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This Wednesday the USD is trading higher while the GBP has declined. Markets react to U.S. and North Korea back and forth threats. 

1 – USD Regains Losses

The US dollar (USD) returned with a vicious comeback yesterday after a lackluster session. It rose to a 1-week high after data showed that US job openings surged to record highs in June. The labor department said job openings reached their highest level since 2000.The dollar index was up 0.34% to 93.745.

2 – GBP Extends Decline

GBP/USD declined further, reaching a low of 1.2952 down from 1.3050. The Job openings data was overall USD supportive as market participants believe now that the Federal Reserve (Fed) has actually got ammunition to continue on its path of raising rates in 2017. The good jobs data came on top of a positive Nonfarm Paryolls (NFP) reading last Friday reinforcing the view that the US is growing its employment sector.

3 – Gold Reacts to Trump’s Threats with North Korea

As mentioned, the USD strengthened following the jobs data, however subsequent give and taken threats from North Korea and President Trump (he said that if N. Korea continues threats, then it will face the US’s “Fire and Fury” in an unprecedented way) caused a whipsaw action in the markets. A perfect example was GOLD, which tumbled from 1265 to 1251, only to rebound back to 1265 shortly after as traders sought its relative safety.

4 – Shares Decline Amidst U.S. And North Korea Conflict

Asian shares and U.S. stock futures slipped on Wednesday and investors sought havens such as U.S. Treasuries, gold and the yen as tensions on the Korean peninsula escalated, with Pyongyang saying it is considering plans to attack Guam. European bourses also looked set to open lower across the board, with DAX futures already down 0.7% in early trade.

5 -Friday’s Inflation Data in Sight

Markets will wait for Friday’s inflation data for further direction US on core Consumer Price Index (CPI) which is expected to show a mild increase to 0.20% in the month of July from 0.1%. any slight increase could cause another round of big moves. Noteworthy is the fact that banks are in holiday mode; any moves can be one directional due to the lack of enough liquidity.

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