Market Snapshot – Weak Economic Data from the US Weighing on the Markets

The European stock markets continue to trade within a tight range but with a bearish bias. The euro currency is up and that is weighing on the stock markets in the Eurozone. In the morning, we had some strong data from China but that has still failed to enthuse the stock markets in Europe which are down for the day. The FTSE has bucked the trend so far and has been trading strongly but the DAX is down by close to 100 points for the day and we believe that this kind of choppy trading is set to continue in the markets in the short term with the issues of tapering and Brexit negotiations looming ahead.

The disappointing data from the US is likely to weigh on the dollar in the short and medium term. We are seeing some major unwinding of dollar positions and this might continue in the medium term and bring about a major change in the market. The dollar is not being helped by the Fed and it is not being helped by the incoming data as well and that leaves it to the mercy of the markets which have not been kind so far. The Fed might be laughing smugly as they see the dollar getting weakened which might be part of their larger monetary policy under the Trump administration and they seem to have done little to change that. As a result, we are seeing gold progress against the dollar as well and is up by about $10 since the weak data from the US was released last week.