China’s credit rating was downgraded by Moody’s spurring a sell-off of Chinese assets. Other markets took ques from Wall Street’s optimism which left the S&P 500 just a few points away from a record high.
Currencies
GBP
Sterling is recovering after a suicide bombing in Manchester on Monday. Prime Minister Theresa May called for caution as further attacks on the UK are likely.
GBPUSD
USD
The dollar is fractionally higher, however still flirting with a 6-month low. The greenback is weaker thanks to the concerns surrounding Donald Trump’s reform policies.
Minutes of the Federal Reserve’s latest meeting will be released later today. Given the doubts surrounding inflation in the US, investors are wary that a June rate hike is not so certain.
EUR
Conversely, the German economy looks to be expanding at a robust pace. The IFO Business climate index rose to 114.6 for May, the highest number on record since 1991.
Despite the upbeat mood in Europe, the euro is slightly weaker. Yesterday, the single currency sank 0.5% against the greenback due to the UK terror attacks which took place late on Monday.
EURUSD
The sharp EURUSD rally in the last month has moved the RSI into overbought territory. Not even the IFO survey brought solace to the EUR bulls. The next resistance point should be around $1.12. There may be bearish momentum over the next 2 days towards the level of $1.116.
JPY
The risk level in the market has ticked up since Monday’s terror attack in the UK, increasing demand for safe-havens like the Japanese yen, despite the S&P 500 and risker assets climbing higher.
USDJPY broke through 111 and is now caught in an upswing. The currency pair is headed for 122.50 as a resistance level – breaking this level would cause a longer-term bullish trend.
On the other side of the currency pair, the dollar is under pressure. Donald Trump’s first major budget has been released and investors fear that the proposal will not make it passed congress.
AUD
AUDUSD is struggling to break through the 0.75 mark.
The Aussie dollar dropped thanks to China’s credit rating downgrade. The single currency is especially sensitive to Chinese news.
AUDUSD
Commodities
Crude oil has advanced 0.5% today as investors keep tomorrow’s OPEC meeting in mind. The cartel is expected to extend supply cuts until March 2018.
World Indices
The S&P 500 is headed for $2400, if the market breaks $2405 there should be a rally in US equities which could possibly extend to world indices.
The DAX 30 is taking a slight breather after climbing higher yesterday, where Germany’s proxy took ques from Wall Street and IFO business climate reports.
Cryptocurrencies
Bitcoin
Since the beginning of this year, Bitcoin has surged more than 100%. Now hovering at $2305, Bitcoin has been supported by a proposal for the open-source project which would add transition capacity.
Two major outcomes from this weekend’s meeting:
The barrier for activation of segregated witnesses has been lowered.
Bitcoins block size will be upgraded to 2MB via a process called a hard fork.
Ethereum
Ethereum has shot up 9% this morning. The cryptocurrency is quickly gaining momentum as corporate support for Enterprise Ethereum Alliance is on the rise. 86 firms, including Toyota, joined the sting of businesses eager to use the blockchain technology which helped lift the stock to new highs.