Market Snapshot – European Stock Markets Slide as Dollar Fades

European Stock Markets Under Pressure

With not much of news or economic data around, we are seeing some profit taking happening in the markets in a small scale and some consolidation and ranging in some parts of the markets as well. The DAX is down for the day as the tension between Germany and Turkey escalates with German companies being accused of terror links. With the euro continuing to be strong and with not much of correction so far, it is proving to be a strain on the European stock markets but with today marking the end of the week, the action is pretty much limited. The ECB yesterday failed to deliver on its dovish promise and with the data overwhelmingly in favor of tapering, we are seeing the ECB being pushed into a corner. This is affecting the stock markets and the pressure on the markets is mainly due to this factor.

Dollar Continues to be Weak

On the other hand, its a kind of reversal of roles in the US with the dollar being thrashed around and with the stock markets in the US being on a strong and steady footing so far. Trump had specified his intent on having a weak dollar at the beginning of the year and he has indeed delivered on that promise but not in the way that he would have liked. Its not as though the Fed had a choice to keep the dollar strong or weak. The economic data from the US over the past couple of months has been very bad and this coupled with the administrative paralysis from the Trump team is making it very difficult for the dollar to manage any kind of a bounce.