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XTB TRADEBEAT

Equities look to recover after bad week; CAD moving higher

Summary:

  • Stock indices around the globe have endured a difficult week
  • Uni Mich shows improving sentiment but USD still under pressure
  • Rising inflation boosts CAD
  • Gold breaks to 2017 high

It’s been another tough week for stock market bulls with some sizable declines. The final trading session of the week has seen a red open for US markets, with leading indices looking increasingly susceptible to a correction. Yesterday was another bad session for the US500 which saw another major down day after the drop seen the previous Thursday.

 A positive data point from the US has rounded off the weekly economic calendar with the latest University of Michigan consumer sentiment index bouncing back after some recent weakness. A reading of 97.6 is back around the high levels seen at the start of the year and given that the prior two readings were 93.4 (revised higher from 93.1) and 94.5 it could be considered an upside surprise. 

The July reading for Canadian CPI showed an increase on the previous month’s +1.0% year-on-year print in coming in at +1.2%. This rise in price pressure was also supported further by two of the components with increase also seen in the median CPI Y/Y (+1.7% vs +1.6% prior) and the trimmed CPI Y/Y (+1.3% vs +1.2% prior). In terms of market reaction the Canadian dollar has received another boost after what has been a good week for the currency.

Gold prices have been buoyed of late mainly on the back of mounting geopolitical as well as terrorist tensions. Firstly, Trump’s remarks aimed at North Korea exerted upward pressure on prices. Secondly, rumors with regard to a possible resignation of Gary Cohn from its post sounded the alarm as far as US politics is concerned. Finally, terrorist attacks which took place in Spain added fuel to the fire. Put all the above-mentioned together, we have a mixture underpinning precious metals.

The last trading day this week is bringing some corrective moves across a majority of digital currencies except for Litecoin which is soaring the most since the beginning of July. The price could be buoyed following the news that the Kohinoor restaurant in San Antonio, Texas, begins accepting Litecoin as a payment. On top of that, there are rather muted swings on other cryptocurrencies as traders are possibly cashing in on their longs before the weekend.

 

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