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XTB TRADEBEAT

Stocks sink and USD runs into resistance

Summary:

  • Stock markets turn lower on tariff fears
  • US outperforming China in tech trade war
  • USD runs into resistance
  • GBP jumps on hawkish BoE shift
  • NOK rises on Sep hike hints
  • Crypto little changed after Blankfein offers views

After a bright start European markets experienced a pretty poor session with sizable declines seen across the continent. The DE30 hit its lowest level since April, led lower by automakers as investors fears surrounding the implication of US tariffs grows

The recent trade tariff talk has weighed on risk appetite and there’s been a notable divergence in the last couple of months between Chinese and US tech stocks. With the Nasdaq (US100 on xStation) outperforming its Chinese equivalent it appears that the market is of the belief that the US will outperform tech wise.

There’s been some interesting moves in the US dollar today with the greenback being met with some selling after earlier hitting its highest level since last July. The USD index (USDIDX on xStation) continues to wrestle with resistance around the 95 handle and looking back this could be seen to be an important swing level for possible resistance.

The pound soared even as the Bank of England stayed on hold with interest rates as expected, albeit at the same time Chief Economist Any Haldane decided to enter a rate hike camp for the first time since 2011. Along with Haldane we had two more dissenters such as McCafferty and Saunders. The British currency jumped immediately above 1.32 against the US dollar as the rate hike probability in August climbed notably.

Norwegian policymakers underpinned the krone suggesting a rate hike is likely to take place as soon as September. In a brief statement the bank wrote that the outlook and balance of risks suggests that they key policy rate will most likely be raised in September 2018. The bank admitted that the backdrop for the domestic economy appears to be quite buoyant as an upturn is continuing.

It’s been another relatively muted session for crypto with the markets seemingly licking their wounds after recent declines. Goldman Sachs CEO Lloyd Bankfein openly admitted he did not own any Bitcoins or other cryptocurrencies, but at the same time, he did not rule out the most famous cryptocurrency could have a future.

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