- GBP/USD Falls from Highest Point Since March
- Other Major Forex Markets also Stabilize on Data Release
- Stock Markets Show First Dip in 7 Days
Major markets around the world were pausing for breath on Tuesday after several days of steady strength. The strong comeback in the markets is showing signs of fatigue as traders begin to take profits after unprecedented growth in recent days. This has impacted the forex market too. Both the GBP/USD market, and the EUR/USD market after impressive recent recoveries have taken a backward step.
Pound Retreats From Recent Peak
Forex brokers and analysts noted a steady move toward the US Dollar on Tuesday and decidedly away from the Pound. This is in line with the broader market movement to a slightly more risk averse stance following the recent days of growth. All eyes for the moment will be on the Fed meeting tomorrow and whether any further quantitative easing measures will be introduced. This appears unlikely with rates widely expected to remain the same, though the door will still be left open for more stimulus to be provided.
Similarly across the pond in the UK, the Bank of England are scheduled to meet on Friday. They too were rumored to be considering a move toward negative rates, though this seems to have been put off, particularly with the market strength which has become apparent in recent days. Both of these meeting could do a lot to shape the short-term picture for the GBP/USD.
EUR/USD Also Drops Back Slightly
The EUR/USD also fell today to a weekly low point as it now trades back around 1.13 levels. With a quiet day in terms of economic news from the bloc, it is likely this forex trading fall back is the result of an early dip in the US as well as a move toward conservatism as traders await the outcome of Wednesday’s Fed meeting.
Another factor which may well have influenced the currency beyond increased US Dollar strength is the release of German trade data. This came in much as expected with both imports and exports sharply declining by 16.5%, and 24% respectively. Although this had been expected during the coronavirus lockdown period, it may still have rocked traders who were buoyant after such strong market gains in previous days.
US Markets Fall Sharply After Consecutive Gains
Following 6 consecutive days of positive movement and market gains, stocks fell sharply at the opening bell on Wall Street today. Giving back almost all gains from the previous day, the Dow Jones slumped 1.4% at the time of writing with other major indices following a similar pattern.
There continues to be much positivity with the economy opening up again, but the general consensus from analysts across the industry is that it may just be a case of, too much, too soon. Even though data is improving with more than 2.5 million jobs added in May, there is still a way to go before full recovery can be declared.
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