As the Brexit-hit pound continues to get a hammering, the FTSE is still going strong despite an otherwise lackluster day in the stock markets. The GBP/USD broke below the 1.29 handle to reach its lowest level since last August, while the EUR/GBP hit a fresh high for the year at 0.90 and the GBP/JPY dropped below the May low of 143.20, as investors fretted over the prospects of a no-deal Brexit. The weakness of the pound may be the reason why the FTSE is trading higher.
It’s been a relatively quiet day for many major currencies today, with a dollop of weakness in the Canadian dollar and a touch of strength in the Australian dollar after last night’s RBA meeting the most notable moves so far. While British pound/U.S. dollar (GBP/USD) currency pair has been essentially flat on the day, there are a couple of major events coming up on Friday that could shake the pair from its top.
U.S. benchmarks are steady this morning and the S&P is within 1% of its all-time high. Our outright Bullish stance has paid off, but key technical resistance sits overhead (discussed in the ‘Technical’ section below). The Nasdaq is also within 1% of its record high and both levels should be watched closely, we have called for these to be achieved before the end of the week.
Fears of a full-blown trade war between the world’s two biggest economies are set to intensify after the Trump Administration announced another round of tariffs on Chinese products on Tuesday. In a move that is likely to cause the further deterioration of US-China trade relations, the United States will begin imposing 25% tariffs on $16 billion of Chinese imports starting from Aug. 23. With Beijing expected to fight back by targeting $16 billion worth of U.S. goods with equal tariffs, the US-China trade saga could get even messier.
While the market starts to come to grips with the new sanctions on Iran and a larger than expected crude draw, as reported by the American Petroleum Institute (API), what should concern them is that U.S. crude oil production is not quite what it was fracked up to be.
Global equity bulls were lingering in the vicinity during Tuesday’s trading session as investors diverted some attention from trade war concerns to focus on strong U.S corporate earnings. Asian stock markets have ventured higher following the robust earnings-led gains on Wall Street overnight.
Asian stocks rallied on Tuesday, following a surge on Wall Street that sent the S&P 500 to a near all-time high and the Cboe’s Volatility Index to its lowest level since late January. The strong earnings season has been the key factor lifting U.S. stocks. With 24.1% earnings growth and more than 79% of S&P 500 companies managing to beat profit forecasts it looks to be the best earning season in recent history.
The American Financial Exchange, an electronic exchange for direct lending and borrowing for American financial institutions, announced daily, weekly and monthly record transaction volumes. The exchange had a record day of $1.089 billion on Monday, July 30; $4.983 billion for the week of July 30; and $16.439 billion for the month of July.