Market Snapshot – Volatile Week Ahead

Stock Markets Bearish

The stock markets have generally been in a bearish mood for the day today as the hurricane in the US, the strength in the euro and the lack of liquidity due to the holiday in the UK seemed to be weighing on the stock markets as a whole. The DAX has been underperforming for the day today as the investors took out their bearish tendencies on the index following the upbeat speech from Draghi on Friday. Though he did not say anything new, the market had decided that it would take the euro on its next bullish leg as long as he was not being dovish and this is what we have been seeing in the markets since that speech. The effects of the Hurricane Harvey is not fully known as yet but the devastation seems to be total and the costs are likely to be large and this is also likely to weigh on the markets in a week that sees the end of one month and the beginning of a new one.

Dollar on the Backfoot

Such a week is always a bit tricky to trade as there are many month end rollovers and flows that happen and we also have a bunch of data welcoming us in the new month. This is going to guarantee a lot of volatility in the upcoming week and with the fundamental events and the geopolitical tensions also lining up, the focus would be on the euro and the dollar in the coming days. The dollar is clearly on the backfoot but all it needs is some strong incoming data from the US for it to reverse course.