Traders are very optimistic this morning and this could push the European markets higher today. The optimism came from the Fed minutes last night and much of the emphasis was focused on the strength of the dollar. Although, it is fair to say that the Fed were very neutral in their tone with a pinch of dovishness, but at the same time, a rate hike was also mentioned. However, what traders like the most was that the Fed is not undermining the strength of the dollar and how it could hurt the growth of the international firms. This was enough for investors to cheer up and they have renewed their vows for buying stocks.
I will not be surprised if the momentum does not have follow through, as markets are very rational and extremely sensitive to the interest rate in the U.S. and headlines in the newspaper. Because it was not so long ago when we experienced heavy sell off and this was based on the headline by the IMF who downgraded the global growth outlook. Therefore, another statement from any Fed member could break the momentum of this optimism which is robust today. The reason is simple be and this is because the minutes which we received last night were based on the US non farm reading of last month and this month we had a very strong number, so I will be absolutely not surprised if the Fed speeches due this week have more hawkish tone.
Back in the UK, it will be all about Mark Carney who will deliver the Bank of England’s rate decision. It is still very much anticipated that the BOE will be the first major central bank which will hike the interest rate. There is no press conference scheduled therefore, it will be only a rate decision which is likely to be a non event.
Disclosure & Disclaimer: The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader.
by Naeem Aslam