Dax Above 200 DMA, Dollar Declines With Riots
London Capital Group | Jun 03, 2020 10:05
DAX breaches its 200-day moving average
Nasdaq on course for new record high (possibly this week)
US dollar falling as protests/looting continue
Last Bank of Canada meeting for Poloz
h2 MARKETS/h2Markets are putting the politics to one side and pinning hopes on a quick economic rebound once lockdown and travel restrictions are lifted. The Aussie dollar continued its multi-month surge after PMI data for China's service sector today showed expansion and Australian GDP fell less than predicted. The US dollar is falling across the board as riots rage despite big city curfews and haven flows dry up. US indices are getting an extra boost from the weaker US dollar which will sure up foreign earnings.
h3 DAX Above 200 DMA/h3European shares are staring to play some catch-up with the United States. The S&P 500 crossed its 200-day moving average last week. Now Germany's DAX has achieved that same feat. Today Germany will announce how and it will lift travel restrictions for EU and other countries this month. If the tourism industry in Germany and elsewhere can salvage some summer holiday bookings it, adds to the economic recovery and reduces the burden of support on governments.
h3 TRADING OPPORTUNITIES/h3Join one of the brand new LCG WEBINAR series - covering everything from the beer industry to fintech shares to breakout trading strategies.
h3 Nasdaq New Record (this week?)/h3Tech stocks continue to carry the Nasdaq higher with gains on Tuesday taking the index just over 1% away from new all-time highs. The broader S&P 500 is now within 10% of a new record. How far the recovery can run after such an uncertain period is unclear but there is now a feeling that the economy has passed its worst. If we are now in a period of economic rebuilding, it stands to reason that technology firms suffered least and are flexible and innovative enough to rebuild faster.
h3 Dollar Falling/BOC Meeting/h3The one place politics could be playing a role is the US dollar. Riots and the chance of US 'troops on home ground' in major cities (temporarily at least) disqualifies the dollar as a haven. Protests and looting are taking place in financial centres New York and Chicago, adding an extra layer of uncertainty. As the dollar declined, the euro has topped 1.12 and the British pound is over 1.26.
The Loonie is back at 1.35 to the dollar with USD/CAD having tanked over 300 pts since last Friday. Bank of Canada's Stephen Poloz will lead his last monetary policy meeting today before he steps down as Governor. Poloz oversaw Canada's first foray into asset purchases this year but will likely lead it to his successor Tiff Macklem to determine the path moving forwards. At the last meeting, the Bank of Canada dropped its forecasts amid the pandemic uncertainty and suggested the economy could contract between -15% and -30% by the second quarter. We think they err towards the rosier outcome of the two today, which should lend support to the Canadian dollar.
h3 Opening calls/h3
Get The App
S&P 500 to open 10 points higher at 3,090
Dow Jones to open 115 points higher at 25,857
Linear Regression imposed on the rally since the March low implies a record high in the Nasdaq by Friday. Of course, the trend can still reverse - or just slowdown - but if it keeps the pace & direction of the last 2 months - we are close to a new record high.
Original Post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.