Equities have fallen almost everywhere over the past day on increased fears concerning an Iran peace deal and a hawkish US Fed.
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- The major story in the financial markets continues to be in stock markets, notably the AI sector. However, yesterday saw markets almost everywhere decline quite firmly, as more news emerged that the US, Iran, and at least one Gulf nation have been trading fire quietly in recent days. Federal Reserve Member Logan has also said that monetary policy might be a "bit loose" which would only have added to the chilling effect. The decline was not enough to shake out serious holders of long positions especially in the US, South Korean, and Japanese markets. I believe that a "good" deal will never happen and that markets might suffer when President Trump finally realises this. He has been trying for two months and keeps talking about an imminent deal - where is it?
- Crypto looks bearish, with Bitcoin falling to reach a new 3-month low well below $65k, in fact it was almost a 4-month low. However, there are initial signs that the price is finding support after bouncing back from the lows to start to form a daily candlestick which is close to being a bullish pin bar, or at least a dragonfly doji - signifying long-term investors who believe in Bitcoin will see this as a buying point. This is a sector I will be avoiding at this time.
- Crude Oil has continued to gain moderately over the past day but is starting to trade lower again. This is partly due to the fact that markets are pricing in more of a chance that the USA and Iran will not reach a peace deal soon, even though this seems to have become largely decoupled from risk sentiment. I would not be a buyer, however.
- In the Forex market, the US Dollar is just consolidating even though it is slightly elevated above the range of the past few days, showing no significant direction. The rest of the market has been relatively quiet so far today. I forecasted last weekend that the NZD/JPY currency cross would probably decline this week on a purely technical analysis. So far, this forecast has performed very well.
- Yesterday's potentially high-impact data releases:
- US ADP Non-Farm Payrolls forecast - as expected.
- US ISM Services PMI - slightly higher than expected, but no real market effect.
- Bank of Japan Governor Ueda dropped a hawkish hint on rate hikes.
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