies to the Egyptian pound, Russian ruble, Turkish lira. Each case has its miseries. However, often in periods of genuinely massive optimism, investors are building up positions in these currencies due to their high yield.

What even more alarming is the increased demand for the Japanese yen and the Swiss franc to the US dollar this week. In both cases, the markets failed to cross the line in the form of 200-day average, which often acts as an indicator of the trend for large investment banks. This should be considered as a sign of uncertainty of currency market players in the context of the main trends break, considering the peak of trading optimism as an opportunity to buy “safe havens” cheaper.

This article was written by FxPro

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US